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What if your employer told you that your next paycheck would come in the form of  Bitcoin. How would you react?

Woman using mobile phone in olive farm

> Posted by By Chrissy Martin, U.S. Global Development Lab, USAID
Note: This post originally appeared on ICTworks and is re-posted here with permission.

Do farmers really want to be paid in mobile money? To answer this question, I’ll ask you to first entertain a brief thought experiment.

Imagine that your employer told you that next pay period, your company will start paying you in Bitcoin.  How would you react?  Sure you’ve heard about Bitcoin, but you have lots of questions as to what it will mean to receive your salary this way, such as:

  • Am I getting swindled?!
  • Where can I use bitcoin?
  • Can I spend it like dollars, or will I have to convert into dollars first?
  • Where can I convert?
  • How much is the conversion fee?
  • Will I be paid into my same bank account?

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A breakdown on gender diversity in the digital currency industry

> Posted by Jeffrey Riecke, Senior Specialist, Center for Financial Inclusion at Accion

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Is cryptocurrency a household word now? How about blockchain or Bitcoin? You don’t have to be immersed in financial services to regularly hear about the soaring values of digital currencies, the launch of new products and systems, and other industry developments. Just last week, for example, the Government of Venezuela announced that it was launching a national cryptocurrency backed by its petrol supply. Switzerland is doing the same. And they’re only two of a growing list of countries actively exploring alternative digital currencies.

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> Posted by David Porteous and Gavin Krugel, Chair and CEO, the Digital Frontiers Institute (DFI)

We have each been involved in the field of payments in some way or other for fifteen years at least. One of us (David) started through the design of a new credit card program for a bank; but soon had the opportunity to experience some of the earliest mobile payment schemes then emerging in Africa from 2003 and thereafter to be more engaged in the policy and strategy issues of mobile money. The other (Gavin) started as lost card call center clerk from where his payment career developed through new product design, delivery and management to being one of the early pioneers of mobile money.

In the early days of mobile money, there was no foundational training available which would have enabled us better to understand the height and breadth of the journey on which we were embarking. Both of us learned ‘on the job’—sometimes from other people more experienced than we were, and sometimes just through having to work through the issues ourselves. Learning on the job in a new field can be fun; but it also is slower. Today, we view as self-evident a range of issues which were anything but in the early days. We certainly had little idea at the outset that payments was a field in itself, worthy of our professional focus. If anything, we first experienced payments as an outgrowth of banking, done mainly by banks, for banks, for the purpose of collecting their loans, for example.

How the field has grown since then! Technological change has swept up and down the payment value chain. The number and nature of payment providers has exploded. So has the scale of related ambition to accelerate it further. In 2015, the World Bank President Kim launched the goal of Universal Financial Access by 2020, which means every adult on the planet having what amounts to a payment account—a safe store of value to and from which digital transfers can be made.

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> Posted by Center Staff

Good morning! It’s the start of another week, which means there’s a new issue of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. This week’s issue includes stories on the Islamic Development Bank supporting the Sustainable Development Goals (SDGs), the Bill & Melinda Gates Foundation’s research on bitcoin and blockchain technology, and the Reserve Bank of India (RBI) creating a new financial inclusion committee. Here are a few more details:

  • Last week the Islamic Development Bank’s Chief Economist asserted the importance of Islamic finance in achieving the SDGs and the Bank pledged over $150 billion over the next 15 years towards achieving them.
  • An interview with CoinDesk highlights the Gates Foundation’s recent research on how blockchain technology might be helpful as a means of settlement between payment systems and in international remittances.
  • The RBI created a committee to devise a five-year measurable action plan for financial inclusion covering areas such as payments, deposits, credit, social security transfers, pensions, insurance, and consumer protection.

For more information on these and other stories, read the sixth issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at ezuehlke@accion.org.

> Posted by Paul Breloff and Jeff Bond, Accion Venture Lab

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Remittances are big business. This year, customers will send $454 billion to developing countries through formal channels alone. Developing countries’ income from remittances is three times bigger than the global aid budget. If you exclude China, remittance flows even outweigh foreign direct investment.

However, remittance services have never been known for great customer experience. Here’s why:

First, they’re expensive. At the end of 2014, the global average cost of sending remittances was just under 8 percent of the value sent. For less popular remittance corridors, rates climb well into the double digits and can reach over 20 percent.

