Today, the U.S. Agency for International Development (USAID) and Citi announced a global partnership to broaden financial inclusion by fostering the rapid adoption of “mobile money” technology in developing countries. The announcement was made at USAID’s Frontiers in Development Forum at Georgetown University. Of the five billion mobile phone users worldwide, nearly two billion lack access to banking services, instead relying on cash transactions that expose them to potential theft, fraud or loss, and high-cost lending and remittance providers that leave them vulnerable to endless debt and high fees. USAID and Citi will work with governments, donors, industry and other participants in the payments system. USAID expects to continue to support local mobile money platforms with over $23 million, and Citi will integrate its core banking services with mobile money platforms to provide seamless integration between banking and last-mile, mobile-based payments services.
The partnership will expand current USAID efforts in mobile solutions and focus on implementing a set of principles in nine countries, with an initial emphasis on Colombia, Haiti, Indonesia, Kenya and the Philippines. The set of principles is outlined here.
USAID and Citi share a common belief that expanding the adoption of mobile financial solutions is a critical economic development strategy with the potential to drive growth and increase financial access and security for the developing world’s poor population. The effort seeks to strengthen alternatives to a cash-based system that is inefficient, costly and prone to corruption.
USAID Administrator Raj Shah said, “The ability to store and transfer money, as well as to make small payments using mobile phones, has the potential to lift millions out of poverty, just as the Green Revolution did in the 1960s. Our partnership with Citi, a global banking leader, will accelerate implementation of these new services in a smart and safe way.”
“Mobile money is a game-changing endeavor with the potential to improve lives, create jobs, catalyze new enterprises and expand financial inclusion, particularly in the emerging markets that are critical to the growth of the global economy,” said Citi CEO Vikram Pandit. “Citi has a rich tradition of Ingenuity that enhances our clients’ lives through innovation and is one of our company's core principles. As we approach our 200th anniversary on Saturday, we are proud to work with USAID to accelerate mobile money adoption with tools and solutions that eliminate barriers to access, improve security, and enhance education.”
A frequently cited model for mobile money success is Kenya, where mobile phones now connect more than 70 percent of households to the financial system, primarily though the payments service M-Pesa. Millions of Kenyans who previously operated largely on a cash-only basis are now able to rely on mobile money for many of their financial activities. For example, PATH, a leading health technology organization and implementing partner of USAID in Kenya, is now able to electronically distribute payments directly to M-Pesa users through CitiDirect, a world-class electronic banking system. Funds are able to flow from their source through financial “pipes” to end users, without ever being converted to cash. The same technology now makes it possible for users to also receive salaries, make deposits, receive and repay credit-building loans, and pay bills – all without cash.
“Public-private partnerships are the future of health innovation, information-sharing, and communication technologies for communities with scarce resources,” said Steve Davis, president and CEO of PATH. “PATH and our partners are looking at ways mobile money platforms can expand health coverage in appropriate, scalable, and sustainable ways in Indonesia, Kenya, the Philippines, and other countries.”
Developing countries with similarly large populations of poor mobile subscribers, including Tanzania, Colombia and the Philippines, are experiencing the promising benefits of mobile money, although market penetration is still limited. USAID and Citi seek widespread transition of payment streams from cash to mobile money requiring the participation of government entities, often the largest providers of payments, in most markets, including salaries and benefits. A principal aim of the USAID-Citi collaboration is to support the inclusion of mobile finance into strategic plans, support for conducive and appropriate environments for adoption, and development of the structure that will form the foundation for a safe, trusted and convenient mobile money system. Together, USAID and Citi will use their relationships and resources to create in-country networks composed of local experts in mobile money, governments and organizations with major cash-based operations to promote dramatic uptake of mobile money.
Citi is already a leader in the mobile finance field and is working with governments, corporations, NGOs and microfinance institutions on mobile money initiatives that cut across client segments, regions and businesses. Through Citi Transaction Services and Citi Enterprise Payments, Citi is using its payment “pipes” to connect institutional clients to mobile channels worldwide. Through its partnerships with América Móvil and Google, Citi offers consumer-focused digital solutions like Transfer and Google Wallet, which provide customers with mobile wallets and innovations like the world’s first smart phone tap and pay technology. As a part of its alliance with USAID, Citi will integrate its core banking solution with mobile money operators to enable its corporate and government clients to leverage mobile payments to reach the “last mile.”
The American people, through the U.S. Agency for International Development, have provided economic and humanitarian assistance worldwide for over 50 years. For more information about USAID and its programs, please visit www.usaid.gov.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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