KATE THOMPSON DAVY

In October 2015, I was a guest of MasterCard, at the fascinating MasterCard Innovation Forum in KL, Malaysia.

The rate of change and innovation around digital payments is startling, and exciting, and holds huge opportunity for changing the way we operate – as businesses, consumers, and even as states. Below is an extract of a story I wrote for Business Day (published both in the print edition and on the website) focusing in on one particularly compelling aspect of the conference – financial inclusion:

“MOBILE money systems not only lift people out of poverty, they can also aid in closing down opportunities for state corruption, improving the lives of all.

The World Bank estimates that more than 2-billion adults globally do not have a bank account and remain outside the formal financial sector. In developing economies, only 41% of adults have bank accounts.

Being “banked” offers people certain protection. It enables them to save more effectively, distribute money to dependants more efficiently and across distance, and can be a path to accessing regulated, affordable credit and employment in the formal economy.

It is often a major stepping stone in the transition out of poverty, making it a primary goal for many philanthropic organisations.

SA enjoys relatively high banking penetration for a developing nation, with seven out of 10 adults banked and little gender disparity. Lower down the economic ladder, though, 57.8% of the poorest 40% of South Africans are banked, and only just more than half of young adults.

Two of the biggest drivers of inclusion figures — up from 45% of the population in 2004 — were the introduction of Mzansi accounts (low-fee transactional bank accounts) and later the South African Social Security Agency (Sassa) initiative.

According to the FinScope 2014 report, a third of the banked population have Sassa cards (linked to Grindrod Bank accounts) through which they receive state benefits.

Only 14.4% of South African adults have mobile-based accounts, according to the World Bank — and the GSMA Mobile Economy Africa 2015 report pegs this even lower, at 7.6%. In Kenya, where 75% of the population is banked, 58% have mobile accounts and more than 50% of adults use their mobile devices to pay utility accounts.

Digital payment systems allow for a saving of up to 90% on the cost of transactions, according to Sacha Polverini, a Gates Foundation senior programme officer and a panellist at the MasterCard Innovation Forum in Kuala Lumpur, Malaysia, last month.

To read the full article, click here.