This report, the third in a <a href="https://www.centerforfinancialinclusion.org/series/municipal-cash-transfer-programs-design-ids-and-data-protection">series</a> on municipal cash transfers in the U.S., focuses on data protection for undocumented or mixed-status beneficiary households. In the context of cash-based assistance (CBA) programs, poor data protection practices could add additional risks for low-risk individuals by providing data trails that could pave the way for unauthorized access to applicant or beneficiary data or leakage of personally identifiable information. These could leave a digital footprint that can make it easier for law enforcement to target undocumented individuals.

Considering these risks, we have identified and detailed approaches and strategies used to protect applicant and beneficiary data through four programmatic phases: targeting beneficiaries, outreach and onboarding, disbursement and distribution, and ongoing monitoring and data storage/retention. Insights in this report are gleaned from CFI interviews with cities, community-based organizations (CBOs), debit card providers, and privacy advocates.

This report and the others in this series are intended to guide municipal officials and CBOs considering or developing programs to support undocumented or mixed-status households. The insights may also be of interest to organizations advocating for and supporting the rights of undocumented populations, students and academics, and anyone interested in access to financial and public services for all members of U.S. communities.

Protecting Beneficiary Data: Guidance for Municipal Cash Transfer Programs Responding to COVID-19

<h2>Panel Discussion</h2>
There is a strong push on the part of card companies and some merchants to eliminate cash in retail, citing reduced transaction times, crime, and worker headcount. But could cashless commerce deprive millions of unbanked customers from access to food and other goods and services? States and municipalities are starting to push back with proposals to restrict cashless commerce in New York City, New Jersey, Philadelphia and San Francisco. We’ll use this latest skirmish as a starting point for a discussion on the ongoing battle for financial inclusion. What is the current status of efforts to provide financial services to the unbanked? Will mandating the acceptance of cash help or hurt these effort?


Moderator:

Andy Lorentz, Partner, Davis Wright Tremaine LLP


Panelists:
<ul>
 	<li style="text-align: start">Matthew Homer, Consumer Data Access, Control, and Portability, Plaid</li>
 	<li>Devina Khanna, Manager, Center for Financial Services Innovation</li>
 	<li style="text-align: start">Eric Noggle, Senior Director, Research, Center for Financial Inclusion at Accion</li>
 	<li style="text-align: start">Leon Perlman, Founder and head of the Digital Financial Services Observatory at the Columbia Institute for Tele-Information, Columbia University</li>
</ul>

Registration 
https://www.nypay.org/event/your-moneys-no-good-here-progress-and-pitfalls-in-cashless-commerce/

&nbsp;

&nbsp;

Your Money’s No Good Here: Cashless Commerce vs Financial Inclusion

In Washington, DC—where much of the CFI team is located—more and more restaurants and small businesses have moved away from cash—some going so far as to not accept cash at all. In response, <a href="https://www.washingtonpost.com/local/dc-politics/as-restaurants-go-cashless-a-backlash-is-building-will-dc-intervene/2018/07/07/89f3f1d8-8098-11e8-b0ef-fffcabeff946_story.html?utm_term=.5540de3e4128">according to the Washington Post</a>, some city lawmakers have suggested a new law that would require businesses to accept cash as a form of payment. The proposal asserts that not accepting cash is a form of discrimination against the poor.

Financial exclusion in DC is certainly not as pronounced <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/996-financial-inclusion-hype-vs-reality">as it is in many emerging markets</a>. Nevertheless, <a href="https://economicinclusion.gov/surveys/place-data.html?where=District_of_Columbia&amp;when=2015">according to a 2015 FDIC report</a>, bank account ownership in DC is lower than in most other places in the U.S., with 11 percent of the population unbanked. And 27 percent of people in DC do not have credit at all (including credit card, bank loan, or other forms of credit). This population—unless they gain access to a prepaid card—would be unable to purchase a salad at Sweetgreen, a taco at Surfside, or a frozen yoghurt at Menchie’s.

