Payment and Financial Inclusions

2 billion adults worldwide live without a bank account and depends on cash for survival. Efficient payment system is fundamental to gaining access to financial services and decreasing unbanked rates. However, increasing the adoption of non-cash payment is a serious challenge to the banks which can take years to overcome.




  • High upfront investment cost is required for infrastructure development. Most of the developing countries, especially in more rural areas, may not have the reliable power supply and connectivity required to support it. As such, they may have to first play catch up on power and telecommunications infrastructure before they can play catch up on banking infrastructure. Developed countries’ solutions are built upon decades of stable infrastructure and has more sophisticated pool of human resources to support the operations that developing countries will need time to grow.
  • High cost and low business viability in extending financial services to remote rural populations. Pen and papers are still the most dependable means of conducting businesses in some areas.
  • Card penetration is low and expensive for merchants with razor thin margins. Adoption for online payment will be even slower with most payment done via cash-on-delivery due to trust deficit in financial system and fear of fraud. In developed countries, populations are generally accustomed to payment online with strong consumer protection laws and supported by clear legal framework.


  • Cash-on-Delivery is preferred method for 90% of online purchases which means logistics companies play an important role in merchants’ cashflow status. Compared to developed countries, a large part of benefits derived from e-commerce through online payment cannot be realised.
  • Agent banking model is essential to working with the unbanks.
  • Mobile proximity payment option is not ubiquitous. For example, India alone has 700 million cards but supported only by 700,000 card terminals. Mobile money charges can be very expensive in some countries.

However, what doesn’t work for developed countries may actually work for developing countries


In spite of the investments that has been poured into distributed ledger or blockchain research by the developed countries, it is unlikely that the real adopters of blockchain will be from the developed financial world.

  • Developed countries have a lot more mature and efficient centralized systems with high resiliency against single-point-of-failures with end-to-end redundancies. This has taken decades of investments to evolve and optimized to its current state.
  • The scale of continued investments in domestic real-time payment infrastructures in developed infrastructure project cost about US$ 100million a year according to SWIFT. Blockchain will never be as efficient compared to their existing infrastructure that has incurred high sunk cost.
  • The high impact risk to operational and mission critical core banking system change alone will deter banks from serious migration onto blockchain. Benefit is incremental at best with large part of population already accustomed to non-cash payments.
  • Developing countries on the other hand may never catch up with the payment infrastructure standard of developed countries comparing the rate of infrastructure spending, and neither can they afford the time to wait. They stand to suffer the most in opportunity cost by not capitalising on the exponential growth of the population’s online and mobile adoption. At the same time, they are exposed to fierce overseas competition from giant successful internet and social media companies that have the resources to phase out any local players, including banks.

Is leap frog the only way out?

This is not a rhetorical question. Developing countries have little legacy and technology baggage, large population with little alternative solutions, low compliance overhead to deal with. It has created an opportunity whereby a large leap in innovation may be an inevitable outcome of evolution. In fact, there is greater likelihood that real-world blockchain early adopters may actually come from the developing world.