It is widely agreed that digital liquidity is an important goal for developing markets. Digital liquidity enables the Bottom of the Pyramid (BoP) to receive, retain, and pay with e-money, which provides safety, greater access to credit (and ease of access to related information), income growth, and other documented benefits. This paper explores the hypothesis that BoP merchants may be more prone to accept e-money transactions, and thus help the e-money system achieve “digital liquidity” if doing so would make credit more available/accessible. The approach employed to inform and test this hypothesis focused on studying the global use of “alternative credit underwriting” methodologies that often leverage one or more of the following
- Mobile device characteristics (make/model, OS installed, etc.)
- Mobile usage data (e.g., data/voice usage, top up behaviour, etc.)
- E-money transactions made and received
- Social media profiles and network activity
- Big data.
This paper specifically explores whether data generated by BoP businesses accepting e-money can be helpful in achieving digital liquidity, which may in turn provide additional incentive for BoP merchants to accept digital payments. This report is divided into three sections:
- Survey of in-market alternative credit data1 (ACD) programs to demonstrate diverse approaches and successes of using e-money activity and other alternative credit data.
- Analysis to identify common and best practices, lessons learned, feasibility, as well as impact on BoP e-money acceptance.
- Recommendations on how to further assess these opportunities and how to move forward.
As noted, programs like these, if effective and scalable, could encourage more micro and small businesses to accept e-money payments from their customers with the expectation that it could help these businesses obtain small loans to grow and sustain their businesses.