UN maps ways govts, companies can forge digital economies

Eden Estopace
eGov Innovation

A new report from the United Nations-based Better Than Cash Alliance reveals 10 tangible steps governments and companies can take to embrace digitization of payments.

The report noted that there is a large amount of evidence supporting the benefits of transitioning from cash to digital payments, but implementation is often difficult for governments to do on their own.

This is in part because successfully creating an economy where digital payments are widely available requires a collaborative approach between many players in the public and private sectors.

The Better Than Cash Alliance research studied 25 countries, including India, Nigeria, Tanzania, Ghana, Brazil, and Mexico, among others.

The 10 accelerators are:

1. Promote merchant acceptance infrastructure across micro, small, and medium enterprises to deepen usage among consumers and larger payers alike.

2. Leverage existing networks or platforms to deliver digital payment products and services to extend digital payment services more quickly and in a way that lowers the cost.

3. Establish a shared digital infrastructure for players to reduce barriers to entry and promote innovation, both in public and private institutions.

4. Establish interoperability to reduce barriers that confine digital transaction to a single payment platform to increase adoption and payments acceptance.

5. Develop a unique identification program that both public and private sector players can access to verify identities can drive digital payments and financial inclusion. Consumer protection frameworks are essential to ensure adequate privacy, security, and data control.

6. Digitize routine use cases that individuals frequently use for transactions can increase comfort with digital payments and increase digital transaction volumes.

7. Digitize government payments to advance a digital payments ecosystem by saving transaction costs and increasing civilian access to payments.

8. Digitize government receipts to promote comfort with digital payments among individuals and businesses, and ultimately reduces leakages and boosts revenues. Collaboration with private sector is key.

Establish regulation that promotes innovation and responsible practices, by understanding the gaps and barriers of existing regulation, and engaging all stakeholders.

9. Implement policies that incentivize and improve the convenience of digital payments to drive faster and more widespread access and adoption of digital payments.

10. Understanding these accelerators will help governments develop tailored approaches to best apply this knowledge in their appropriate markets. The report is accompanied with a toolkit to specifically help policymakers and important stakeholders to develop such programs.

The new report comes just as McKinsey Global Institute released projections that digital finance could lead to a $3.7 trillion GDP boost by 2025, create 95 million new jobs across all sectors, and save $110 billion annually in leakages in emerging countries.

"The new McKinsey Global Institute study on digital finance for all should inspire emerging countries' leadership to move quickly on creating economies where digital payments are widely available," said Dr. Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance.

The data compiled in the report also provides evidence of the benefits that digital payments, including: savings of up to $2 billion every year by digitizing fuel subsidies in India; trimming $175 million in annual revenue leakages in Tanzania through digitation of the port business-to-government payments; savings of over 30% in transaction costs in Brazil through government to people disbursements.

In Mexico, the report also noted that installing 20,000 point-of-sale devices resulted in 17% growth rate in transactions between 2014 and 2015.

"Building a digital economy can take significant work, but as the new data shows, it is completely achievable and will drive inclusive growth, helping people lift themselves out of people lift themselves out of poverty," Dr. Goodwin-Groen said.

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