How does the retailer weigh going cashless against accepting cash? Jetties sandwich shop <a href="https://www.washingtonpost.com/local/dc-politics/as-restaurants-go-cashless-a-backlash-is-building-will-dc-intervene/2018/07/07/89f3f1d8-8098-11e8-b0ef-fffcabeff946_story.html?utm_term=.5540de3e4128">told the Washington Post</a> that 20 percent of its customers paid with cash. Jetties decided to stop taking cash, under the assumption that some of those customers would shift to using cards. But other similar restaurants that have employees paid in tips opted to continue to accept cash.

People choose to use cash even when they do have access to a full suite of financial services. Paying with cash is a common budgeting strategy, for example, ensuring that people only spend what they have physically available in their wallet. It’s also a way to pay with anonymity, protecting purchases from being known by credit card companies. (I personally pay cash sometimes around holidays when I don’t want my husband to see his gift on our joint credit card statement.) Consider some of these responses from DC residents via Twitter:

https://twitter.com/SilverSummerSun/status/1016479293013217280

https://twitter.com/flyingtiger1/status/1016480273893068800

https://twitter.com/hippiecahier/status/1016480766421807110

On the business side, going completely cashless might make financial sense. Credit card companies charge fees of around 3 percent to merchants. The cost of cash, on the other hand, includes employee time to count and manage money before and after opening hours, the cost of security when transporting cash to and from the business, and the cost of employee fraud or miscounting. Going cashless could mitigate these operating costs.

The debate over moving cashless is not limited to Washington, DC. Around the world, countries have—either naturally or with policy pressure—shifted toward eliminating or at least limiting the use of cash. In Sweden, five out of six major banks <a href="https://cointelegraph.com/news/sweden-to-become-worlds-first-cashless-country">refuse to interact with cash</a>—and businesses have quickly followed. Sweden is predicted to become the world’s first cashless country. The Economist <a href="https://www.economist.com/finance-and-economics/2016/08/11/emptying-the-tills">reported last year</a> that in many shops in Europe, only tourists pay with cash. United Nations-based <a href="https://www.betterthancash.org/">Better than Cash Alliance</a>’s goal is to move individuals, companies, and governments toward electronic payments and away from cash.

Some governments like this approach because eliminating cash drives shadow finance and informal financial activity into the formal sector. Eliminating cash from the formal financial sector makes moving cash from the informal sector to the formal sector much more difficult, driving down the use of cash in the informal sector as well.

While it may be the next step in our modern global economy, eliminating cash without making sure that everyone is able to meaningfully participate in digital finance can be discriminatory. For some city lawmakers, this is the primary concern. They recognize that full inclusion is a precondition to making a cashless economy work for everyone. Maybe one day we’ll see a cashless DC, but first we need to make sure all people in DC can participate.

I’d love to hear your perspective—are you Team Long Live Cash or Team Time to Let Cash Go? Leave your response in the comments.

&nbsp;

Cashless Backlash? Washington, D.C. Moves Back Toward Cash

“Would you like to save $10 today?” In the United States, it seems you can’t shop anywhere these days without hearing this question at the checkout counter. According to <a href="http://www.cardhub.com/store-credit-cards/">Card Hub</a>, there are at least 134 large retailers in the U.S. offering credit cards. And of course, these offers usually sound great. Who wouldn’t want to save money on purchases? All you have to do is fill out a short form on the spot… It’s easy.

These savings can come at a price. Here are a few of my concerns about credit cards offered by the likes of Target, Macys, Sears, TJ Maxx, and others.
<ul>
 	<li>Confusion between Rewards and Credit Cards – Many retailers provide rewards or loyalty card programs. For instance, you can earn points at CVS with a card or get gas reward points at Stop and Shop. These rewards and loyalty cards are often similar to retail credit cards in that they are offered at the register, you fill out a short form to join, and you present the cards when checking out. For customers with limited financial literacy or limited English language skills, the difference between reward/loyalty cards and retail credit cards can be very confusing. It’s blurred even more by the fact that most credit cards also offer rewards – like cash back or bonus air miles. Of course, there are big differences between a card that one swipes to simply “earn points” and a card that allows one to make purchases on credit.</li>
</ul>

