accelerators to an inclusive digital payments ecosystem

WWW.BETTERTHANCASH.ORG

AcceleratorstoanInclusiveDigitalPaymentsEcosystem

PrioritizationFrameworkandGuideAugust2016

Thistoolkitismeanttohelpplayersinacountryassessthebestuseoftime/resourcestoimplementaccelerators

Who? When? How? •  Asawhole,thetoolkitmaybeusedbyanyplayer(publicsectororprivatesector)whoisdecidingbetweendifferentcoursesofac=ontopromotedigitalpayments.

•  Differentacceleratorsarerelevanttodifferentplayers–forinstance,theregula=onacceleratorismeanttobeassessedbyaregulatorybody.

•  Acceleratorsmaybepriori=zedinasubsetofthosethataremostrelevanttoaplayertodeterminethebestuseof=me/resourcestoimplement.

•  Thetoolkitis=me-agnos=c–itmaybeusednomaEerwhereacountryisinitsdigitalpaymentsjourney.•  Thetoolkitcanbeusedmany=mesbyaplayertodeterminewhatisthebestuseof=me/resourcesnowtoimplementanaccelerator.–  Forinstance,uponfirstreviewofthetoolkit,aplayer

maychoosetoimplementanacceleratorinawaythatisbestsuitedtothemarket.Once=meandresourcesareagainavailable,thetoolkitcanagainbereviewedtodetermineanextacceleratortoimplement.

•  Further,manyacceleratorsarenota“oneanddone.”Theymayrequireitera=onstoimplementinfull.–  Forexample,promo=ngmerchantacceptance

infrastructurewillnotresultin100%ofmerchantsaccep=ngdigitalpaymentsatfirstimplementa=onoftheaccelerator.Rather,theplayercanaimtogettoamorerealis=cpor=on,andthencomebacktotheacceleratoratalaterpoint.

•  Thetoolkitisnotmeanttoreplacetheneedfordetailedreviewofamarketthroughdiagnos=cs.

•  Itisahigh-levelguidancetowardswhichaccelerators,ofthe10iden=fied,shouldbepriori=zedforfurtherreviewbeforeimplementa=on.

•  Whenusingthetoolkit,aplayercanfollowthroughtheques=onsprovidedduringdiscussionsregardingwhatcourseofac=ontotakenext.

•  Thetoolkitisnotprescrip=ve.Itisastar=ngpointoftheques=onsaplayershouldbeaskinghim/herselfwhileassessingop=onsavailable.Thetoolkitcanbethoughtofasadiscussionguide.

2

Theprioritizationmatrixandaccompanyingguidefosterdiscussionsinacountrytoprioritizetheacceleratorsacrosstheecosystem

3

MEDIUM-HIGHPRIORITYAddtoPipeline

ExecuteOnceFeasible

HIGHPRIORITYAddtoPipelineQuickWin

LOWPRIORITYDoNotAddtoPipeline

MEDIUMPRIORITYAddtoPipeline

FEASIBILITY(CostandCapacity)

IMPA

CT

(Digita

lPaymen

tsAccessa

ndUsage)

AcceleratorPrioriAzaAonMatrix

Evaluatetheaccelerator’simpactontheaccessandusageofdigitalpaymentsinthemarket.Forques=onstoguidetheimpactassessment,pleaseseepages3-4.

Evaluatethecostandcapacityofimplemen=ngtheaccelerator.Forques=onstoguidethefeasibilityassessment,pleaseseepages3-4.

Plottheacceleratorinthematrixonthele_,basedontheassessmentsmadeinsteps1and2.

Decidethetopacceleratorstofocuson,basedonpriori=za=on.

Discusswhichstakeholdersshouldbeinvolvedwithimplementa=onandbegincollabora=veconversa=onswithkeystakeholders.

Thepriori4za4onframeworkandguideisplayer-agnos4c.Anyplayercanu4lizeitwhendeciding

betweenasetofaccelerators

InstrucAons

Theecosystemframeworkforaccelerators

4

Policy/RegulaAon

DemandSide

SAmulatorsSupplySideDrivers

EcosystemAcceleraAonFramework

Themeanstoincreaseaccessandusageofdigitalpaymentsamongendusers

Theunderlyinginfrastructure,products,anddistribu4onnetworkssuppor4ngdigitalpayments

Policiesandregula4onsissuedinthemarketthatpertaintodigitalpayments

ImplementpoliciesthatincenAvizeandimproveconvenienceoftheusageofdigitalpayments

EstablishregulaAonthatpromotesinnovaAonindigitalpaymentswhilepromo=ngresponsibleprac=ces

Promotemerchantacceptanceinfrastructure

Establishashareddigitalinfrastructureforplayers

LeverageexisAngnetworksorplabormsfordeliveryofproductsandservices

Establishinteroperabilityinthemarket Digi=zegovernmentpayments

Digi=zerouAneusecases

DevelopauniqueidenAficaAonprogram

Digi=zegovernmentreceipts

Guidedquestionsforaccelerators:Supply-sidedriversNON-EXHAUSTIVE

5

Promotemerchantacceptanceinfrastructure

LeverageexisAngnetworksorplaYormsfordeliveryofproductsandservices

Establishashareddigitalinfrastructureforplayers Establishinteroperabilityinthemarket

•  Whatpor=onofmerchantscurrentlyacceptdigitalpayments?

•  Couldmerchantsgenerateaddi=onalrevenueiftheyacceptdigitalpayments?

•  Howmuchtaxrevenuecouldincreasedtransparencygenerate?

•  Whatistheimpacttofraudthatcanbemi=gatedwithdigi=zedmerchantacceptance(accountsetup,transac=on,scheme,systemic,moneylaundering)?

•  Isthebuildingofinfrastructurefordeliveryabarrierforplayers?

•  Doesthereachofanexis=ngnetworkextendtothedesiredmarketsegments?

•  HowmanynewcustomerswouldaproductorserviceaEain?Whatwouldbetheassociatedrevenue?

•  Doesasharedinfrastructure(e.g.,openAPIs)exist?

•  Doesthelackofasharedinfrastructureposeabarriertoentryfornewplayers?

•  Isthecountryahubforinnova=on?Wouldashareddigitalinfrastructureencourageinnova=on?

•  Doeslackofinteroperabilitylimittheuptakeandusageofdigitalpayments?

•  Isthereabusinesscaseforplayerstointeroperate?

•  Aredigitalpaymentsplabormsandservicesatasufficientlevelofqualitytobeginconversa=onsregardinginteroperability?

•  Howmuchwouldneedtobespentonincen=vesformerchantstoinstallandpromotedigitalpaymentsinfrastructure?

•  Isconnec=vityadequatetoensureminimaloutagesofacceptancetechnology?

•  Doescustomerdemandtotransactdigitallyexist?•  Atwhatlevelaremerchanttosupplierpaymentsdigi=zed?

•  WhatisthesizeofthesegmentsofmerchantsinthemarketthatwouldbeaEractedtodigi=zedpayments(e.g.,large,transit,u=li=esandservices,mid-sizedretailers,smallfarmers,smallsoleproprietors)?

•  Dophysicalorvirtualnetworksexistwiththedesiredreach?

•  Whatcostwouldridingonexis=ngnetworksrequire?

