Digital money is taking the world by storm, and it is probably because digital money is financially inclusive. If you want to learn how digital money broadens financial inclusion, here is everything you need to know.
The People Using Mobile Money
Firstly, we need to address the majority of people who use mobile money: young people. While it is definitely not limited to young people anymore (many people who are 40 years old and older use digital money), young people are more likely to make financial transactions through online payment methods.
Many young people prefer to send and receive money through mobile money because they can do it anywhere, at any time. All they need is their phones and an internet connection. The sender and receiver usually both need to have an account to use the mobile money platform, but they are relatively easy to sign up for. More young people are encouraged to set up mobile wallets than bank accounts, which is a good way to encourage the youth to get more responsible with money.
Some people may not have easy access to the banks. People in more rural areas may live far from a bank. However, if they have a phone, they can send and receive money through their digital money provider.
Alternative to Bank Accounts
Many people are unable to make a bank account (typically due to lack of IDs), while some people simply do not want to make a bank account. Luckily, mobile money usually uses other forms of verification, and many mobile money platforms only require one ID if they require a definite form of identification.
For instance, some groups of people in sub-Saharan African may struggle to create a bank account. Luckily, around 10% of the sub-Saharan African’s population that are under 40 years old can get financially included because of mobile money platforms. There is also a good amount of that population that only have a mobile money account (no typical bank account that you would get from a regular financial institution).
Why is Financial Inclusion So Important?
Firstly, everyone needs to send and receive money. While most people can receive cash on hand, it is not always convenient, and sending physical money through physical payment services can cost huge fees.
Plus, mobile money allows almost anyone with a mobile phone to create a mobile wallet. This means that people in rural areas can send and receive money from loved ones who live abroad, which is especially helpful for family members of OFWs.
Many teenagers and young adults tend to put off starting a bank account because it can seem like a chore. Mobile money takes away that pain and encourages the youth to take charge of their money.
Some people may not be able to make a bank account as mentioned earlier, and it can be tough for them to pay the bills, taxes, etc. Most places allow online payment methods through mobile platforms, making it easier for people without bank accounts to make transactions.