Financial inclusion has been a major challenge for developing economies for many years. The reason it is such a hot topic, especially in Africa, is that many governments have identified it as one of the key enablers for sustainable economic growth. When too much business activity is conducted informally, outside traditional financial systems, governments lack the controls they need to effectively manage their economies and stimulate growth. In some cases, operating outside the boundaries can be intentional, but for many, being “unbanked” is not a choice.
Many countries that achieved high growth rates after the GFC, failed to see the high growth translate into poverty reduction and new employment opportunities. As history has shown, when low-income and other vulnerable groups are excluded from financial opportunities, civil unrest and political instability follow,, which negatively impacts on economic growth, taking the economy into a downward spiral.
“Broadening access to financial services will mobilize greater household savings, marshal capital for investment, expand the class of entrepreneurs, and enable more people to invest in themselves and their families” African Development Bank Group, 2013
Although the need for financial inclusion is well understood, the solution has proved elusive. The barriers to inclusivity in developing countries are usually formidable. Access to education, communications services, and financial and banking services pose special challenges, especially in Africa. The barriers include distance from a financial service provider, lack of necessary documentation papers, lack of trust in financial service providers, and religion.
Even though over 2 billion people do not have access to formal financial services and more than 50% of adults in the poorest households are unbanked, mobile phone penetration in many developing economies is close to saturation. And this creates an opportunity for fostering financial inclusion.
While some progress has been made through new technologies such as mobile money, there has never been a break-through payments solution that has the potential to displace cash and profoundly change the financial situation of the unbanked and financially excluded. To do this, the solution needs to meet three key adoption criteria:
- It must be affordable: inexpensive to deploy and use, even for the smallest transactions.
- It must be versatile: suitable for use both by traders and all segments of the general public and which covers a broad range of transactions, including purchases, transfers, credit payments, e-commerce and insurance.
- It must be simple: accessible to users with low financial literacy.
At Bluechain, we have developed a truly ground-breaking payments technology that has the potential to finally displace cash, promoting a cash-lite economy and financial inclusion. Bluechain is an overlay service which works with existing switches, employing virtual cards to represent bank accounts and bank-based deposits, supporting payment requests on any payment channel. Bluechain enables the previously unbanked customer, merchant or trader to access financial services that were previously either too expensive or too exclusive, via an easy to use mobile app that can be downloaded to their mobile device. Bluechain is the only payment platform that is capable of delivering on all three of these adoption criteria.
Bluechain transactions are secured by a new patented paradigm that offers the same high level of security to online and over-the-phone payments as it does to in-store and peer-to-peer payments. By removing the need to disclose personal information or banking or account details, Bluechain security eliminates the major causes of card fraud and associated costs. Costs are further reduced by allowing merchants and consumers to use their existing mobile phones and tablets, without the need for expensive point-of-sale (POS) terminals or a bank-issued credit or debit card.
Bluechain puts the customer in control of all their payments from a single mobile device without the need for a credit or debit card. Bluechain utilises the latest technologies to provide secure, cost-effective and simplified transactions in every possible payment scenario. In addition to providing new, secure and low-cost methods of payment, Bluechain also supports and enhances the use of traditional card schemes, bank accounts and mobile wallets.
The same easy-to-use app is used for every transaction, regardless of whether it’s made online, in-store, peer-to-peer or for billing. Compare that with the bewildering array of apps, devices and methods you currently need to employ when making and authenticating payments to an online merchant, a bill payment, a money transfer or an in-store purchase. And merchants and traders use the same app to request payments and send bills as their customers do to receive and authorize payments. It really doesn’t get any simpler than that.
“Digital financial technology… particularly the global spread of mobile phones, has facilitated expanding access to financial services to hard-to-reach populations and small businesses at low cost and risk.” Financial Inclusion, The World Bank
Bluechain is an independent payment scheme designed to run as a domestic payment scheme, which allows central banks and governments to take control over the sovereignty of their payments data while still being connected to an international payments backbone. Bluechain offers both an innovative and robust solution that finally provides a means to successfully embrace financial inclusion, while also meeting many of the other financial needs of developing economies.