•  Whatarethetechnicalconsidera=onstoleveraginganexis=ngnetwork?

•  Doesleveraginganexis=ngsolu=onfordigitalpaymentsrequirewaiversorchangestogovernmentlawsorprocedures?

•  Howmuchwouldthedevelopmentandmaintenanceofsharedinfrastructurecost?

•  Doesthegovernmenthavethenecessaryinternalresourcesandskillsforsuchaninfrastructure?Ifnot,arethereprivatesectorplayersthatwouldcollaborate?

•  Dotherightmo=va=onsexistacrosstherelevantstakeholderstodrivethedevelopmentandmaintenanceofasharedinfrastructure?(PleaserefertoBTCAGovernmentToolkittoweighmo=va=ondrivers)

•  Whatinvestmentdoeseachplayerrequiretoimplementandmaintaininteroperability?Willthebenefitsofinteroperabilityoutweightheinvestment(businesscase)?

•  Whatiseachplayer’scapacitytodedicatetopromo=nginteroperability?

•  Doestechnicalcapacityexistwithinthemarkettodevelopandexecuteonaplantoachieveinteroperability?

•  Howfeasibleisittogettherightplayersatthetabletocollaborateoninteroperability?

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IMPACTOFIMPLEMENTATION

FEASIBILITYOFIMPLEMENTATION

Guidedquestionsforaccelerators:Demand-sidestimulatorsNON-EXHAUSTIVE

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DevelopauniqueidenAficaAonprogram DigiAzerouAneusecases DigiAzegovernmentpayments DigiAzegovernmentreceipts

•  DomostadultshaveanIDthatmaybeusedtoverifyiden=ty?

•  Whatregula=onhasbeenissuedrela=ngtotheuseofID(e.g.,eKYC)?

•  Canpublicandprivatesectorplayersgainaccesstoadatabasetoverifyiden==es?

•  Isliteracyabarriertotradi=onal(non-biometric)ID?

•  Whataretherou=neusecasesthatremaintobedigi=zedinthemarket?

•  Whataretheassociatedtransac=onvolumesofcash-basedrou=neusecases?

•  Whatistheappe=teofmerchantsandconsumersofcash-basedrou=neusecasestodigi=ze?

•  Howmuchtaxrevenuecouldincreasedtransparencygenerate?

•  Hasthegovernmentdigi=zedallofitspayments?Ifnot,whataretheassociatedvolumesofcashtransac=ons?

•  Howmuchcashleakageisexperiencedingovernmentpayments?

•  Howmuch=mecoulddigi=zinggovernmentpaymentssavefortheenduser?

•  Howmuchrevenuecouldadigi=zedgovernmentpaymentsservicegenerateforanengagedprivatesectorparty?

•  Howwouldthegovernment’sdemonstratedcommitmenttocashlessimpacttherestofthedigitalpaymentsecosystem?

•  Doallagenciesofthegovernmentofferadigitalop=onforpayment?

•  Doagenciesaccep=ngcashpaymentexperiencecashleakagesorotherinefficienciessuchasmiddlemen?

•  Wouldadigitalop=onforgovernmentpaymentsaveenduser’s=meormoney?

•  IfaprivatesectorpartycollaborateswiththegovernmentforaP2GorB2Gprogram,whatwouldbetheassociatedrevenue?

•  Woulddigi=zinggovernmentpaymentsdemonstrateacommitmenttocashless?Howwouldthisimpactthemarket?

•  HowmuchwouldthedevelopmentofanIDprogram,theissuanceofcards,andthemaintenanceofthesystemcost?

•  Doesthegovernmenthavethenecessaryinternalresourcesandskillsforsuchaprogram?Ifnot,arethereprivatesectorplayersthatwouldcollaborate?

•  Whatprivacy,cultural,orreligiousconsidera=onscanimpactimplementa=onofauniqueIDprogram?

•  WhatinfrastructuregapsaretheretodevelopabiometricID?

•  Dotherightmo=va=onsexistacrosstherelevantstakeholderstodrivethedevelopmentandmaintenanceofauniqueIDprogram?(pleaserefertoBTCAGovernmentToolkittoweighmo=va=ondrivers)

•  Whatinvestmentdoeseachplayerrequiretogetmerchantacceptanceinfrastructureintheloca=onofrou=neusecases?

•  Whatarethecapabili=esofindividualstotransactdigitally?Woulddigi=zingrou=neusecasesrequireinvestmentineduca=onandawarenesscampaigns?

•  Whatassociatedtaximplica=onswouldincreasedtransparencycauseformerchants?

•  Whatfinancialinvestmentdoesdigi=zinggovernmentpaymentsrequire(e.g.,electroniccards,agentnetworks,etc.)?

•  Dorecipientsofcurrentlycash-basedgovernmentpaymentshavethecapabilitytocollectadigitalpayment?

•  Whatfinancialinvestmentdoesdigi=zinggovernmentreceiptsrequire?

•  Isthereathirdpartythatcouldpartnerwiththegovernmentfordevelopmentandmaintenanceofasystemfordigitalreceipts?

•  Doindividualsand/orbusinesseshavetheskillsandtechnologyneededtoremitdigitalpaymentstothegovernment?

•  Dogovernmentagenciesofcurrentlycash-basedgovernmentreceiptshavethecapabilitytocollectadigitalpayment?

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Guidedquestionsforaccelerators:Policy/Regulation


EstablishregulaAonthatpromotesinnovaAoninthedigitalpaymentsecosystemwhilepromoAngresponsiblepracAces ImplementpoliciesthatincenAvizeandimprovetheconvenienceofdigitalpayments


•  Doescurrentregula=oninthemarketposebarriersforplayerstoenterthedigitalpaymentsspaceorinnovate?

•  Doescurrentregula=onensureconsumerprotec=on?•  Doregulatorsmaintainanopendoorpolicywithplayers(bothlargeandsmall)?•  Dofinancialregulatorscollaboratewithregulatorsofperipheralindustries(e.g.,telecommunica=ons)•  Doregulatorsevolveregula=onasthedigitalpaymentsindustrydevelops?•  Howwouldthegovernment’sdemonstratedcommitmenttodigitalpaymentsimpacttherestoftheecosystem?

•  Whataretherisksofregula=onthatpromotesinnova=ontoconsumers?

•  Hasthegovernmentissuedanypoliciestocreatedisincen=vesforusingcash?•  Doesadequatemerchantacceptanceinfrastructurefordigitalpaymentsexist,toensurecashlesspoliciesandmandatesdonotdisadvantagepopula=ons?

•  HowdevelopedistheICTsector?WhatimpactwouldamoreadvancedICThaveondevelopingthecountry?•  Aregovernmentservicesdigi=zed?•  Howwouldthegovernment’sdemonstratedcommitmenttogoingcashlessimpacttherestofthedigitalpaymentsecosystem?

•  Whatstakeholdersarerequiredtobeengagedintheprocess(refertoBTCAGovernmentToolkittounderstandtheroleofstakeholders)?

•  Howfeasibleisittogettherightplayersatthetabletocollaborateonnewregula=on?•  Wouldnewregula=onbewelcomeinthemarket,orcausenega=vedisrup=on?•  Woulddevelopingnewregula=onincuranycosts?

