The Ford and Bill & Melinda Gates foundations, Omidyar Network, United Nations Capital Development Fund, United States Agency for International Development, Citi, and Visa, Inc. have announced the launch of the Better Than Cash Alliance.
With the goal of reducing the burdens imposed on the global poor by cash-only economies, the alliance will work with governments, the development community, and the private sector to accelerate the adoption of electronic payment systems and provide resources to those who commit to making the transition. To date, the governments of Peru, Kenya, Colombia, and the Philippines and the nongovernmental organizations Mercy Corps, CARE, and Concern Worldwide have pledged to digitize their disbursements and payments to the poor, thereby becoming eligible to receive technical assistance and financial support from the alliance.
According to The Journey Toward "Cash Lite": Addressing Poverty, Saving Money and Increasing Transparency by Accelerating the Shift to Electronic Payments (24 pages, PDF), a report commissioned by the alliance, 90 percent of the 2.6 billion people around the globe living on less than $2 a day rely on informal cash-only economies, which often act as a significant barrier to individuals and families hoping to break the cycle of poverty.
"Cash-only economies often make it too difficult to find a path out of poverty — it means it is hard to build up savings, cash offers too many opportunities for corruption, and women are often at risk when they have to carry their life savings in cash or gold rather than in an electronic account. For these many varied reasons, it is so important to begin the journey to electronic payments."
According to the alliance, shifting from cash to electronic payments also can lead to significant cost savings for governments, NGOs, and companies, while boosting transparency and economic growth. "We know that electronic payments can empower people and help grow emerging economies," said Christine Roth, deputy executive secretary of the UNCDF, which serves as the secretariat for the alliance. "Yet, while there are many benefits in shifting away from cash, the effort requires leadership, resources, and technical expertise. By offering these services to governments, private sector, and development community organizations, we believe we can accelerate the shift to electronic payments."