But while the use of digital financial services has exploded over the past decade, 1.4 billion people around the world, and nearly one in three adults in low- and middle-income countries, still do not have access to a digital financial account. All of their transactions must be handled in person, using cash or through barter, adding extra hardships for families already living in or near poverty.
Without a digital account, getting paid and paying bills can often involve traveling long distances, which can be especially difficult for women caring for small children. In many countries, women also cannot easily access cash, hindering them from job or business opportunities. It’s also harder to save and impossible to earn interest. And when a catastrophe like COVID-19 hits, people without digital financial services—usually the families most in need of help—have a harder time receiving direct aid from the government or from friends or family.
Evaluating at a global scale
A 2023 United Nations analysis found that building digital public infrastructure (DPI) in low- and middle-income countries to provide currently unbanked individuals with digital payment, money transfer, and credit services could speed up GDP growth in those countries by 20% to 33%. Up to 730 million more people could access digital payments, 16 to 19 million more small businesses could obtain credit to help them grow, and direct benefit transfers would increase by US$17 billion to US$21 billion, or US$80 to US$100 per household.
Given these outsized benefits, extending digital financial services to everyone should be a no-brainer. But commercial banks don’t operate as charities: Every transaction they’re involved with must be profitable, and there’s not much profit in reaching those living on less than US$2 a day.
Several years ago, to help close this gap, the Bill & Melinda Gates Foundation began funding the creation of free, open-source, and interoperable “digital public goods” that any country or entity could use to bring more citizens into the circle of financial inclusion. These open-source technologies give countries new options for building out their DPI in a way that ensures national sovereignty over the data and systems and for giving all citizens access to safe, secure digital financial services.
In steps Mojaloop
Among these goods is Mojaloop, an open-source software solution that enables governments and financial enterprises users to launch and maintain an inclusive instant payment system (IIPS)—a system that allows anyone with a mobile phone to access digital financial services and the opportunity to participate in the digital economy.
Eight years after the Mojaloop project launched, and four years after the Mojaloop Foundation was created to support adoption of the software, I’m delighted to say that innovators around the world are taking advantage of this exciting new technology. In Rwanda, the Philippines, and elsewhere, Mojaloop deployments will soon extend the benefits of digital financial services to millions more people.
Rwanda’s digital payment breakthrough
In the video above, Sharon Umunyana, a technical project manager for the Rwanda Information Society Authority (RISA), talks about how and why she and her team have been working on one of the first national deployments of Mojaloop.
Established in 2017 to champion Rwanda’s digital transformation and lead the construction of the country’s DPI, RISA was looking for a digital merchant payment system that could reach the many unbanked populations outside Kigali, the capital city, and also be owned and operated nationally, thus decreasing Rwanda’s reliance on foreign payment vendors. Mojaloop met both of those key requirements with an off-the-shelf package that let Umunyana and her team skip over much of the complex work that would be needed to build such a system from scratch.
Without Mojaloop, Umunyana says, it would have taken them two years or more just to build a payment switch—a software solution that helps move payment transactions between different banks and digital payment providers. The creators of Mojaloop “thought about current scenarios in the world and even predicted some of the functionalities that would be needed in the future and then provided that for any country, anyone who wants to implement their own switch,” she says. “You can use it as is, or you can choose to customize it to your liking. It’s been easy to work with because they’ve already developed everything for us. We’ve just customized it for the local context of users and digital financial service providers.”
