How Digital Payments Can Improve Lives Globally

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SEATTLE, Washington — “Digital payments” is an umbrella phrase for any exchange of money via digital devices instead of traditional banking implements like cash. Popular digital payment services in the United States, such as PayPal, Apple Pay and Zelle, among others, are used for nearly every exchange of money, whether it be for running a business, purchasing a product or service or simply paying back a friend for lunch. These services are an extra tool in developed nations. However, these digital payments are essential in developing local and national economies. Digital payment services, such as Indonesia’s app Gojek, WhatsApp’s payment exchange system introduction in Brazil and M-Pesa, a payment system with millions of African users, demonstrate how this new method of money management is helping impoverished communities improve their businesses and personal needs.

Gojek

One example of digital payments overseas is Gojek. Gojek is an app originating from Indonesia with the purpose of providing several online services to users, such as ordering food, purchasing products and exchanging money with others. The organization has acquired millions of users across Southeast Asia since its inception in 2010 and provides services for consumers, drivers and merchants alike.

Gojek has recently received investments from Facebook to bolster the growth of this digital service, develop the digital payments economy in South Asia and continues to grow and improve the lives of millions.

WhatsApp’s Payments in Brazil

Similarly to Gojek, Facebook has introduced new functionality to WhatsApp users in Brazil. Users of one of the world’s most popular messaging apps can now safely and securely send payments to their contacts and 10 million small businesses.

For Brazilians, these money exchanges are more convenient and secure and require very little effort. Moreover, the user can take advantage of the pre-installed app that millions already use. This improves local economies and makes people’s lives extremely accessible.

M-Pesa

A third example of digital payments is M-Pesa by Vodafone. M-Pesa is a digital payment platform that is prominent in Africa. M-Pesa shares similar functionality as Gojek and WhatsApp in that it enables users to send and receive money to anyone. However, it also has the ability to store that money in a mobile, secure digital bank. M-Pesa is even simpler in its usability for its 37 million users by using technology such as QR codes and SMS notifications to open its service to anyone that wishes to join.

How Digital Payments Help Impoverished Communities

These three digital payment services engage with different parts of a typical economy, but all provide similar benefits; they all help consumers engage in easier and safer economic practices that make their lives better.

For one, small businesses can see significant growth when users engage with digital payment methods. Gojek is a fantastic example of how digital payments can help bolster small businesses. Gojek businesses are accessible to millions of users and allow customers to engage easily with the organizations, when they may otherwise have not been able to. Gojek itself reports that its small business users have a better quality of life. For example, 100% of their delivery drivers state that their families’ lives have improved and they are confident in their abilities to send their children to school.

Another example of how digital payments make the lives of poverty-stricken people better is safety. For example, a large portion of Indonesian businesses and consumers still rely solely on cash to exchange. Millions of consumers in Africa also rely heavily on cash. Digital payment services help break people’s reliance on cash, which is more cumbersome than using an app to pay for goods and services. This broken reliance also assists in crime prevention in cash-based areas. With services like M-Pesa allowing anyone to safely and securely store their money out of the reach of thieves, impoverished workers who make cash wages in agriculture and manufacturing can ensure their money is spent on their own priorities.

Moreover, these services do not require expensive, flagship phones to operate. Basic smartphones can engage with all three of these services and more, causing vulnerable communities’ access to these services to skyrocket. Many smartphone models can often be less than $100, which puts them within reach of millions of people who would otherwise be absent from the digital payment side of the economy. With access to affordable devices and free digital payment services, the economy is more available to even the furthest reaches of a country where travel distance and costs may make money exchanges of all types, such as food or medicine, challenging.

Digital payment systems are the future of the world’s economies. However, while it is merely a convenience for developed nations, digital payments provide vital tools for millions of impoverished individuals to improve their financial stability and general well-being.

—Domenic Scalora
Photo: Flickr

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