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Jake Kendall – Gates Foundation

Jake Kendall – Gates Foundation. First, the poor’s existing options are bad.

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Jake Kendall – Gates Foundation

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  1. Jake Kendall – Gates Foundation • First, the poor’s existing options are bad. • In a recent survey we conducted in 11 countries in Africa, 50% (134m people) did some form of distant payment, and 50% of those were in cash, either sent with a traveling friend or family member or informal money carrier, or carried in cash while traveling. That’s 62m people a month, sticking cash in a plastic sack and risking it by sending it down the road in a bus. In 11 countries, 28% had sent domestic remittance to family and friends. 134 Bn in flows (annual) in 11 countries; 1.5 Bn transactions/year 35-45% in cash; median size $34 non-cash $24 cash. • Costs, risks also high. Convenience, speed, reliability, low. • Second, electronic payments can be a gateway product for other financial services: • Clients have high need (due to bad options, see above) and do them infrequently for large amounts thus willingness to pay is significant. • Unlike savings, credit, insurance, with payment, trust does not have to be sustained over time or over many iterations. (works both ways for supplier and client) • Instant, salient feedback that it works and delivers as promised. • Viral uptake… eventually • Payments platforms are multifunctional so once on board, can do lots of other things. Makes the poor a viable market where both fixed costs of entry (integration) and transaction costs are low. • Also begin to develop a financial history (if payments are electronic) that correlates with income and other financial characteristics • Third, when we get it right, the scope of the benefits are very broad. • P2P and informal sharing – very important • Easier to connect with formal institutions  • Financial services providers – a whole new range of financial services available, targeting the individuals niche. • Public sector efficiency gains and private sector market creation, macro efficiency too, potentially.

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