Ideas & Updates

ACDI/VOCA: Why Electronic Payments are Game-Changing for Development Practitioners

At ACDI/VOCA we see firsthand how technological innovations are revolutionizing approaches to global economic development. This is particularly true for electronic payments. Around 2.5 billion people around the world are “unbanked.” Without access to financial services, they can’t save for the future, build assets or get credit. For those who do have access, the services are often rudimentary and inefficient. Electronic payments open doors and create lasting benefits for this underserved population by providing access to robust, modern financial services.

And for us development practitioners, electronic payments are equally game-changing. They’re an instrument for financial inclusion that brings our products and services right into rural poor households. Beyond their efficacy for those we work with, electronic payments also make sense for our own organizational operations—they’re more transparent and efficient, and safer than cash.

The Better Than Cash Alliance understands this potential. We joined the Alliance to be part of the network of governments, development organizations and private sector companies spearheading the use of electronic payments to empower those in emerging economies. Institutionally, we’ve already made the decision to reduce dependence on cash. But some countries we work in have better platforms for electronic payments than others. Being a member of the Alliance will give us an opportunity to learn and to share knowledge with governments, organizations and the private sector to make the shift to electronic payments effective and efficient.

We’re exploring creative ways to use electronic payments to help the rural poor reach new markets. In Indonesia, for example, we’ve brought together a commercial bank, suppliers of inputs (e.g., seeds and fertilizer) and a large cocoa buyer to help smallholder cocoa farmers access high-quality inputs via bank loans through mobile money. The bank distributes a loan so that the farmer can buy inputs. At harvest, the farmer delivers cocoa to the buyer, and when accounts are reconciled, the profit above the initial loan amount is electronically transferred to the farmer’s mobile wallet account with the bank. If you’ve ever waited for hours in a series of lines in a small developing country bank just to make a withdrawal or complete another simple transaction, you know that the above scheme is an almost miraculous breakthrough.

The Better Than Cash Alliance will provide policy, technical and financial assistance to maximize the benefits of transitioning to electronic payments. This assistance will be valuable to members like us who are implementing electronic payments at all levels of our operations, within our projects or within the organizations, companies and even countries at large with which we deal. At ACDI/VOCA we commit to promoting awareness of and increasing the comfort level around electronic payments to bring this cost-effective and scalable tool to the rural poor. We’re excited to be part of an impressive movement working toward this aim.