The world is entering a new era of cash displacement, where
digitisation will lead to better economic inclusion, driven by innovative
fintech companies.
Emerging economies, particularly those across Asia and
Africa, are leapfrogging advanced economies by going straight from cash to
digital and mobile access, providing new opportunities to countless people
around the world.
This process has already made a difference: over the past
decade, 1.2 billion previously unbanked people have gained access to financial
services, with the unbanked population around the world falling by 35 per cent,
according to the World Bank.
But there’s still a long way to go, with an estimated 1.7
billion adults remaining unbanked.
And economic inclusion is about a lot more than just having
a bank account, it’s about being able to send and receive money easily, quickly
and cheaply. This is critical for the millions of micro-merchants around the
world that are trying to earn a livelihood to support their families, staff and
communities.
The United Nations’ Sustainable Development Goal 8 is to
promote sustained, inclusive and sustainable economic growth. One of the
targets of this goal is to expand access to banking, insurance and financial
services for all. But to improve participation, we need to remove the many
layers of complexity and barriers to access that have been built up in
financial systems over recent decades.
Fintech innovations can enable people in emerging markets to
take advantage of high digital and mobile penetration. According to Statista,
6.378 billion people, or more than 80% of the world’s population owns a
smartphone. Coupled with the widespread availability of mobile networks and
digital payment networks, merchants have alternative pathways to access
financial services at their fingertips.
Fintechs and the solutions they can deliver via smart
devices hold the key to economic inclusion and financial independence around
the world.
Eliminating legacy tech barriers
If you spend a couple of hours in your local café on any
given day, you will likely witness a failed transaction. Often, it’s expensive
and inefficient legacy point-of-sale terminals that get in the way of merchants
earning their livelihoods.
There’s no good reason why a small business owner should
lose a payment from a willing customer. And thanks to new technologies,
merchants no longer have to be at the mercy of the monolithic banking
incumbents and their control over business models and customer relationships.
All a merchant needs is something they already have in their pocket – a
smartphone – to accept any digital form of payment.
Accepting any and every payment
The shift to cashless payments is accelerating and shows no
signs of slowing down. Digital wallets and QR-based systems have been steadily
growing in recent years. Meanwhile, more and more Buy-Now-Pay-Later solutions
are coming to market with adoption skyrocketing, and we’ll start seeing digital
currencies enter the mainstream.
It’s no longer as simple as “cash or card”, but that doesn’t
mean merchant acceptance of funds has to be complex. Sophisticated technology
has the power to enable simplicity at the point of sale and empower merchants,
from the largest multinational franchisee down to the smallest independent
business or sole trader, to accept any form of payment using the customer’s
preferred method.
Breaking down the complexity
Technology should never get in the way of a transaction. It
should facilitate payments and prevent merchants from missing out on sales due
to poorly designed systems.
Layers of complexity have built up around the payments
system for decades, and fintechs can tear these barriers away. While many new
models are disrupting and replacing existing players in the financial
ecosystem, there is also a need for solutions that integrate and consolidate
the myriad services available today.
Accessing transaction data insights
Data is the new oil. With data being captured by businesses
and consumers alike at an unprecedented scale, it is now powering the global
economy. Access to detailed data insights provides merchants with a better
understanding of their business and enables them to make more informed
decisions that could impact the long-term viability of their operations.
Digitised payment systems improve equity and inclusion in
this data economy by offering all merchants - no matter how big or small -
equal access to insights. Even basic information about purchasing behaviour can
inform decisions that improve customer engagement and increase transaction
volume.
Removing economic silos
According to data from The World Bank, cross-border
remittances account for an estimated $600 billion in value. The average global cost to send this money in
the form of cash is 6.8 per cent, but a fully digital transaction drops the
cost of this to 3.3 per cent.
Technology that helps remove friction, reduce cost and
increase the speed of cross-border transactions will help more merchants
participate in an inclusive and sustainable economy.
Now is the time to take advantage of the high digital
penetration in markets across the world, and use technology that provides an
alternative pathway to merchants than traditional financial services. This is
our idea of a digitised inclusive economy - where every merchant has equal
access to an entire world of customers.
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