<ul>
 	<li>Negative Impact on Credit Scores – Credit scores are extremely important for anyone wanting to get a loan, or buy a car or a home. Though how they’re calculated is based on complex and opaque calculations. However, just having a wallet full of retail credit cards can still negatively affect your credit score. You may be judged a higher credit risk if you have signed up for many retail credit cards – even if you don’t use them – because you have the ability to go on a huge spending spree. What’s more, just having your credit score checked, which happens when you sign up for a card, may negatively affect your credit score.</li>
</ul>
<ul>
 	<li>Cashiers Are Not Bankers – If you apply for a credit card with a financial institution, the setting itself prompts many people to ask about and make comparisons on things like interest rates, credit limits, and repayment terms. In fact, there are many websites (see <a href="http://www.creditcards.com/">here</a> and <a href="https://www.nerdwallet.com/">here</a>) to help consumers evaluate financial credit cards. The idea behind retail credit cards, however, is to attract decisions based on just one thing: saving money right away at the checkout counter. Obtaining retail credit cards are mostly impulse decisions, and little is done to disclose their terms and conditions. Moreover, if you do have questions about the terms and conditions of a retail credit card, the person you are asking is a store clerk, not a banker.</li>
</ul>
<ul>
 	<li>Over-Indebtedness – Despite the sophisticated credit bureau system in the U.S., <a href="https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/">over-indebtedness is an issue</a>, especially among lower-income populations. Retail credit cards contribute to the problem of over-indebtedness in a number of ways:
<ul>
 	<li>They are ubiquitous – Everywhere you shop, every time you take a flight, a retail credit card is being offered at checkout or over a loud speaker, with incentives advertised front-and-center.</li>
 	<li>They have high APRs – The average APR on credit cards offered from America’s big retailers is <a href="http://www.creditcards.com/credit-card-news/retail_card-stores-survey-apr_2014-1276.php">23 percent</a> – a number that has recently gone up by more than 2 percentage points. For comparison, the country’s average for general purpose credit cards is about 15 percent.</li>
 	<li>They are inconvenient to pay – There is a movement to use technology to make paying bills easier. Yet, the industry lags, with retailers often mailing bills, which can get lost in the shuffle.</li>
</ul>
</li>
</ul>
Are all retail credit cards a bad idea, and should you never enroll for one? Of course not. But next time you shop you might want to think twice about saving those $10 at the checkout counter. From a client protection perspective, and given that this retail credit trend doesn’t appear to be going away, it’s essential that this corner of the industry puts equal emphasis on fair and responsible practices. For their own institutional sustainability and for their clients’ well-being, retail credit providers -- like all credit providers -- should incorporate the Smart Campaign’s <a href="http://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">client protection principles</a> throughout their operations, especially including mechanisms for complaint resolution, transparency, prevention of over-indebtedness, and responsible pricing.

Have you read?

<a href="http://cfi-blog.org/2015/08/26/investing-in-native-american-communities/">Investing in Native American Communities</a>

<a href="http://cfi-blog.org/2015/09/24/discrimination-and-credit-underwriting-in-the-age-of-social-media/">Discrimination and Credit Underwriting in the Age of Social Media</a>

<a href="http://cfi-blog.org/2016/03/04/fintech-goes-to-the-festival/">FinTech Goes to the Festival</a>

The Trouble with Retail Credit Cards

&gt; Posted by Michael Miebach, President, Middle East and Africa, MasterCard

<a href="http://www.fi2020week.org"><img class="alignright wp-image-19409" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fi2020-week-logo.png" alt="" width="350" height="141" /></a>FI2020 Week is a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world are participating in more than 30 events and sharing their voices over social media, with #FI2020.

<a href="http://www.fi2020week.org/">FI2020 Week</a> offers a good opportunity to review the findings in the <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a> and to consider actions the global community needs to take to advance financial inclusion. This is of particular interest to me as I work every day to expand MasterCard’s payments platform in the Middle East and Africa, and in a volunteer capacity, I also serve on the board of directors of Accion.