Second, they’re inconvenient. Coordination between senders/receivers, locating branches to send and receive cash, paperwork and red tape, and long lines – these and other factors often make the experience of sending remittances pretty miserable.

But the world is changing. A convergence of forces offers the opportunity to rethink the traditional remittance model, promising more money, time, and peace of mind for customers. What’s new?

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The most exciting trends and startups in inclusive finance this year

> Posted by Vikas Raj, Director of Investments, Accion Venture Lab

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There has been a lot of buzz in the financial technology (FinTech) space over the last several months, with a high-profile IPO, several more apparently on the way, and more and more venture funding flowing into FinTech startups. Bold ideas for financial services innovation are getting more visibility – just this month, Australian Wealth Index (AWI) listed the 50 Best FinTech Innovators, and CFI’s Elisabeth Rhyne conveniently categorized the list so it’s easy to see at a glance where the innovations are.

At Venture Lab, we found the AWI list interesting but also felt it missed something significant: namely, that one of the biggest opportunities for FinTech is figuring out new solutions to include the billions of lower-income people who are today excluded from formal financial services. And it’s not charity that compels us to reach these customers – it’s good business. These customers represent a big market. In fact, they’re such a significant part of any emerging market’s customer base that any global providers with dreams of international expansion must cater to them if they want to succeed.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Amidst all the excitement about disruptive fintech innovators it helps to sort out what innovations are actually at play. Australia Wealth Investors, together with KPMG-Australia and Australia’s Financial Services Council, have created a list of the top 50 fintech innovators for 2014, based on a combination of ability to raise capital and subjective judgment about the degree of innovation or disruption the company represents.

I clicked on all 50 (so you don’t have to) to get a sense of where the action really is. Here’s my quick and dirty categorization. It may help to read this to the tune of “The 12 Days of Christmas”, starting with:

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> Posted by Adriana Magdas, Specialist, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.

Cryptocurrencies, especially Bitcoin, the most famous, are the hot topic of the moment. In light of the shutdown of the most popular Bitcoin exchange in the world, Mt. Gox, and a loss of an estimated US$ 400 million worth of Bitcoins, it’s important to take another look at digital currencies, their pitfalls, and their relevance for financial inclusion. Hailed by many as the greatest monetary innovation of our time and by others as nothing but “libertarian exuberance,” cryptocurrencies show the opportunity that exists for financial transactions, especially international transactions, to move from cash to digital form. As someone working in financial inclusion, I have been wondering whether cryptocurrencies have any role to play in the critical path toward greater inclusion, which ultimately requires lower dependency on cash for low-income consumers.

Other cryptocurrencies abound—Dodgecoin, Litecoin, and Ripple are a few of the others—but Bitcoin, which launched in 2009, is the first decentralized mainstream P2P payment network and digital currency. Independent from hard, government-backed fiat currencies, Bitcoin is an internet-based, software dependent, inflation immune currency that can be purchased with cash and exchanged for services or goods with merchants who accept it. The market supply of Bitcoin is fixed at 21 million, meaning that once 21 million “coins” are in existence, the cash value will be fully determined by demand. In the last four years, the popularity of Bitcoin in developed economies has increased considerably, not necessarily because it’s an easier medium of exchange but because it is new, interesting, a source of revenue for Bitcoin miners and speculators, and because it decreases the costs retailers incur from accepting credit card payments. For example, Overstock.com is the first large online retailer to accept Bitcoins, in an effort to minimize the costs incurred from credit card transactions.

Does Bitcoin have any relevance for low and middle-income countries? As in developed economies, for P2P and P2C payments, its greatest benefit is in significantly decreasing the cost of sending remittances to friends and family. Bitcoin transactions are free, meaning remittance senders do not incur significant money transmitter fees.

But what are the challenges?

The challenges to Bitcoin in particular, and cryptocurrencies in general, are substantial. It will be a while before Bitcoin and other cryptocurrencies will be able to substantially help advance financial inclusion in developing countries. In the short-term, Bitcoin might take a significant chunk out of the profits of money transmitters and will definitely underline the appetite for monetary and payments innovation.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.