Yet, if nations adopt real-time payments designs that add interoperability and financial inclusion principles, then more of the population – especially women – would be connected to the global economy and more emerging countries’ GSP would gain $3.7 trillion by 2025, according to McKinsey Global Institute. High fees and payment systems that don’t interoperate with each other are both barriers that keep underserved women from becoming economically active. Without change, it could take women an estimated 250 years to erase the economic gender gap, according to World Economic Forum.
Open, accessible, affordable real-time payments systems would have a tremendous positive impact on unbanked women. The United Nations estimates that there are more than 740 million women in informal employment worldwide. Consider how female employees receiving their salaries directly to their mobile wallets in an interoperable Mojaloop-based system could positively impact their communities, along with education, health and the emerging economy. Second, there is the expense of building out proprietary networks and systems. It can be costly and complex to build interoperable systems that are inclusive to all, which means providers often end up charging high transaction fees — or not building anything at all for developing markets.
The first is the lack of interoperability with mainstream financial providers, such as banks, microfinance institutions, and other digital financial services providers. This keeps customers in silos and puts a limit on potential transactions. These silos and high fees keep those underserved with a mobile phone using cash instead of digital financial services. An open-source interoperable payment blueprint offers a way to reduce the cost and complexity of adopting payment interoperability more broadly by more countries, systems integrators, aggregators, and other payments innovators.
So why, given the rise of mobile wallets making cashless transactions easier all over Africa, does there remain such a wide financial inclusion gap to fill? Two key barriers to financial inclusion remain. Both are seen in numerous economies, including many across the African continent. Closing the Financial Inclusion Gap Involves Reducing Barriers, Especially for Women
Using an open-source interoperable real-time payments blueprint, they can influence the platform’s strategy and leverage the efficiencies of a local and international development community, respond rapidly to security fixes anchored on system-wide fraud and security protection, and encourage their local technology communities to build what is truly meaningful and relevant to their countries. It’s a path more emerging countries – and even huge regions like the continent of Africa – are starting to take to build interoperability and inclusion into the backbone of their systems.
By incorporating interoperability and financial inclusion principles, women benefit. In developing countries such as Kenya, Côte d’Ivoire, Bangladesh, Nigeria, and South Africa, women found it easier to access and use digital financial tools designed with financial inclusion principles in mind, according to research byDFS Labs. Not only did the research find that lower and more transparent fees have a potentially greater impact on women’s limited budgets and may create a differential positive impact for women, but it also revealed the following impacts: More digital financial services innovation, variety, and choice results in a more positive effect on women than men, both in time and cost savings; Application of the financial inclusion principles payment model design positively impacts women more than men. Open source brings a unique opportunity for tech start-ups and developers to be the builders and shapers of inclusive payments systems of tomorrow for emerging economies. They can also help innovate for other nations. For example, if one country adds an innovative new feature, it will be relatively simple for other countries to add this feature as well. With many countries contributing to and using the same system, the benefits of the platform can be scaled up and thereby extend to everyone. The Bank of Tanzania’s Instant Payment System (TIPS) and Mowali, which includes two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, are early adopters of Mojaloop’s interoperable payment reference model design based on financial inclusion principles. Here, interoperability is key to enabling low-cost, real-time interoperable payment services that benefit all.
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