This story is from the 2019 Access FYI: FedEx Young Innovators List. Explore more from this issue
Man using digital payment methods to pay for groceries

Mobile Money: Broadening Financial Access Worldwide

No bank account? No problem. Technology is connecting “bankless” consumers in Brazil, Nigeria and other countries with the digital economy.

Man using digital payment methods to pay for groceries

More than 1.7 billion adults worldwide don’t have bank accounts and rely entirely on cash — but about two-thirds of them own mobile phones. Tech innovations are connecting unbanked consumers with the digital economy by giving them phone-based ways to buy goods, pay for services and even take out microloans.

Paytm: India’s digital wallet

Users who set up a digital wallet in India’s Paytm app can deposit cash at branches of partner banks using their phone numbers instead of account numbers and can use the mobile app to pay at retailers, utility providers and other businesses by scanning a QR code. Paytm lets users handle dozens of transaction types, from paying traffic tickets and booking travel to buying gold and making charitable contributions. And a recent app update allows users to order physical debit cards for payments at businesses that take only plastic.

Bank slips in Brazil

More than a third of Brazilians don’t have bank accounts, and about 80 percent of the country’s online purchases are made via boleto bancário — “bank slip” in Portuguese. Boletos are regulated by the Brazilian Central Bank and were formerly hard-copy only, but now they’re digital as well: When a user makes a purchase online, the merchant site generates a voucher with a bar code that she can store on a mobile phone (or print out, if she’s feeling old-school). The user then takes her bar code to a bank branch, supermarket or lottery stand. There, it’s scanned and the amount due is collected from the user in cash, with confirmation transmitted to the merchant.

Money transfer services

People who live in sub-Saharan Africa were early adopters of “mobile money” thanks to fintech disrupters like the M-pesa money transfer service. Now, offerings such as the Branch app give people in countries including Kenya and Tanzania a way to take out small loans even when they don’t have accounts that would help them build a credit history. With users’ consent, San Francisco–based Branch analyzes smartphone data — such as the SMS receipts that utility companies send to confirm bill payment — and uses it to determine eligibility for loans as small as $2. In the first year after downloading the app, an average customer borrows small amounts from Branch 20 times.

Helping people out of extreme poverty

But the benefits of mobile money extend beyond individuals and the idea of convenience. A recent Science magazine study found that access to mobile money in Kenya, for example, helped bring an estimated 2 percent of Kenyan households (approximately 194,000) out of extreme poverty and paved the way for 185,000 women to move from subsistence farming into business or sales jobs.

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