The report <a href="http://www.fi2020progressreport.org/technology/">asserts</a> that it’s not enough to “build the rails” to enable payment and transaction access, but that “providers, regulators and support institutions need to ensure that the financial services that follow provide value and quality to the passengers who climb aboard.” Here is where interoperability is essential—if last mile customers are to benefit. Banks, telcos, merchants, and governments must be connected—despite different rules and technologies—in a way that is seamless to the user. From a customer perspective, that means ubiquity, safety, and utility—the trifecta of success in financial inclusion. It won’t work if all the stakeholders are competing to create their own end-to-end solutions, or operating in silos. It won’t work if we are creating islands, where the unbanked transact with each other and where data is used in proprietary ways to support individual business models, rather than being shared as a public good.

Now, a parent in Zimbabwe sends money to his daughter studying at university in South Africa using a mobile money operator connected to the global banking system. All he needs to do is go to an <a href="http://newsroom.mastercard.com/press-releases/mastercard-launches-cross-boarder-remittance-service-in-zimbabwe/">EcoCash</a> agent and top up his mobile money account. His daughter then accesses the funds using a MasterCard debit card linked to the same EcoCash mobile money account to purchase text books, and pay university fees as well as other day-to-day expenses while at university in South Africa. This is ubiquity, safety, and utility put into action.


<img class="alignright wp-image-19955" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/thumb_4298b3a77f1a41819e09b1e02e4c3c59.jpg" alt="" width="300" height="200" />Equally critical is the focus on <a href="http://www.fi2020progressreport.org/client-protection/">client protection in the digital age</a>. The explosion of data brings new opportunities for inclusion, but it also requires trust in a system many have never used. The distributed trust model requires that both merchants and customers can trust in a secure transaction when making a purchase without cash. An expanded merchant acceptance network along with an expanded Internet add to the complexities. This will be even more challenging with the rise of P2P transactions, which will bring more micro merchants into the financial system. One solution for increasing protection and decreasing fraud is the use of biometrics. For many people, a biometric ID—using fingerprints or an iris scan—may be the first form of identification they have ever been issued. It increases security and transparency and can open the door to having a bank account, receiving government benefits, and even voting. In this case, biometrics can lead not only to greater financial inclusion, but also to greater social inclusion.

But the fundamental challenge ahead is <a href="http://www.fi2020progressreport.org/addressing-customer-needs/">addressing customer needs</a>, underscored by the gap between access and usage that proves there is still much work to be done despite many new accounts being created. Take the great leap forward of moving from cash to electronic payments for G2P social benefits. This is a good change all around—good for governments, which can reduce transaction costs, leakage and fraud, and good for customers, who can avoid the theft of their money and no longer have to wait in long lines either to receive their social benefits or to pay bills. Yet despite this advance, many customers don’t really take advantage of the service—at least not at first. Many people simply head to the nearest ATM to withdraw all of their funds. Yes, they have avoided the long lines to receive the payments, and the government still saves money—but the customers are not using the service to their own benefit.

This is where the Center for Financial Inclusion’s message about the need for providers to take the long view is key. Take the SASSA debit card in South Africa (the South African Social Security Agency electronic benefits disbursement program). The good news is that, over time, people started changing their behavior when provided with a tool they could learn with through use. We found that from year to year, POS purchases increased by 27 percent, cash withdrawals without a purchase decreased by 24 percent, and cash back with purchase transactions grew slightly by 3 percent. This, of course, means that beneficiaries were not simply cashing out as soon as they received their payments and were using the card to store value in a more secure way. And, along the way, merchants have seen as much as a 30 percent increase in sales in the first year of the card.

For all of us working on financial inclusion, the questions about technology circle back to the central question of the customer experience. If we keep in mind the need to create value for all stakeholders, the access/usage gap will be transformed, and we will move closer to a financially inclusive world.

