September 27, 2012 02:00 PM
By Bob Annibale, Global Director, Citi Microfinance and Community Development
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This week, Citi helped to launch the Better Than Cash Alliance, a coalition of public, private and NGO partners that will call on governments, the development community and the private sector to adopt the use of electronic payments for programs that support the underbanked -- and provide resources to those who commit to make the transition.
According to a report commissioned by the Better Than Cash Alliance and released by specialist consultancy Bankable Frontier Associates, roughly 2.6 billion people live on less than $2 per day and 90 percent of them lack access to formal financial services, mainly operating in a cash-only economy that is vulnerable to theft, loss, lack of transparency, and inefficiencies.
Encouraging a global shift to electronic payments creates an opportunity for payees to move beyond cash, save for the future, build assets and move out of poverty - and the Better Than Cash Alliance knows that governments, the private sector and the development community can play a pivotal role in driving that transition. Instead of making billions of cash payments, including disbursements of salaries, payments to vendors, pensions, social welfare stipends, cash-for-work programs, and emergency relief payments, these large payers can tap into existing payment systems to move money electronically. In doing so, they not only will unlock access to financial services for millions of people, they will also realize increased cost savings, transparency, and security.
Already, the governments of Peru, Kenya, Colombia, and the Philippines, along with development organizations including the U.S. Agency for International Development (USAID), the United Nations Development Programme, the World Food Programme, Mercy Corps, CARE USA and Concern Worldwide, have committed to digitize their disbursements and payments to people living in poverty, thereby becoming eligible members for technical and financial support from the Better Than Cash Alliance.
Together with our other founding partners, including the U.N. Capital Development Fund, USAID, the Bill & Melinda Gates Foundation, the Ford Foundation, Omidyar Network, and Visa Inc., Citi is working to leverage its longtime global electronic payments leadership to move people into the financial mainstream and to create efficiencies for clients and customers. Follow our progress at betterthancash.org.