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We discuss India’s UPI and compare it to other solutions developed for banking the unbanked in South Asia.
We talk about what we can learn and apply for the western banking system.
Show Notes
https://www.nytimes.com/2023/03/01/business/india-digital-payments-upi.html?smtyp=cur&smid=tw-nytimes
You can instantly pay a roadside vendor for a Rs. 10 cup of tea using a free government-provided phone app just by scanning a QR code. This is revolutionizing commerce in India–both online and offline.
Pakistan easypaisa: https://easypaisa.com.pk/
- Telenor EasyPaisa is a mobile banking service in Pakistan - financial services through their mobile phones
- Launched in 2009
- The service allows users to deposit and withdraw cash, send and receive money, pay bills, and purchase mobile phone credit using their mobile phones.
- Operates through a network of over 130,000 agents, who act as intermediaries between the customers and the banking system. These agents are mostly small shopkeepers
- the unbanked population of Pakistan, which is estimated to be around 100 million
- There were around 61.3 million active mobile banking users in the country as of June 2021, and Telenor EasyPaisa had a market share of around 21.6%
Bangladesh: mobile banking, microfinance
- Microfinance refers to the provision of small loans and other financial services to low-income individuals who do not have access to traditional banking services. It is often seen as a tool for poverty reduction and financial inclusion
- pioneered by Muhammad Yunus, a Bangladeshi economist and banker who founded Grameen Bank in 1983
- bKash, a mobile banking service launched in 2011, has become one of the largest mobile banking services in the world, with over 45 million registered users and a network of over 240,000 agents as of 2021. bKash allows users to deposit and withdraw cash, send and receive money, and pay bills using their mobile phones
Canada: Interac
- Interac is a Canadian payment network that provides electronic payment solutions for consumers and businesses. While Interac has made it easier for people to make digital payments and transfers in Canada, it may not directly help bank the unbanked population
- Interac requires users to have a bank account or a credit union account to use their services
- In Canada, the term “unbanked” refers to individuals who do not have a bank account or access to basic banking services. The latest data on the unbanked population in Canada comes from a survey conducted by Statistics Canada in 2019. According to the survey, an estimated 1.6 million Canadians aged 15 years and older were unbanked, representing about 5.3% of the population.
- In addition to the unbanked population, there are also individuals who are “underbanked”, meaning they have a bank account but still rely on alternative financial services such as payday loans and check cashing services. According to a report by the Financial Consumer Agency of Canada, about 1 in 10 Canadians are underbanked.
US: Venmo, Cashapp
- Venmo and Cash App require users to have a bank account or a debit card to use their services
- Venmo and Cash App have introduced features that may help improve financial inclusion in the United States. For example, Cash App allows users to sign up for a Cash Card, which is a prepaid debit card that can be used to make purchases and withdraw cash from ATMs. Similarly, Venmo has introduced a debit card that allows users to spend their Venmo balance at merchants that accept Mastercard