from Hacker News

Digital money will include the unbanked

by zhoutong on 2/4/15, 5:23 AM with 11 comments

• by nowarninglabel on 2/4/15, 6:11 AM

  The problem is that many countries, especially the EU and US have strong anti-money laundering efforts in place (stronger after 2001). Not to mention the draconian banking laws in some places like Brazil and India. Further, the same people who don't have documents to get an account are going to lack the knowledge and access to use a digital service for banking. So, while this optimistic approach to digital banking sounds nice, it doesn't actually work well in practice.

  Of course, there is a lot of hope for new mobile money, like M-Pesa, but even with it the reality is fairly slow adoption rates. There's some good articles on the subject via Microfinance Gateway, could dig them up if anyone is interested.

• by zamalek on 2/4/15, 12:54 PM

  ePula[1] is already in wide usage up the east coast of Africa. It is a digital currency that works with even the most basic cellphones.

  South Africa as a different datapoint is mostly digital. I haven't personally walked into my bank in 2 years.

  With all that said, the thing that most people forget when they talk about "transforming the developing world" is that the developing world doesn't want your technology. The poorer classes in South Africa typically go to ATMs and draw out their entire salary the very day that they earn it: they have absolutely zero interest in banking services. The only reason they have a bank is because their employer wishes to pay them via a bank. They want the physical cash in their hands.

  If you came to them and said, "here is a digital bank service" they would likely pay no attention and rudely walk away, believing that you are some kind of special idiot.

  [1]: http://www.bankgaborone.co.bw/index.php?id=115

• by sly010 on 2/4/15, 2:12 PM

  The reason so many people have no bank account is because banking doesn't provide them anything. I understand what's in it for the service provider (bank/wallet/lender/etc), but not everyone needs a credit card. My parents live in Europe. They don't shop online, they don't take on loans and they always pay with cash. The only reason my mom has a bank account is to receive her salary, which then she withdraws because it looses value way slower under the pillow.

  It's not simply about being cheaper or having access. Many local economies just can't make use of fancy global financial services.

• by axanoeychron on 2/4/15, 2:11 PM

  Bitcoin is technically interesting and awesome. My problem with Bitcoin and why it does not completely solve the problem described in the article - it is a social problem.

  Like land, a lot of Bitcoin is landed wealth. It has an inherent inequality in who starts with it. This is what makes me uncomfortable with it. If you transact two goods or services to obtain Bitcoin, that eliminates the inequality.

  For an unbanked person to obtain this digital currency, they would have to provide services in exchange for BitCoin. They would have to 'serve' someone else. A bit like land rent.

• by hiou on 2/4/15, 2:29 PM

  I ditched any large scale banking and contract, lease, debt arrangements over 7 years ago. I have a crappy no credit check bank card for online payments and getting money transferred. I never sign a lease over month to month, no car loan, no debt. I just buy liquid assets instead of sticking money in the back. And I've never been happier. Being underbanked was one of the best decisions I ever made.

  I should add, this isn't some political statement about banks or finance, it's more about simplifying my life and avoiding the debt vortex.