Michael Miebach is president, Middle East and Africa for MasterCard. Based in Dubai, Mr. Miebach is responsible for driving the evolution of payments in markets across the Middle East and Africa region. Mr. Miebach recently joined the board of directors of Accion.

Image credit: Accion

Have you read?

<a href="http://cfi-blog.org/2015/10/13/the-data-story-in-the-fi2020-progress-report-on-credit-reporting/">The Data Story in the FI2020 Progress Report on Credit Reporting</a>

<a href="http://cfi-blog.org/2015/10/08/why-we-gave-consumer-protection-a-5/">Why We Gave Consumer Protection a 5</a>

<a href="http://cfi-blog.org/2015/10/05/toward-an-agent-free-world/">Toward an "Agent-Free" World</a>

Ubiquity, Safety, and Utility: The Trifecta of Success in Financial Inclusion

&gt; Posted by Allyse McGrath, Senior Associate, CFI

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The <a href="https://www.facebook.com/JPayInc">Facebook page of JPay</a>, a Florida-based company that provides a range of services to inmates in the U.S. prison system, is calling for visitation pictures – photos of families and their incarcerated loved ones. Happy images seem to echo the company’s statement that JPay is “the most trusted source for connecting incarcerated individuals with family and friends”. Money transfers are one primary element of the connection that JPay and others like it provide. JPay is one of the largest providers in the burgeoning field of financial services for the 2 million-plus inmates in the U.S. prison system. These providers are changing the way that families send money to their incarcerated loved ones and also the way in which inmates receive money upon their release. But has this change been good?

For those that might not know, money sent to inmates can be used in prison for things like making phone calls, sending emails, and buying food, toiletries, and winter clothes. To give you a sense, at the Clallam Bay Corrections Center in Washington State, phone calls begin at $3.13, and emails are 33 cents. When prisoners are released, money accumulated from work in prison or sent from family and friends can be transferred onto stores of value like debit cards.

The new companies shift inmates and their families from money orders and checks to presumably more convenient electronic and mobile payment options. However, they charge a high price for this convenience. In a division of the financial services industry where <a href="http://www.nytimes.com/2014/06/27/business/in-prisons-sky-high-phone-rates-and-money-transfer-fees.html?_r=0">common consumer protection laws do not apply</a>, fees are bloated and partnerships between providers and prisons are increasingly restricting options in what is far from a free market.

In some states JPay money transfers cost up to <a href="http://www.publicintegrity.org/2014/09/30/15761/prison-bankers-cash-captive-customers">45 percent</a>. For example, the cost of sending $10 to an inmate’s account at the Southeast Correctional Center in Charleston, Missouri is nearly $4. At the Illinois Youth Center in Chicago the cost is almost $6. Traditional means of purchasing and sending a money order can <a href="http://www.publicintegrity.org/2014/09/30/15761/prison-bankers-cash-captive-customers">run about $2</a>.

Over the past couple of years, many families have heard about the new way to transfer funds to their family members and friends in prison. For most, this message has centered on JPay, which first made electronic payments possible in prisons, and now covers about 70 percent of prisoners in the United States. While many can still use more traditional money transfer options or smaller competing providers, 40 percent are restricted to JPay as the only method of sending money, thanks to exclusive services partnerships.

Effectively, families are forced to bear these greater costs, and prisons take greater slices of revenue (“commissions”) from these payments. <a href="http://www.publicintegrity.org/2014/09/30/15761/prison-bankers-cash-captive-customers">The Center for Public Integrity found</a> that in some cases, prison operators receive up to $2.50 per payment – a sweet deal since they pay JPay nothing for their services.

