News / Economy

    Developing World Leapfrogs to Cashless Society

    Developing World Leapfrogs to Cashless Societyi
    X
    Bernard Shusman
    January 24, 2016 7:52 PM
    According to MasterCard, 85 percent of all transactions in today’s world are in cash. Only 15 percent are electronic. But things are changing, especially in the developing world. VOA’s Bernard Shusman reports from New York.

    Major credit card companies are expanding their efforts in emerging economies to help move from traditional cash exchange to electronic processing of transactions.

    From merchants in local markets to full service commercial bankers, credit card companies are encouraging new technologies to facilitate the growth of electronic accounts.

    According to Michael Fiore, MasterCard’s Executive Vice President of Global Product, there is a good reason the emerging countries to want money distributed differently.  

    “Governments are very interested in cutting costs.  “Cash,” he said, “is actually very expensive for a government.

    In fact, 1.5 percent of a country’s Gross Domestic Product is spent on handling cash... printing it, distributing it, securing it, collecting it, cleaning it.  It’s very expensive.”

    In addition,” according to Fiore, “there’s a crime factor.  Cash cannot be tracked,” he told VOA in an interview conducted at MasterCard’s Purchase, New York, world headquarters. “It’s very difficult to do that.  

    In fact, tax evasion, the black market and money laundering are all typically using cash to avoid being tracked.  Whereas,” Fiore continued, “electronic is a way to keep a transparent view of what cash is, how it is moving.”

    Cash still king

    According to MasterCard, even with all the new technology applications, fully 85 percent of all transactions in the world today are in cash and only 15 percent electronic.  

    One of the major growth areas for electronic card companies is the developing world.  Africa, India and Brazil are wider battlegrounds for card companies with vast numbers of people without bank accounts, and a growing middle class.  

    Scott Shay, chairman of Signature Bank of New York, told VOA “in the developing world new technology can be extremely helpful in helping those societies leapfrog some of the development that we went through."  

    For example,” he added, “the fact that in the developing world countries can go directly to cell phones, it means they don’t have to install the expensive infrastructure that we’ve installed in the United States and in other developed countries for our phone systems and for other telecommunication systems.  They can leapfrog that.”

    Innovation is the key.  MasterCard’s John Sheldon is in charge of innovation management.  His offices in Manhattan have that cutting edge look.

    He showed VOA the new hand-held facial recognition transactional software in action. The user validates a purchase with a picture of his or her face.

    Electronic ID cards

    In Nigeria, Sheldon has helped that country issue new ID cards.  

    He said, “so many of the people, particularly in Africa, don’t have a reliable means to verify their ‘Know Your Customer’ data and therefore aren’t able to participate in the banking system. So one of the big things we’ve done as a business at MasterCard is work with the country of Nigeria and we’ve helped them issue their EID, which is their Electronic ID, which has information similar to a driver’s license issued by the government."

    According to Sheldon, “It is a reliable data source so they can go ahead and participate in the banking system.”

    But the world is not standing still. Change is happening. Fiore of MasterCard gave an example of how his company is working with other emerging nations.

    “In South Africa,” Fiore said, “the government wanted to have a better experience in distributing Social Security. We worked out a system with South Africa to have Social Security distributed on a MasterCard.

    "They now have a safe place to keep their money,” he said, “as opposed to having it in cash.” Now, according to Fiore, 1-in-3 South Africans has an electronic account to use to receive their benefits.

    In Egypt, the government has also made a commitment to move to cashless.  With the help of MasterCard they’ve created mandates to allow mobile network operators and banks to allow consumers access to electronic accounts.    

    There’s still a long way to go for a fully cashless society. Basically, it is up to governments to decide how and when they join the cashless world.

    You May Like

    Hope Remains for Rio Olympic Games

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    Diplomats Hope to Revive Cradle of Civilization After Defeat of IS

    Diplomats from around globe gather at US State Department, discuss how to rebuild minority communities shattered by Islamic State group

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100% Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100% Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8998
    JPY
    USD
    103.32
    GBP
    USD
    0.7594
    CAD
    USD
    1.3176
    INR
    USD
    66.954

    Rates may not be current.