Ideas & Updates

Responsible Digital Payments: Reducing the risks that come with new opportunities

© ©Bill & Melinda Gates Foundation/Frederic Courbet

It’s all at our fingertips. The possibility to make a payment. The delight of receiving one. From Peru to Rwanda to India, people, governments and businesses are increasingly making their payment transactions digitally, whether by mobile phone, by card or online.

Technology has opened up opportunities to save time and money and to increase the convenience and security of making transactions. But with these opportunities come new risks: Those who have been financially excluded or underserved—and who may also have low levels of technological capabilities—may be the most vulnerable.

In consultation with a broad range of government, industry, and civil society stakeholders, The Better Than Cash Alliance has developed the Responsible Digital Payments Guidelines to reduce some of the risks, especially for the most vulnerable. These Guidelines show what underserved clients expect from a digital payments market which treats them fairly and with respect. Consistently applied, they can build trust in and use of innovative payments services such as e-money transaction accounts, help meet financial inclusion goals, and build robust, sustainable markets that work for both clients and industry. They can serve as a critical tool for a world where there are still 2 billion unbanked adults, according to the 2014 Global Findex.

The Guidelines set out the key good practices that show respect for digital payment clients and provide practical examples of each. The good practices are below with further details here:

  1. Treat Clients Fairly
  2. Keep Client Funds Safe
  3. Ensure Product Transparency for Clients
  4. Design for Client Needs and Capability
  5. Support Client Access and Use Through Interoperability
  6. Take Responsibility for Providers of Client Services Across Value Chain
  7. Protect Client Data
  8. Provide Client Recourse

Responsible practices build trust and confidence in both acquiring and using innovative digital payment services. When designed well and linked to accounts, digital payments can contribute to greater financial inclusion particularly for underserved groups, including women who particularly value the convenience, privacy, and security of digital payments.

“Anything worth providing, is worth providing transparently,” says Dr. Bitange Ndemo, Former Permanent Secretary of Kenya’s Ministry of Information and Communication. “This is all the more important for people who may be making and receiving payments digitally for the first time. It is incumbent on providers to give people the full and clear information they need to make decisions that are right for them.”

Furthermore, broader uptake of responsibly provided digital payments can help bring more people and businesses into the formal economy.

As Mr. Dasgupta Kumar of bKash notes “We want our clients, who are mostly unbanked and new to digital payments, to feel that they are being respected and treated fairly and served with special care by our agents and service points.”

The Responsible Digital Payments Mapping, to be published in August, notes dozens of initiatives and/or standards or codes that address certain aspects of responsible digital finance. The Better Than Cash Alliance Responsible Digital Payments Guidelines draw on these in establishing guidelines that are provider and technology neutral and focus on the underserved market

To put the Guidelines into practice requires action by the providers of digital payments, and the engagement of policymakers and regulators, as well as the support of development partners to facilitate implementation. Given the pace of innovation, there is no doubt that these Guidelines will evolve over time. So we must test and learn, but we need to do so in ways that protect the client to the best of our ability with the information and experience we have. These Guidelines are intended to do just that.