Even after inmates leave prison, they face disproportionately high fees that remain unregulated by traditional consumer protection systems. Many prisons have switched from checks to “release cards”, debit cards which provide access to the funds that prisoners have accumulated up to their release. A variety of companies provide these cards, but they all feature high fees. As a snapshot, <a href="http://america.aljazeera.com/articles/2015/4/20/release-cards-turn-inmates-and-their-families-into-profit-stream.html">one card</a> includes the following: $3 withdrawal, $1.50 balance inquiry, $2.50 maintenance, $30 closing fee if the funds are transferred to a bank account. (It’s <a href="http://www.nerdwallet.com/prepaid/">typical for mainstream prepaid debit cards</a> not to charge for balance inquiries, and only to charge a few dollars for out of network withdrawals.) <a href="http://america.aljazeera.com/articles/2015/4/20/release-cards-turn-inmates-and-their-families-into-profit-stream.html">Al Jazeera highlighted</a> the case of a man who was only able to use $70 of his accumulated $120 after these fees. In most cases, inmates are not informed of these fees before their release.

It might feel natural to dismiss these facts, thinking “these are criminals who hardly deserve our compassion.” However, the punishment meted out by the justice system should not include financial services exploitation for the benefit of companies that <a href="http://www.nytimes.com/2014/06/27/business/in-prisons-sky-high-phone-rates-and-money-transfer-fees.html">often win contracts</a> not for the rates they can charge inmates, but the commission they can offer prisons! Do we want this already disproportionately poor population segment to be finally crippled as they try to start anew? A U.K. study found that in a sample of inmates who opened a traditional bank account, about 34 percent had re-offended within 12 months of their release – well below the national average of 47 percent. In recent years, the U.S. Federal Communications Commission has started to <a href="http://www.nytimes.com/2014/06/27/business/in-prisons-sky-high-phone-rates-and-money-transfer-fees.html?_r=0">clamp down</a> on the phone rates being charged to prisoners. On financial services for prisoners, release cards have faced <a href="http://www.publicintegrity.org/2014/09/30/15768/debit-cards-slam-released-prisoners-sky-high-fees-few-protections">criticism and litigation</a> in at least two states, and the New York Department of Financial Services’ consumer division is <a href="http://www.publicintegrity.org/2014/09/30/15761/prison-bankers-cash-captive-customers">reportedly reviewing</a> JPay’s practices. Regulation needs to step up and bring this financial services area into the fold.

Have you read?

<a href="http://cfi-blog.org/2015/02/04/keeping-score-the-client-protection-principles-vs-the-u-s-subprime-auto-loan-market/">Keeping Score: The Client Protection Principles vs. the U.S. Subprime Auto Loan Market</a>

<a href="http://cfi-blog.org/2015/04/09/helping-u-s-consumers-translate-financial-knowledge-into-better-financial-behavior/">Helping U.S. Consumers Translate Financial Knowledge into Better Financial Behavior</a>

<a href="http://cfi-blog.org/2014/11/13/an-innocent-visits-the-pawn-shop/">An Innocent Visits the Pawn Shop</a>

Are Financial Service Providers Gouging Inmates in the U.S. Prison System?

<h4>There is a need to enhance consumer awareness and confidence in doing electronic transactions</h4>
&gt; Posted by Smita Aggarwal, Senior Program Director, the Centre for Advanced Financial Research and Learning (CAFRAL)

The following post was <a href="http://www.livemint.com/Money/Z3e6k8laDUGeISI4lixpVP/Why-consumer-protection-makes-business-sense.html" target="_blank">originally published</a> on Livemint.

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On a recent visit to Sydney, Australia I needed some cash and I inserted my Indian debit card in an automated teller machine (ATM). Immediately after I put in my transaction request for cash withdrawal, I got a prompt that there would be a $3 charge for that transaction and I had to confirm with a “yes” before the transaction would be processed further. I withdrew my card and left. The e-payments code by Australian Securities and Investments Commission (ASIC), the unified regulator responsible for market conduct, requires all service providers to provide certain mandatory information, including fees and charges, to users before or at the time users first perform transactions.

The experience in Australia shows that the display of charges just before the transaction is done has altered consumer behavior, apart from significantly reducing complaints. Increasing the usage of electronic transactions through ATMs, cards, internet, and mobile phones is a critical step towards digitizing our economy. However, there is a need to significantly enhance consumer awareness and confidence in doing electronic transactions and there could be lessons we can learn from what Australia has done.

