The Inter-American Development Bank (IDB) is the first regional development bank to join the Better Than Cash Alliance, a partnership of governments, companies, and international organisations that works to accelerate the transition from cash to digital payments to help drive inclusive growth and reduce poverty.
“The IDB has already done a lot of work on digitising payments,” Tidhar Wald, Government and Corporate Relations Specialist, Better Than Cash Alliance told Development Finance. “As the main source of multilateral development financing in Latin America and the Caribbean, the IDB has supported both the public and private sector in the region, in their efforts to move towards greater use of electronic payments, to benefit from transparency, efficiency and speed, while reducing transaction costs.”
According to the alliance, there is a growing trend that digitising payments boosts transactional efficiency, reduces costs, improves transparency and accountability, unlocks domestic resources, and drives financial inclusion in the places that need it most.
“Since one of our main focus areas is fostering peer learning between our members, we will work with the IDB to showcase examples of how governments and companies have gone about digitising their own payments and promote learning exchange,” added Wald.
The Latin American region is taking a lead in digital payments, most notably in Mexico, Peru, Colombia and Uruguay, all members of the alliance. In Colombia, 69 percent of money ‘changing hands’ is paid digitally. In Mexico, Grupo Bimbo, the world’s largest baking company, is promoting digital payments to further develop small business shops in the country.
“We are delighted that the IDB has become the first regional development bank to join the Better than Cash Alliance, because we share the [alliance’s] commitment to promoting financial inclusion as a way to reduce poverty and improve people’s lives,” said Bernardo Guillamon, Manager of the Office of Outreach and Partnerships, IDB.
The IDB has worked with a number of countries throughout the region to help them transition to digital payments for government transfers to low-income families. In addition, the IDB has encouraged governments to use new technologies, such as tablets and cash machines, to provide financial education and simplify bill-paying for consumers who previously did not have access to banking services. Such policies not only promote financial inclusion but result in cost savings and greater efficiency for governments.
Although specifics of the partnership are yet to be released, Wald did say that the alliance will work with the IDB to build digital payment ecosystems across member countries and bring together key public and private sector actors, to assist governments, companies and citizens to make and receive payments electronically.
“We are indeed hoping that other regional development banks will follow the IDB’s lead and join the Better Than Cash Alliance,” said Wald. “The IDB’s work should be a source of inspiration for those seeking to empower people and drive inclusive growth by using innovative payment solutions.”