•  Howareregulators’enforcementcapacity?•  Howisthegovernment’sskills/resourcestodigi=zeitsgovernmentservicesandpromotetheICTsector?Doescapabilityexistinternally,orcoulditengageathirdparty?

•  Howdocountrydemographics(e.g.,largeelderlypopula=onwithlowtechnicalliteracy)impactthepopula=on’sabilitytotransactdigitally?

NON-EXHAUSTIVE

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ApproachandAccelerators

8

ILLUSTRATIVEILLUSTRATIVE

Thestudyutilizedabottom-upapproachtoassessactivities&arrivedat10keyaccelerators,nestedintheecosystemcomponents

9

RefinedhighpotenAalacAviAesinto10core“accelerators”nestedintheecosystemcomponents

Gatheredmetricstoscoreimpactandapplicability;clusteredacAviAesintoacceleraAonpotenAal

IdenAfiedacAviAesusingaboaom-upapproach

Accelerators:ac=vi=esthatcanhaveastrongimpactonpromo=ngthedigitalpaymentsecosystem

Ac=vityA:Launching

mobilemoneyservice

Ac=vityF:Commiingto

MAYAdeclara=on

Ac=vityL:Installing

NFC

Ac=vityP:Digi=zingpublictransporta=on

Ac=vityO:Na=onal

Digi=za=onStrategy

Ac=vityD:Installingnew

ATMs

Ac=vityG:Expandingagent

networks

Ac=vityJ:Public/privatepartnerships

Ac=vityI:Digi=zing

G2P

Ac=vityE:Opendoorpolicy

Ac=vityN:Taxe-portal

Ac=vityC:Peer

educa=onprograms

Ac=vityB:mPOSvalue-

addedservices

Ac=vityH:IssuingdigitalID

Ac=vityM:Postalbanking

Ac=vityK:Agentnetworkregula=on

Ac=vityQ:Digi=zing

P2G

Ac=vityD

Ac=vityI

Ac=vityM

Ac=vityJ

Ac=vityJ

Ac=vityF

Ac=vityE

Ac=vityL

Ac=vityA

Ac=vityN

Ac=vityB

Ac=vityBAc=vityO

Ac=vityO

Ac=vityP

Ac=vityP

Ac=vityG

Ac=vityH

Ac=vityC

Ac=vityK

HighpotenAalforacceleraAon

Ac=vityQ

ImpactonEcosystem(MetricsScore)

Applicab

ilityto

MulAp

leM

arketC

ontexts

(#Cou

ntrie

s)

Supply-sideDrivers:

1.  Promotemerchantacceptanceinfrastructure

2.  Leverageexis=ngnetworksorplabormsfordeliveryofproductsandservices

3.  Establishashareddigitalinfrastructureforplayers

4.  Establishinteroperabilityinthemarket

Demand-sideSAmulators:

5.  Developauniqueiden=fica=onprogram

6.  Digi=zerou=neusecases

7.  Digi=zegovernmentpayments

8.  Digi=zegovernmentreceipts

Policy/RegulaAon:

9.  Establishregula=onthatpromotesinnova=oninthedigitalpaymentsecosystemwhilepromo=ngresponsibleprac=ces

10.  Implementpoliciesthatincen=vizeandimproveconvenienceoftheusageofdigitalpayment

SupplySideDrivers

1010

Promotemerchantacceptanceinfrastructure(P2B,B2B)

•  DrivemerchantacceptancefordigitalpaymentsacrossMSMEstodeepenusageamongstconsumersandlargeen==eshigheronthevaluechain

•  Createacompellingbusinesscaseforgoingdigitaltofacilitatetheonboardingofmerchants

•  Context:InSweden,digitalpaymentmethodshavebeenincreasingdrama=callysincethe1995SwedishCompe==onAct,whengreatercompe==onincen=vizedbankstoinvestinnewtechnology,businessdevelopment,andmarke=ng.

•  Results:Today,mPOSplabormshavebecomecommonplace,andmerchantsusingmPOStechnologyhavereportedsalesincreasesofupto30%.MorethanhalfofSweden’sbankbranchesnolongerkeepcashonhand,takedeposits,orhaveATMs.1

1)Henley,Jon."SwedenLeadstheRacetoBecomeCashlessSociety."TheGuardian.GuardianNewsandMedia,04June2016.Web.2)ZeSerli,Peter,andBenLyon."HowtoDriveMerchantPayments?BuildSoluVonsMerchantsWant."CGAP.3Aug.2015.Web.3)Arnfield,Robin."MexicanBanksAdoptMPOSPaymentsTechnology."MobilePaymentsToday.13Feb.2015.Web.4)BancodeMexico5)ACHColombia,BancodelaRepública(bancocentraldeColombia).ACHTransacVons.Web.

UbiquitousAcceptanceInfrastructure

TOPICS COUNTRYCASEEXAMPLES

•  Context:InKenya,thepaymentsplabormKopoKopooffersvalue-addedservicesthatmakeacceptanceofmobilepaymentsbeEerthancashpaymentsforMSMEs.Its“PaymentsHub”enablesmerchantstotransferelectronicfundstheycollectfromcustomerstosupplierbankaccountsatalowercostthanwri=ngacheck.

•  Result:Merchantswhou=lizethisservicewitnessgrowthintransac=onvolumes22%higherthanthosethatdonot.2

•  Context:InMexico,Visa,thetaxauthority,andtheNa=onalChambersofCommerce,Services,andTourismcollaboratedonaschemein2014toprovidesubsidizedmPOSdevicestoMSMEs,whichcomprise64%ofMexico’sonemilliongroceryretailers.3

•  Results:AsofFebruary2015,theschemeinstalled20,000mPOSdevices.3Mexicoexperienceda17%growthrateinPOSpaymenttransac=onsbetween2014and2015.4

OfferingValue-AddedServicesandOther

IncenAves

11

KEYLEARNING

•  Context:InColombia,onlineacceptanceofdigitalpaymentsisanotablecomponentoftheecosystem.PSEwaslaunchedin2005asapaymentplabormtopaybillsormakemerchantpaymentsonline.Public-privatecollabora=onwasahallmarkofthisini=a=ve.

•  Results:ThepercentageofACHColombiatransac=onsini=atedthroughPSEhasincreasedyear-over-year,from4%ofACHColombiatransac=onvolumesin2007to23%in20165.DigiAzingOnlinePayments

•  Aligningincen=vessothatmerchantsacceptinstallingtheinfrastructure•  Manypar=escanhavearoleinseingincen=ves(e.g.,government,banks,etc.)–fosteringcollabora=onamongthesepar=escanbeachallenge

InhibitorstoPromoAngMerchantAcceptance

Infrastructure

Leverageexistingnetworksorplatformsfordeliveryofproductsandservices

• Leverageexis=ngnetworkstoextenddigitalpaymentservicestowide-reachinguserbasesatarapidrateandtoimprovethebusinesscaseofbreakingintothedigitalpaymentsmarket

• Beyondridingonthenetworkas-is,makeappropriateinvestmentstoenhancethereachofthenetworksothatitreachesthetargetmarketaswellas,ifnotbeEerthan,compe=tors

•  Context:InBangladesh,BangladeshPostleverageditsmassivepostaldistribu=onnetwork—including1,500postoffices,76%ofwhichareinruralareas,and8,500addi=onalruraloutlets—tointegrateunbankedpopula=onsinruralandremoteareasintothedigitalfinancialecosystem.1

•  Results:Ayeara_erthelaunchofitsmobilemoneyservicein2010,italreadycaptured22.5%ofthemarketshareforremiEancemoneytransfersinBangladesh.Duetoitsexpansionintodigitalfinance,BangladeshPostearnedUS$3millionmorerevenuein2013thanthepreviousyear.1

1)Kachingwe,Nomsa,andAlexandreBerthaud."Bangladesh“AnUnexpectedSourceofBranchlessBankingInnovaVon?"UniversalPostal.Union.Dec.2013.Web.2)TencentAnnounces2016FirstQuarterResults.Tencent.18May2016.Web.3)Osawa,Juro."ChinaMobile-PaymentBaSleBecomesaFree-for-All."WallStreetJournal.22May2016.Web.4)Lee,Yimou,andPaulCarsten."UPDATE2—WeChatPaymentsRocketasChina'sTencentRidesGamingWave."ReutersAfrica.17Mar.2016.Web.

