Hosted by UNCDF, the Better Than Cash Alliance is a global partnership of governments, companies, and international organizations that accelerates the transition from cash to digital payments in order to drive financial inclusion and reduce poverty.

#UNCDFExpertsChat spoke to Dr. Ruth Goodwin-Groen, Managing Director at the Better Than Cash Alliance.

Ruth leads the Alliance’s efforts to accelerate the global movement from cash to electronic payments. This digitization of payments continues her work on poverty reduction as it is one means to increase transparency, efficiency and provide a pathway to financial inclusion, driving inclusive growth. Prior to joining the Better Than Cash Alliance, Ruth was the Australian Co-Chair of the G20’s Global Partnership for Financial Inclusion and the Financial Services for the Poor Adviser at the Australian Agency for International Development (AusAID). As a Senior Consultant for Inclusive Financial Markets at Goodwin-Groen Consulting for over 15 years, she worked with many of the leaders in financial inclusion. Ruth holds a Ph.D. from the University of Bath, UK, an M.B.A. (Distinction) from Harvard Business School, USA and; a B.Sc. Hons.I from the University of Western Australia.

#UNCDFExpertsChat: What is the development challenge you are trying to solve? How does the Better Than Cash Alliance solve that challenge?

Just think about what it means to live in a world with only cash. It’s extremely time consuming, expensive and dangerous. It means you need to pay and get paid in person, receiving a stack of cash from your employer or from your government and spend valuable time standing in line. This inefficiency also adds extra costs and reduces income particularly for low-income employees or small business owners who need to step away from their work. People who live in a cash-only environment do not have safe ways to save or build assets. Cash savings can get lost, stolen or are too easily accessed and are, therefore, not available when it’s time to pay for school or an unexpected financial shock. Even if families begin to move above the poverty line, they are often vulnerable to slipping right back with an illness, injury or natural disaster.

To help create a global movement that moves away from cash, we do three things: advocacy research and catalytic support of our members. All our government members commit to taking action, to work towards an inclusive digital payments ecosystem in their countries. Importantly, we advocate for the shift to digital payments to take place responsibly and responsively to clients’ needs.

#UNCDFExpertsChat: How does the Better Than Cash Alliance build public/private partnerships?

Collaboration between the public and the private sector is at the heart of what we do. It is absolutely crucial for unlocking the full potential of digital payments to drive financial inclusion and improve living standards. This is one reason why we have governments, companies and international organizations as members to encourage such partnerships!

One way we encourage such partnerships is by bringing public and private stakeholders together in a country to understand each other’s needs and challenges at what we call “ecosystem” events. In other cases, it means producing knowledge-sharing products about collaboration and partnership models that have been effective. For example, in Peru, we helped start the world’s first shared interoperable mobile platform “Modelo Perú”. And we are now helping guide policies that will drive further adoption of digital payments for which partnerships are essential.

#UNCDFExpertsChat: How does the Better Than Cash Alliance support the achievement of the SDGs?

Our central purpose is contributing to poverty reduction - SDG1: No Poverty. But when you look right across the SDGs, practically all of them are in some way are being advanced by the transition to digital payments. At the launch of the SDGs, member governments including Rwanda, Sierra Leone, Bangladesh, Philippines and Colombia, as well as the UNDP Administrator, all spoke enthusiastically about how digitizing government payments contributes to the SDGs. Whether its digital payments enabling the world’s poorest communities to access clean energy, provide reliable payments to high-risk health workers, or deliver food assistance securely to those facing hunger or building the infrastructure for a digital economy, digital payments are having a discernible impact in countless way.

There are a couple of specific SDGs I’d like to highlight though. SDG5 on Gender Equality is acutely relevant to our work. Most of the world’s financial excluded people are women, and digital payments offer vast opportunities to empower them, particularly in developing and emerging countries. SDG17 on Partnerships is very relevant, given our work enabling partnerships, collaboration and knowledge-sharing, particularly bringing together the private and public sector, as mentioned.

#UNCDFExpertsChat: The SDGs have a strong focus on leaving no one behind. How does the Better Than Cash Alliance’s work reach poor communities and under-served regions in LDCs? How does it reach women and vulnerable groups?

