Ruth Goodwin-Groen

The Digital Payments Future: Transforming the way the world addresses poverty

The expansion of digital payments appears to be poised to transform the way the world delivers economic empowerment and addresses poverty. During the 2013 United Nations General Assembly, a delegation of world leaders, including Mr. Bill Gates and Her Majesty Queen Máxima of the Netherlands, UN Secretary-General’s Special Advocate for Inclusive Finance for Development, gathered to bring greater attention to harnessing digital technology to alleviate poverty.

“For a lot of people, they may not recognize the importance of digital payments,” said Gates during his keynote address. “To them it is kind of under the cover … it seems like more of a tactic. But we all know it is a very fundamental thing.”

Technology is fueling advancements in many fields, including access to financial services through the introduction of digital payments. Studies show that better access to financial services has the potential to increase economic growth and thus reduce global poverty. Yet financial inclusion is just one of the many benefits that can be gained as cash is replaced with digital payments.

For example, members of the Better Than Cash Alliance often cite cost savings as the motivation for committing to shift bulk cash payments to digital payments. With billions of dollars distributed each year in the form of cash, governments, companies and development organizations have the potential to greatly reduce their transaction costs by digitizing payments. Electronic distribution is also more transparent (allowing better accountability) and more secure than cash (particularly important for women and girls).

The possible benefits to be gained are plenty, but each government or organization will find its own unique opportunities and barriers.

The Better Than Cash Alliance was launched to accelerate the shift from cash to digital payments and help government, private sector and development organization members overcome the challenges to implement it successfully. We’ve already made progress elevating electronic payments as a top development priority, mustering resources to make the shift possible, and documenting benefits and challenges. Now we are poised for implementation.

In the year since the Better Than Cash Alliance was launched, there are several key lessons that have shed light on how we can achieve the potential of digital payments and contribute to transforming the lives of those living in poverty.

  • Success requires collaboration and a focus on the payments infrastructure. The decision to digitize government benefits and other payments is often led by Ministries of Finance. However, the ability to implement a better-functioning government system requires broader collaboration with central banks and communications ministries to develop the infrastructure and implement the programs. For this reason, a key learning is that more minister-level leaders from finance, central banks and communications need to work together and incentivize technical-level staff to collaborate.
  • People need to have trust in money they cannot physically handle. As with any new technology, users of digital money must understand and trust the new system in order to change their behavior. Responsible digital finance can be achieved through an appropriate combination of a sound legal framework that supports innovation to reach people excluded from the formal financial sector and that offers recourse mechanisms, responsibly designed and delivered products, and opportunities to build the capacity of users so that they can have a positive experience and build their trust in digital money.
  • The transition must be supported by measurement. The Better Than Cash Alliance Development Results Focused Research Programme’s (DRFRP) work indicates that up to now, research has not focused on measuring the transition to electronic payments across an economy. However, economy-wide information is essential to advancing the decision to transition payments, evaluating progress and evolving the approach. As a first step, we are gathering data and case studies in five countries that have purposefully led a shift to electronic payments. We will use the collective knowledge across diverse demographics and economic landscapes to develop toolkits with practical steps for others to plan, measure and implement their own shifts in the future.
  • The benefits of digital payments extend to other advocacy efforts. The intrinsic ability of electronic payments to be tracked offers greater transparency than when cash is used. Systems that deal in cash leave the potential for corruption and leakage. This provides an opportunity to broaden the movement seeking to accelerate the transition away from cash by partnering with transparency and anti-corruption advocates to address several policy agendas with a shared effort that will move the needle more quickly.

As Queen Máxima noted in her address at the 2013 UN General Assembly, the Better Than Cash Alliance is one example of how the UN, by working together and with governments and private companies, is encouraging implementation of good practices and also assuring volume to nascent efforts in electronic payments.

We are encouraged to see many world leaders from a variety of sectors join in our effort to transform the payments landscape, and look forward to the future outcomes that will be shared by these players as they embrace digital payments.

Ruth Goodwin-Groen is managing director of the Better Than Cash Alliance, which partners with governments, the development community and the private sector to empower people by shifting from cash to electronic payments. To learn more, visit and follow @BetterThan_Cash.

digital payments, financial inclusion