•  Context:InChina,Tencent’smegapopularchatappWeChat,reaching762millionmonthlyac=veusersasofQ12016,2recognizedthebusinessopportunityofleveragingitsexis=ngonlinenetworkandbeganallowingitsuserstomakewallet-basedP2Ptransfersandotherdigitalpaymentsfromthechatplaborm.

•  Results:Between2014and2015,Tencent’smarketshareinthemobilepaymentsspacenearlydoubledfrom11%to20%.3AsofNovember2015,WeChatdisclosedthatusershadconnected200millionbankcardstotheservice.2Es=matesindicateWeChatcanenablemorethanUS$500billionintransac=onsin2016.4

LeveragingNaAonalPostalNetworks

LeveragingSocialMediaNetworks


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KEYLEARNING

•  Existenceofadigitalorphysicalnetworkwithabroadreachtoatargetmarketand/ormakingthenecessaryinvestmenttoaugmentexis=ngdigitalorphysicalnetworkstocompetewithcompe=tors

InhibitorstoLeveragingExisAngNetworksor

PlaYorms

Establishashareddigitalinfrastructureforplayers

•  Shareddigitalinfrastructurereducesbarrierstoentryforpar=cipantsandpromotesinnova=on

•  Ensuresuchdigitalinfrastructureisopensourcewithappropriateaccessrightssothatplayersarenotexcludedfromthebenefitsoftheplaborm

•  Context:InIndia,thegovernment’s2015mandateforanopenAPIpolicymadepossible“IndiaStack,”thecompletesetofAPIthatenablesthedevelopmentofpayment-enabledapplica=ons.AadhaarisakeyelementofIndiaStack--Asavarietyofthirdpar=es,includingprivatesectorplayers,canaccessAadhaar’sdatabase,itsexistenceandubiquityhashelpedcreateandadvancenovelbusinessmodelsindigitalpayments.

•  Results:Aadhaar-enablede-KYCprocessescansavebanksandtelcosUS$1.5billionoverthenextfiveyearsduetotheelimina=onofinefficientpaper-basedverifica=onandmovement/storageofpaperdocuments.1

1)Chopra,Puneet,PareshRajde,VivekGupta,PriyankMishra,andAkshatPathak."E-KYCandtheIndiaStack–ATransformaVveBlueprintforEmergingMarkets."MicroSave,Mar.2016.Web.2)Vassil,Kristjan.“EstonianE-GovernmentEcosystem:FoundaVon,ApplicaVons,Outcomes.”Rep.WorldDevelopmentReport,June2015.Web.

•  Context:InEstonia,thegovernmentdeploysX-Road—adataexchangelayerthatenablessecureInternet-baseddataexchangebetweeninforma=onsystems—tomakeiteasierforpublicandprivatesectorins=tu=onstoinnovate.Byconnec=ngtheirinforma=onsystemswithX-Roadandpar=cipa=ngindataexchange,theycanleveragealready-exis=nginfrastructureandsaveresources.Thus,X-Roadpromotesdigitalpaymentservicesbyloweringbarrierstoentry:forexample,byfacilita=ngrapidmovementofdatabetweensystemsandintegra=nge-services,X-Roadhelpedenableadigi=zedincome-taxdeclara=onsystemthroughlinkingemploymenttaxrecordstoindividualci=zens’taxrecords.

•  Results:Byelimina=ngtheneedforin-personinterac=ons,X-Roadsavedanes=mated2.8milliontotalhours,or3,225years,in2014.2

OpeningtheMarkettoInnovaAonsthroughOpen

APIs

Government-DeployedSharedInfrastructure


13

•  Context:InPeru,thegovernment,financialins=tu=ons,telecommunica=onscompanies,andlargepayersandpayeescreatedapartnershipanddevelopedaninnova=vepaymentservicecalled“Bim,”whichisthecountry’sfirstfullyinteroperablemobilemoneyplaborm.Bimpoolsexis=ngfinancialinfrastructureacrossPeru,andmembersofthepartnershipcanusetheplabormtoissueaffordableproducts,compe=ngondesignwithinaninteroperableplaborm.

•  Results:BimonlylaunchedinFebruary2016,butwithinjust3monthsoflaunch,morethan126,000accountshaveopened.Itistarge=ng5millionregisteredaccountsby2020.

Public-PrivateApproachtoDevelopingShared

Infrastructure

KEYLEARNING

•  Geingtherightplayersatthetabletocollaborateonthedevelopmentandmaintenanceofthesharedinfrastructure•  Aligningincen=vestodedicatetowardssuccessfulimplementa=onandmaintenanceoftheinfrastructure•  Lackoftechnicalcapabilitytostrategicallyplanandexecute

InhibitorstoEstablishingaSharedDigitalInfrastructure

Establishinteroperabilityinthemarket

•  Bringtherightplayerstothetabletocollaborateonestablishinginteroperabilityandensurebusinesscasesarealigned•  Accountformarketcontextslikelevelsoffragmenta=ontosuccessfullyimplementinteroperability

•  Context:InTanzania,threemobilemoneyproviders—Tigo,Airtel,andZantel—announcedapioneeringinteroperabilityagreementinJune2014,enablingcustomerswithdifferentmobilewalletsandnetworkstosendmoneytoeachother.Privatesectorplayerswerewillingtocollaboratebecauseithelpedsolveamarketissuetheywerefacing:lackofA2Ainteroperabilityhadcausedindustry-widefragmen=ng,impedingtheu=lityanduptakeofmobilefinancialservices.

•  Results:A_ertheagreement,thethreemobilemoneyplabormssawanincreaseof3.5=mesthevalueoftotalofflinetransac=ons.1

1)“Africa’sFirstUniversalMobileMoneyServiceGoesLiveinTanzania.”Millicom,18Feb.2016.Web.3)"InteracDebit."Interac.Web.3)NauVyal,Anant."BranchlessBankingInteroperabilityinPakistan:APromisingStart."GSMA,7Apr.2016.Web.4)Osawa,Juro."ChinaMobile-PaymentBaSleBecomesaFree-for-All."WallStreetJournal.22May2016.Web.5)BTCAInCountryMissionStakeholderinterviewsinGhana,June2016

DominantPlayers:•  InChina,sincethedigitalpaymentsecosystemisdominatedbytwomajorplayers–

Alipaywith68%marketshareandWeChatwith20%4—interoperabilityisnotforeseenintheshorttermduetolackofincen=ves:bothplayersaresucceedingindependently,reducingtheneedtocollaborate.

