Bill Gates calls on payment systems to lower costs

Bill Gates has said that digital payment systems have the power to lift billions of people out of poverty, but transaction costs must be lowered to enable the technology to realise its potential.

The Microsoft founder and chair of the Bill and Melinda Gates Foundation told a packed audience of thousands at the closing of the Sibos Conference in Boston that emerging markets must take the lead in harnessing this technology.
“We think that digital payment systems can do more for equity in poor countries than they can do anywhere else,” Gates said. “This is not a case of waiting for trickle down like we do for much advanced technology.”
The idea that digital payments systems can gain faster and greater adoption in developing economies has been gaining traction across the financial and technology industry in recent years. Many believe that the lack of financial infrastructure in developing countries, which has traditionally acted as a barrier for financial inclusion, means people will be more likely to adopt newer more innovative systems.

M-Pesa, for example, a mobile payments service, which is widespread in Kenya and other African countries, allows users without a bank account to transfer funds through mobile text messages.
“There are some amazing things we can do once we get this stuff to critical mass," Gates said. “This is going to be absolutely pervasive.”
Gates said that it is essential that banks keep transactions digital, universal and almost free, and that costs must be kept to a minimum to a minimum in order to encourage take up and retention.
“You need extremely low cost and extremely high volume,” he said.
The World Bank estimates that 50% of adults globally, or around 2.5 billion people, do not have an account at a bank, credit union or other formal financial institution, with the majority living in developing economies.
In many cases these economies lack financial infrastructure like bank branches and ATMs.
Earlier this week at Sibos senior bank executives warned that tougher financial crime regulations are hampering the ability for banks to encourage banking in emerging markets, however Gates told delegates that mobile payment systems are the most attributable part of the financial economy.
“When some has a mobile phone in Africa, you can see who they call, where they are located and their whole transaction history and we have that on record. Would you rather have that or these hundred dollar bills that the US chose to print and hand out all over the world?,” Gates said.
Gates said this transparency, along with the social benefit, should act as an incentive for governments, particularly the US, to create regulations which encourage the take up of digital payment systems.