Great question. A big part of our advocacy and research work is focused on guiding our members in their efforts to put in place initiatives for underserved or low-income communities, recognizing particularly that women constitute the majority of the world’s financially excluded.

One of our most recent case studies focused on the garment production sector in Bangladesh which accounts for 13 percent of Bangladesh’s GDP and 45 percent of its industrial workforce. We looked at a group of factories that had digitized wage payments to workers – people who are typically on very low incomes, and 80 percent of whom are women.

In addition to finding very significant cost and time savings for factories, we found very high levels of satisfaction among workers, particularly women who often have limited control over their earnings when paid in cash, due to a tendency for household finances to be controlled by males.

Importantly, receiving wages digitally also acts as an introduction to a range of other ways to use digital payments that can make a material difference on the everyday lives of people on very low incomes. This is just one among countless examples that we find very encouraging.

#UNCDFExpertsChat: Can you give an example of how the Better Than Cash Alliance has made a difference to the lives of poor people and communities?

A better question is how have digital payments - which we advocate for and help enable by supporting our members – have made a difference to the lives of poor people and communities.

There are countless examples that provide fascinating and compelling answers to that question. For example, we’ve just released a case study on a non-profit organization in Kenya, a founding member of our Alliance, that addresses rural poverty by providing farmers with farming inputs on credit, as well as training in better agricultural practices, and uses digital technology to enable farmers to repay their loans digitally. Digitizing repayments has cut loan repayment leakages by 85 percent and processing costs by 80 percent which means the non-profit One Acre Fund can offer more loans, and devote far greater resources to providing agricultural experts to improve farming yields and sustainability. Farmers participating in the program have reported incomes on average 48 percent higher than their peers of a similar size in the same area. For people on very low incomes, that makes a very substantial difference. It can be the difference between children going to school or not.

#UNCDFExpertsChat: What are the lessons learned from the Better Than Cash Alliance’s implementation so far?

One of the key lessons we have learned is that while there is a growing body of evidence showing how powerful digital payments can be in driving financial inclusion and economic opportunity, that knowledge has been highly fragmented. There hasn’t been a coherent, adaptable framework available to governments and businesses about how to realize these gains, and that has tended to limit the ability to learn from the experiences of others.

To address that gap, we recently released a paper that studied 25 countries where digitization has had a significant impact, including many of our members, and distilled from that study 10 tangible steps, or “accelerators,” that governments and companies can take to build inclusive digital economies. These include steps like promoting merchant acceptance infrastructure, developing a unique identification system and establishing regulation that promotes innovation.

As part of our work as Implementing Partner of the G20’s Global Partnership for Financial Inclusion, we have also developed a guidance note that provides policymakers with an overview of the major practical issues to consider when planning the expansion of financial inclusion through digital payments ecosystems. The guidance will be endorsed by Heads of State and Government at their summit in Hamburg in July.

#UNCDFExpertsChat: What can we look forward to in the future of the Better Than Cash Alliance?

In member countries, we’ll be continuing our work on ecosystem development, particularly working with governments to identify use cases which could be effectively digitized, and helping guide government policy-makers through that process, using lessons learned in other markets where they are applicable. So there’s a lot of fascinating work coming up for us!

At the same time, we’ll be further ramping up our work with private sector companies to increase understanding of how their business models can support further digitization.

A great example of learning lessons is our recent study of two major Chinese companies WeChat and Alipay which looks at how social networks and e-commerce platforms are being successfully leveraged to support the development of one of the world’s largest and most sophisticated digital payments ecosystems. The report shows how incorporating digital payments into existing services has unlocked economic opportunities for hundreds of millions of users, including through low-risk savings accounts, new credit assessment and lending services, and by opening up new markets for micro, small, and medium enterprises. Importantly, as China’s economy is unique, the report provides lessons that can be assessed, and where relevant, applied in other markets beyond China.

#UNCDFExpertsChat: What's exciting about working in this space?

The opportunity to make a big difference in driving growth and poverty reduction is the most exciting thing about working on digitizing payments. When we help our members put new policies in place or work on global initiatives that open up opportunities for a genuinely better life, that is both exciting and rewarding. It’s also a real thrill to see the technological advances and innovation of members that is recognized in their global leadership such as Peru, Kenya, India, Bangladesh, H&M, the Word Food Programme and many more. I can’t wait to see what comes next!