TheNeedtoAlignBusinessCasesandEnsureIndividualPlaYormsareSound•  InGhana,mobilemoneyplayershaveconcernsregardingdifferentbusinesscases–

forinstance,playersthatmadesignificantinvestmentsinagenetnetworkshavefreeriderconcerns5

•  Further,inGhana,mobilemoneyplayersnotedthattheydonotyetfeelreadywiththeirownplabormstointeroperatewithothers5

Private-SectorDrivenApproachtoBilateral

IntegraAon

InhibitorstoEstablishingInteroperability


•  Context:InPakistan,wheremobilemoneyisbank-led,connec=ngtotheexis=ngswitchwasthemostcosteffec=veandstrategicapproachforinteroperability:theoperators,asbanks,werefamiliarwithswitchesandunderstoodthebenefits,andalsowantedtheabilitytoconnecttothebroadermobilefinancialecosystem.

•  Results:Followingtheconnec=onofmobilemoneyplabormstothena=onalswitchin2014,thevalueofmobilemoneytransac=onsincreased225%organicallyinjustthreequartersbetween2014and2015.2

PrivateSector-DrivenSwitchArrangement

14

KEYLEARNING

•  Context:TheInteracsystemwasfoundedinCanadain1984asacollabora=ve,nonprofitinterbanknetworkbetweenfourofthefivelargestfinancialservicescompaniesandthelargestassocia=onofcreditunionbanks.Theyestablishedstandardsforasecure,real-=mePOSdebitnetwork.ThisdeliveredinteroperabilityinCanada.

•  Results:InteracenableddigitalpaymentsinCanada.Thesystemhandled5.2Bdebitcardtransac=onsin2015.3

UsingNetworkCapabilitytoEnableLow-Cost,Secure

TransacAons

DemandSideStimulators

1515

Developauniqueidentificationprogram

•  AuniqueIDisanenableroffinancialinclusion•  IncorporatedigitaltechnologieslikebiometricstocombatthebarrierstoIDposedbypoorliteracy•  Provideonlineaccesstoacentralizeddatabasetoverifyiden=tyinforma=on,butensurepropersafeguardstosafeguardconsumerprivacy

•  Context:Priortothedevelopmentandissuanceofacentralizediden=tysolu=on,therewerehighbarrierstoobtainingiden=fica=onforIndia’spoor,excludingthemfrommanyrightsandservicessuchasopeningabankaccount.Further,highfrequencyofblackmarketIDfraudwascausingleakages:Whilethegovernmentwasspending4%ofGDPonsubsidies,es=mateswerethat40-50%ofthisspendwaslostasleakages.1

•  Results:Recognizingtheseissues,theIndiangovernmentestablishedtheUniqueIden=fica=onAuthorityofIndia(UIDAI)in2009,issuing12-digituniqueiden=ty“Aadhaar”numberstooveronemillionofits1.2billionresidentssinceitsincep=on.2Aadhaarhasbeenusedforvariouspolicyini=a=ves,suchasdigi=zingLPGsubsidieswhichoffersthegovernmentUS$2billionpoten=alsavingsintrimmedleakages.3

1)"JAMTrinityatWorkforDirectBenefitTransfer."ICICISecuriVes,14Sept.2015.Web.2)"AadhaarDashboardSummary."UniqueIdenVficaVonAuthorityofIndia,July2016.Web.3)"IndiaSaved$2BillionbyReformingFuelSubsidyDelivery."TheTimesofIndia,2July2015.Web4)Vassil,Kristjan.“EstonianE-GovernmentEcosystem:FoundaVon,ApplicaVons,Outcomes.”WorldDevelopmentReport,June2015.Web.

•  Context:Thena=onalIDcardsysteminEstoniaishighlydeveloped,andservesasdigitalaccessforallofEstonia’ssecuree-services.Policyandregula=onexiststosupportthedigitalIDsystem:thelawrequiresallci=zensovertheageof15tohaveanID,andobligatesthepublicsectortoacceptdigitallysigneddocuments.

•  Results:Morethan1.2millionIDcardsinEstoniaareac=ve,represen=ng94%ofEstonia’sresidents.4Currently,98%ofbankingtransac=onsand95%oftaxdeclara=onsaredoneelectronically,andhavingapaperlessgovernmenthasenabledsavingsthatequateto2%ofGDP.5

Lackofacentralizeddatabase:•  InGhana,thelackofana=onal,centralizediden=fica=onmethodanddatabasehashamperedthedevelopmentaninclusivedigitalpaymentsecosystem.

•  While98%ofGhanaiansreportatleastoneformofiden=fica=on,6thewidevarietyofformsofiden=fica=onandiden=tydatabasesinexistencemakeitdifficultforplayersperformefficientKYC.

Lowlevelsofliteracy:•  InNigeria,lowlevelsofliteracypreventedfinancialinclusion,asopeningandaccessingbankaccountswaslinkedtotradi=onalformsofIDthatrequiresignaturesforauthen=ca=on.

•  Biometricsserveasawaytoovercomethisobstacle:a_erlaunchingaMasterCard-brandedna=onalbiometriceIDcardthatenableselectronicpaymentsforpreviouslyfinanciallyexcludedpopula=ons,Nigeriahadayear-over-yeargrowthof18%indigitalpaymenttransac=onvolumes.7

5)"E-EstoniaFinancialIndicators."E-Estonia,2015.Web..6)"FinancialInclusionInsights."CGAP,2015.Web.7)PaymentVolumes,CentralBankofNigeria.Web.

DevelopingaCentralizedIdenAtyDatabase

UnlockingDigiAzaAonthroughtheIssuanceofa

DigitalID

InhibitorstoDevelopingaUniqueIDProgram


16

KEYLEARNING

Digitizeroutineusecases(P2B)

• Iden=fyanddigi=zepaymentusecasesthatindividualsu=lizeonarou=nebasistoincreasecomfortwithdigitalpaymentsandincreasedigitaltransac=onvolumes• Indigi=zingsuchusecases,accountfortheexis=ngbusinesscaseassociatedwithcashtodevisetherightapproach

•  Context:InKenya,Tanzania,andUganda,M-Kopa’srent-to-ownsolarenergyproductsprovidepoorruralhouseholdswithcheapsolarpower.

•  Result:AsofJuly2016,M-Kopahasprovidedover375,000homeswithaffordableservice,withprojectedsavingsforthesecustomersofUS$280millionoverthenextfouryears.1

•  Context:InRwanda,Berlin-basedMobisolpartneredwithMTNRwandain2013toofferoff-gridcustomerssolarhomesystems.Customersusemobilewalletstobuyprepaidenergycredit.

•  Results:In2014,customersmadeanaverageof1.7paymentspermonthonthesystem,incomparisontotheindustrybenchmarkofonetransac=onevery90days.20%ofMobisolcustomerswerepreviouslyunregisteredforMTNmobilemoney.2

1)M-Kopa,CompanyOverview.Web.2)Cohen,Ilana.“MobileforDevelopmentUVliVes:MobisolPay-as-you-goSolarforEntrepreneursinRwanda.”GSMA,Jan.2016.3)“GlobalLandscapingStudyonDigiVzingP2GPayments.”Rep.:KarandaazPakistan,CGAP,2016.4)MinistryofRailways.PressInformaVonBureau.RailwayMinisterLaunchesNextGeneraVonE-TickeVng,FreightE-DemandSystem,FreightE-DiversionSystemandGoIndiaSmartCard.GovernmentofIndia,13Aug.2014.

•  InIndia,therailwaye-=cke=ngsystemcaterstoonehalfofthedaily1.6millionpassengers,4andisthelargeste-commerceplayerinIndiabyrevenue.5In2015,itintroducedamobileappanddigitalwalletspaymentsop=on.PaytmandMobikwikincen=vizecustomerstousetheirplabormsfore-=cketsbyoffering100%cashbacksontransac=onconveniencefees.

•  InKenya,GooglepartneredwithEquityBanktocreateNFC-basedcashlesspaymentmechanismsforpublictransporta=onin2013.Implemen=ngthecardsfailedby2015duetocorruptdrivers’misalignedincen=ves,sincetheyprofitfromchargingvariableratesincashpayments.

•  InRwanda,alocalITcompanyTap&Golaunchedanelectronicbuspaymentsystemin2015,inpartnershipwithlocalgovernmentandtransportoperators.IncontrasttoKenya,thelocaldesigncancontrolfactorslikeinformaleconomyprofitstructures.Withinfourmonths,20%ofthebustransportmarketwasusingthedigitalpaymentop=on,andbusrevenueshadmorethandoubled.3

SolarPay-As-You-GoEnergy(PAYG)

DigiAzingPaymentsforTransportaAon


17

KEYLEARNING

•  Context:InTanzania,thegovernmentbeganofferingmobile-enabledpaymentsforwateru=litybills,digi=zingwhatwaspreviouslyaninefficientand=me-intensivecashtransac=on.•  Results:Withintwoyears,thereweremorethan2Musersofthesedigitalpayments,andthegovernmentachieved13.4%increaseinrevenuepercustomer.3

WaterPayments

•  Context:ThePhilippinesisthe3rdlargestremiEancemarketintheworld6,makingthismarketripeforthebenefitsofdigi=za=on.BothSmartandGlobelauncheddigitalremiEanceservicesin2004.•  Results:Asof2012,oneinthreecustomersofGCASHusetheplabormforinterna=onalremiEances.8Within2yearsofSmart’sproductlaunch,theservicehadamonthlyaverageof1.5MusersremiingUS$15M.9

DigiAzingInternaAonalRemiaances

•  Ensuringthattheapproachtakentodigi=zepaymentsaccountsfortheincen=vesassociatedwithcashtransac=ons,asshowcasedbyKenya,wheretheplayersbenefitedgreatlyfromcashpaymentsandthereweredisincen=vestodigi=ze.

•  Manyrou=neusecases,suchasgrocerypurchases,takeplaceatMSME’s,whicho_enrequireincen=vestoinstallacceptanceinfrastructureandencouragetheircustomerstotransactdigitally.•  Anadequatedomes=cdigitalpaymentsecosystemmaybeaprerequisitetosuccessfullaunchofaninterna=onalremiEanceservice

InhibitorstoDigiAzingRouAneUseCases

5)Aroral,Kim."BehindtheScenesofIndia’sBiggestE-commercePlayer."TheTimesofIndia,31Jan.2016.6)BangkoSentralNgPilipinas."PaymentsandRemiSances."FinancialInclusioninthePhilippines2016.7)Chan,Connie."MoneyasMessage."AndreessenHorowitz.24July2016.Web.8)Baltao,Paolo."MobileInternaVonalRemiSancesinthePhilippines."CGAP.27Mar.2012.9)“MobileMoneyinthePhilippines–TheMarket,theModelsandRegulaVon.”GSMA,2009.

•  Context:InChina,itiscommontogiveredenvelopescontainingcashasgi_s.WeChatlaunchedaP2Ppaymentfeaturein2014calledRedPackets,buildingoffthisculturalnorm.•  Results:Inthe2016ChineseNewYear,over420MWeChatuserssent32Bdigitalredenvelopesoverthecourseofsixdays.Over60MuseresinChinacon=nuetosendRedPacketsdaily7

RidingonExisAngCulturalNorms

Digitizegovernmentpayments(G2P,G2B)

•  Digi=zinggovernmentpaymentscanplayapowerfulroleinadvancingthedigitalpaymentsecosystembycapturingindividualsandbusinessesintodigitalpaymentsproductsandservices,enhancingpeople’scomfrtwithdigitalpaymentsthroughthegovenrment’sdemonstratedsupport,andgenera=ngefficienciesandcostsavings•  Digi=zegovenrmentpaymentswithcloseregardtotheexis=ngfinancialecosystem

•  Context:InBrazil,thegovernmentmergedmul=plepre-exis=ngCCTprogramsintotheBolsaFamiliaProgram(BFP),whichoperatesthroughanelectronicbenefitcard(EBC)linkedtobankaccountsatthestate-ownedbankCaixa.

•  Results:BFPsavedthegovernment31%intransac=oncosts.1BFPassistsapproximately50millionpeople,¼ofthepopula=on,byprovidingthemwithaminimumlevelofincomethroughthesebank-accountbasedgranttransfers.2Ayeara_erlaunchin2004,theprogramcatalyzed20-25%ofBrazil’sdrama=cdecreaseininequalityand16%ofitsdecreaseinextremepoverty.3

•  Context:InSouthAfrica,theSouthAfricanSocialSecurityAgency(SASSA)migratedsocialgrantrecipientstoelectronicpaymentsystems

•  Results:Thegovernmentcutfeesby54%whentransferringpaymentsintomainstreamcommercialbankaccounts.1

•  Context:InColombia,whentheCCTprogramMasFamiliasenAcciónimplementeddigitalpaymentsin2009,itincurredmorecostsforthegovernmentthancash-basedprogramsbecauseitaEemptedtobuilditsdistribu=onnetworkfromscratch.1

•  Results:Asaresultoftheseissues,in2012thegovernmentgaveBancoDavivienda’smobilemoneyplabormDaviPlataacontracttofacilitatepaymentsto900,000beneficiariesofMasFamiliasenAcción,helpingthedigi=za=onprocessandforcingBAtoaccelerateitsexpansion.4

1)Parker,SarahRotman."BranchlessBankingandFinancialInclusionforG2PRecipients."CGAP.15Mar.2012.Web.2)"BolsaFamilia:AnInternaVonalExampleofSocialInclusion.AnInterviewwithHelmutSchwarzer."SocialProtecVon,July2015.Web.3)Lindert,Kathy,AnjaLinder,JasonHobbs,andBénédicteDeLaBrière."TheNutsandBoltsofBrazil’sBolsaFamíliaProgram:ImplemenVngCondiVonalCashTransfersinaDecentralizedContext."WorldBank.May2007.Web.

DigiAzingG2PPaymentsthroughExisAngCCT

Programs


4)Consultores,Marulanda."DaviPlata:TakingMobileG2PPaymentstoScaleinColombia."CGAP.01July2015.Web.5)Babatz,Guillermo.SustainedEffort,SavingBillions:LessonsfromtheMexicanGovernment’sShivtoElectronicPayments.BeSerthanCashAlliance,2013.

18

KEYLEARNING

• Context:TheMexicangovernmentme=culouslyplannedandexecutedacentraliza=onanddigi=za=onofgovernmentpaymentstosuppliersandindividualsforpayrolls,pensions,andsocialbenefits.• Results:Thedigi=za=onandcentraliza=onsavedthegovernmentUS$17Bperyear,or3.3%oftheexpendituresrela=ngtosalaries,pensions,andsocialtransfers5

CentralizingandDigiAzingPaymentstoIndividuals

andBusinesses

•  Adigi=zedgovernmentpaymentneedstoaccountfortheexis=ngdistribu=onnetworkthatreachesthetargetrecipientbase•  Colombiaincurredmuchgreatercostwhendigi=zingitsCCTprogramthandidBrazilandSouthAfrica,largelyduetotheirini=alaEempttobuildadistribu=onnetworkfromscratch

InhibitorstoDigiAzingGovernmentPayments

Digitizegovernmentreceipts(B2G,P2G)

•  Digi=zegovernmentreceiptstopromotecomfortwithdigitalpaymentsandimproveefficiencies•  Collaboratewithprivatesectorplayerstoleveragenecessarytechnicalcapabili=es•  UndertakeP2GandB2Geffortswithcloseregardtothecountry’sexis=ngfinancialecosystem

•  Context:InTanzania,acash-basedsystemofpayingformotorvehiclelicenseswashighlyinconvenientforindividualsandresultedinamiddle-mansystemthatcreatedrevenueleakagesforthegovernment.TheTanzanianRevenueAuthorityandVodacomenteredintoapartnershipin2013toofferadigitalop=ontopaythefeeviamobilemoney.

•  Results:Withinthefirstthreeweeksoftheservice’slaunch,42.5%ofUS$2.1Minlicensefeeswascollectedthorughmobilemoney.1

1)"Tanzania:Tra,VodacompartnerontaxcollecVon."Adlip.2013.2)Morisset,Jacques,CharlesMoret,andJulieRegolo.“HowtoPushEfficiencyEnhancingReformsatthePortofDarEsSalaam?”TheWorldBank,Feb.20133)“TanzaniaCouldBoostItsEconomybyReformingthePortofDarEsSalaam.”TheWorldBank,21May2013.Web.4)“GlobalLandscapingStudyonDigiVzingP2GPayments.”KarandaazPakistan,CGAP,2016.5)Hokans,James."CountryDiagnosVc:Philippines."BTCA,July2015.6)Shrader,Leesa."InnovaVoninPersontoGovernmentPaymentsinthePhilippines."CGAP,5Sept.2013.

•  Context:TheDar-es-Salaamporthandles90%ofTanzania’sexport/importtraffic2,andithassignificantimplica=onsonthelandlockedcountriesthatsurroundTanzania.However,un=l2013,itwasconsideredoneofthemostinefficientportsintheworld.Assuch,in2015,thegovernmentimplementedane-paymentsystemthatenablesbusinessestopayportfeesremotely.

•  Results:ImprovingtheefficiencyoftheDar-es-SalaamportcanenableUS$1.8BincreaseinTanzanianGDP3andUS$157MinimprovedrevenuefortheTanzaniangovernment.2

DigiAzaAonofGovernmentReceiptsforMotorVehicle

Licenses

DigiAzaAonofGovernmentReceiptsforBusinesses’

CustomsPayments


•  Context:InGhana,thegovernmentlaunchedBacktoSchoolin2014asamobilepaymentsolu=onforparentstomakepaymentsfortheirchildren’sschoolfees.ItteamedwithMTNforthedevelopmentandmaintenanceoftheservice.MTNseesofferingBacktoSchoolasawaytoaddvalue-addedservicestoitsmobilemoneyplaborm.

•  Results:Schoolshavebenefitedfromgreatertransparencyandmorepredictablerevenues.Individualshavebenefitedfromthereduc=oninthecost,=me,andriskofmakingpaymentsinperson.Asof2016,over100schoolsareusingtheBacktoSchoolservice,and5%ofMTNmobilemoneycustomersuseBacktoSchooltomakeschoolfeepayments.4

DigiAzaAonofReceiptsforSchoolFees

19

KEYLEARNING

•  Alackofsufficientdigitalpenetra=onamongatargetgroupinhibitsthesuccessofP2Gini=a=ves.In2013,SmartinthePhilippineslaunchedBayadLoadwhichenabledworkerstoremitgovernment-mandatedP2Gpaymentsdigitally.However,asof2015,only1%ofallP2GpaymentsinPhilippineswereelectronic,5partlyduetothelackofdigitalfinancepenetra=onamongpoorworkers.6

InhibitorstoDigiAzingGovernmentReceipts

Policy/Regulation

2020

Establishregulationthatpromotesinnovationinthedigitalpaymentsecosystemwhilepromotingresponsiblepractices

•  Establishandoverseearegulatoryframeworkthatissound,non-discriminatory,andpropor=onalinordertopromoteinnova=on,adequatelyprotectcustomers,andpromoteusageofdigitalpayments•  Consultwithplayersinthedigitalpaymentsecosystemtoestablishregulatoryframeworksthatappropriatelyaccountforplayers’needsandobserva=ons•  Evolvearegulatoryframeworkasthemarketchangesbyunderstandingthegapsandbarriersofexis=ngregula=on,consul=ngwithstakeholders,andcollabora=ngwithotherregulators

•  ContextInTanzania,theBankofTanzania(BOT)hastakenanevolvingregulatoryapproach,engagingcloselywithMNOsandtheirpartnerbankstoenablethemobilemoneymarkettoflourish,accoun=ngfornewtechnologiesemerginginthespacewhenconsideringtheregulatoryframework.Atthesame=me,itscloseoversightoftheindustryhelpsitensureconsumerprotec=on,anddevelopabeEerunderstandingofthebusinessandassociatedriskfactors.

•  Results:AstestamenttotheBOT’ssuccessinencouragingtheindustrytoflourish,mobilemoneytransac=onvolumesinTanzaniain2014wereUS$23.6billion--almost50%oftheGDP.1

1)WorldBankFindexDatabase,2014.2)DiCastri,Simone.“EnablingMobileMoneyPoliciesinSriLanka:TheRiseofEZCash.”GSMA,July2013.Web.3)Byron,RejaulKarim."SriLanka:AStarinMobileBanking."TheDailyStar,27Jan.2016.Web.

•  Context:InEstonia,thecentralbankini=allyrequiredthatmobilemoneyservicesbebank-ledwithnon-propor=onalKYC/AMLrequirementstoopenanaccount,hinderingservicesfromreachinganysubstan=aluserbase.Thecentralbankthenupdateditsregula=onallowingnon-banks,suchastheMNODialog,toacquirelicensestoleadmobilemoneyservicesontheirown.Followingthisregulatorypivot,DialogrelaunchedthepreviouslyfailedeZPayas“eZCash”in2012,auser-friendlymobilebankingplabormaccessibletouserswithouttradi=onalbankaccounts.

•  Results:Showingrapidsuccess,eZcashreachedonemillionuserswithinayearoflaunch,with300,000inthefirstmonthaloneandanimpressive20%ac=verate.2Asof2016,eZCashhadexpandedtomorethan2.2millionsubscribersandenablesawidevarietyofconsumerswithoutaccesstotradi=onalbankingtoshopat4,000retailersthroughtheirmobilebankaccounts.3

CollaboraAve,Test-and-LearnApproachtoIssuing

RegulaAon

PivoAngRegulaAonFollowingLowUptake


21

KEYLEARNING

•  Ensuringthatregula=onissuedpromotesdigitalpayments,ratherthaninhibi=ngit,canbechallenging.•  InGhana,thecentralbank’sini=alregula=onspertainingtodigitalpaymentsissuedin2008didnotpromoteinnova=oninthemarketbycallingforatleastthreebankstobeinvolvedineverymobilemoneyservice.Incen=vesweremisaligned,andtherewasnotamplemo=va=ontoinvestintheservice.Theregulatorypivotin2015hadtoaccountfortheseshortcomingsandleverageconsulta=onswithmarketplayersandotherregulators.

InhibitorEncounteredwhenEstablishing

RegulaAon

Implementpoliciesthatincentivizeandimproveconvenienceoftheusageofdigitalpayments

•  Demonstratecommitmenttothetransi=onawayfromcashthroughpublicsectorpolicyini=a=ves

•  Accountforthedemandandinfrastructurefordigitalpaymentspresentintheecosystemtoensureanappropriatepaceofdigi=za=on.

•  Context:InNigeria,thecentralbankimplementeda“CashlessNigeria”policy”thatadailycumula=velimitonfreecashwithdrawals.Further,thegovernmentaccompaniedthepolicywithamassivedeploymentofsharedPOSterminalsthroughacommitmentfrombankstobuyanddeployPOSterminals.

•  Results:Between2012and2015,thevolumeofelectronicpaymentsincreased14%yearoveryear,andvolumeoftransac=onsatPOSexperiencedanannualgrowthrateof136%.1

1)PaymentVolumes,CentralBankofNigeria.Web.2)"StaVsVcsonPayment,ClearingandSeSlementSystemsintheCPMICountries."BankforInternaVonalSeSlements.Sept.2015.Web.3)EconomicandFinancialDataforSweden,SverigesRiksbank.Web.4)"UruguayMakesGreatStridestowardtheUniversalizaVonofAccesstoFinancialServices."BeSerThanCashAlliance.29Apr.2016.Web.

•  Context:InSweden,thecentralbankhasissuedseveralpoliciesrela=ngtoreducingthevolumeofcashintheeconomy.Forinstance,Swedenhasanega=veinterestrateandbanks,retailers,andrestaurantsarepermiEedtorefusecash.Theseini=a=vesaresupportedbythefactthattransac=ngwithcashisfairlycostlyduetodecliningcashinfrastructureandfeesassociatedwithcashtransac=ons.

•  Results:Only2%oftransac=onsarethroughcash,2andbetween2014and2015,thenumberofbanknotesandcoinsincircula=oninSwedendecreasedby5%.3

•  Context:Uruguaylaunchedafinancialinclusionlawin2014thatgrantsallworkers,socialbenefitrecipients,andsmallbusinessesfreeaccesstodigitalfinancialservices.Further,itmandatesthatallsalary,pension,andsocialbenefitpaymentswillbeelectronicbyMay1,2017.Tohelpitseffortssucceed,thelawintroducedanumberofincen=vesencouragingtheexpansionofPOS.

•  Result:ThePOSnetworktripledbetween2011and2015,whiledebitcardtransac=onsgrewtobeseven=meshigherthanbeforetheintroduc=onoftaxincen=ves.4

PenalizingUsageofCashbyBusinessesand

Individuals

ReducingthePresenceofCashthroughPolicy

IniAaAves

DigiAzaAonPoliciesGrowingDigitally

EmpoweredSocieAes


22

KEYLEARNING

•  Countriesmayencounterobstacleswhenrelyingonpoliciestoincreaseusageofdigitalpaymentsifsufficientacceptanceinfrastructurefordigitalpaymentsdoesnotexistandifenforcementoversightislimited.

InhibitortoPoliciesthatIncreaseUsageofDigital

Payments

GeneralLessons

2323

Overarchinglessonsforexecutingontheaccelerators

24

KeyLearning:Cateringtocontext,inves=nginimplementa=on,andcarefullyresearchingac=onsarethreecri=calstepstobringvaluetoexecu=on.Thesefactorsarefrequentlyprecondi=onsforunlockingthevalueofanacceleratoritself.

Extendingservicesacrossdifferentdigitalpaymentslandscapeswithmarketfactorsinmind

M-PESAinKenyaandSouthAfrica:•  Vodafone'smobilemoneyplabormM-PESAwasabletoquicklycommandKenya’ssizableunbankedpopula=onasitprovidedlowbarrierstoentryintothefinancialsystem.

•  ItfailedinSouthAfricabecauseitbroughtinmanyofthesameusecasesitofferedinKenyawithoutdevelopingnewonesforthecompara=velymorefinancially-includedanddigitally-matureSouthAfricanconsumer.

Inves=ngincustomer-centricexecuAonofdigi=za=onstrategies

AirtelMoneyinIndia:•  AirtelMoneyconsidereddifferentmarketsitcouldtargetandimplementedahuman-centereddesign:Partneringwiththemicrofinanceins=tu=onSaharatoexpanditsloanrepaymentusecasetoeconomically-ac=veresource-poorwomen,itlaunchedapeereduca=onprogramtoovercometheirbarrierstousage.

Accoun=ngforendusers’exisAngresourceswhendeliveringnewproductstoacceleratelastmiledigi=za=on

F-RoadinChina:•  ThetechcompanyF-Roadacceleratedlastmiledigi=za=onbycateringtoexis=ngdemographicresources:ItsSIM-overlaytechnology(func=oningon95-97%ofallphones1)andpartnershipswithRuralCreditCoopera=veshelpedreachChina’sruralpoor.

EquitelinKenya:•  EquityBankandAirtellaunchedthemobilemoneyserviceEquitelofferinginclusiveSIM-overlaytechnologyandaccesstoallEquityBankaccountholders.

Conduc=ngduediligencetoensuresuccessfulstrategyimplementa=on

CentralgovernmentinKorea:•  Whenthegovernmentincen=vizedtargetconsumerstousecreditcards,itprovidedincometaxrebatestothosewhoreportedtheirannualexpendituresusingcreditcards.

bKashinBangladesh:•  Byallowingagentstochargecustomersanextraamountforover-the-countertransac=ons,themobilemoneyservicebKashcreatedamisalignedincen=vefortheagenttonotpromoteregisteredwalletusage.

1)Shrader,Leesa."China–TheFutureLeaderinBranchlessBankingforthePoor?"CGAP,15Aug.2013.Web.

25

TheBeaerThanCashAllianceisapartnershipofgovernments,companiesandinternaAonalorganizaAonsthatacceleratesthetransiAonfromcashtodigitalpaymentsinordertoreducepovertyanddriveinclusivegrowth.WeworkwithourmemberstocramsoluAonstailoredtoeachcountry’scontextandculture.

accelerators to an inclusive digital payments ecosystem

Economy & Finance