The e-payments code, which applies to all service providers offering electronic transactions, and not just banks, states that consumers are not liable for losses when they have not contributed to the loss. Moreover, for transactions with a passcode where it is unclear whether the consumer has contributed to the loss, the consumer’s liability is capped. There is also a framework for mistaken payments, i.e., when you make an error of entering the wrong account number and the payment goes to the wrong recipient. The framework provides for return of the money to the sender, provided the money is still in the recipient’s account, and encourages the users to report the error soon enough so that the likelihood of recovery is high.

Another example of altering consumer behavior through increased transparency is that all credit card statements in Australia are required to prominently state: “Minimum payment warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance”. This is followed by an actual calculation of the amount you will pay in total and the number of years it would take to clear the current dues. The actual visibility on the statement of the implied loan amount and tenor (could be even 10 years or more) prompts the customer to make an informed decision about how much to pay and increases her confidence to use the credit card in a responsible way. The e-payments code also has tailored provisions to facilitate low-value electronic transactions. For example, providers are not obliged to provide a statement or receipt for low-value transactions and instead must provide access to users to view their balance and transaction history. Additionally, no personal identification number is required for small-value “tap and pay” transactions through near-field communication and the incidence of frauds so far has been quite limited.

Considering the significant influence advertising has on consumers and the natural tendency of providers to focus only on positives in advertising, as part of its consumer protection mandate, ASIC also tracks advertising of financial products. Omission in advertising could be misleading to the consumer. For example, an advertisement which says that a bank offers a credit card with no fees, but does not say prominently that the customer needs to have a mortgage loan from the same bank to be eligible to get this card, would be unacceptable to the Australian regulator. Similarly, while marketing products through Twitter, banks are expected to be truthful, despite brevity.

To read the rest of this post, visit <a href="http://www.livemint.com/Money/Z3e6k8laDUGeISI4lixpVP/Why-consumer-protection-makes-business-sense.html" target="_blank">Livemint</a>.

Have you read?
<a href="http://cfi-blog.org/2014/08/26/ecpps-how-a-principles-approach-to-client-protection-is-built-for-the-digital-age/" target="_blank">eCPPs: How a Principles Approach to Client Protection is Built for the Digital Age</a>
<a href="http://cfi-blog.org/2014/09/08/emerging-themes-in-responsible-digital-finance/" target="_blank">Emerging Themes in Responsible Digital Finance</a>

<a href="http://cfi-blog.org/2014/06/20/electronic-g2p-for-the-poor-does-electronic-social-protection-need-better-consumer-protection/">Electronic G2P for the Poor: Does Electronic Social Protection Need Better Consumer Protection?</a>

Why Consumer Protection Makes Business Sense

&gt; Posted by Jeffrey Riecke, Communications Assistant, CFI

<a href="http://www.occupycooperative.com/" target="_blank" rel="attachment wp-att-11830"><img class="alignright wp-image-11830" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/07/omc-header.png" width="350" /></a>A few months ago we shared a post spotlighting Walmart’s popular Bluebird prepaid debit card service, <a href="http://cfi-blog.org/2013/05/29/your-neighborhood-bank-walmart/" target="_blank">Your Neighborhood Bank, Walmart?</a> As of the past few days, there’s a surprising new entry into this expanding prepaid card space: Occupy. With the mission of providing quality, transparent financial services to everyone, especially to those who are currently denied service by larger for-profit banks, the Occupy Wall Street Movement launched the Occupy Money Cooperative, indicating its first product will be a prepaid debit card.

The Occupy Money Cooperative aims to provide services that differ from those of the U.S. for-profit banking industry, overcoming such annoyances as account-opening requirements, service fees, and lack of branch penetration. Much like a credit union, the Cooperative will be controlled and owned by its members. Unlike a credit union, the Cooperative won’t be a deposit-taking institution or be bound by common bond membership restrictions – anyone will be able to join. Here’s a few of the Cooperative’s pledges, taken from <a href="http://www.occupycooperative.com/" target="_blank">its website</a>.
<ul>
	<li>Will offer access to low cost, transparent, high-quality financial services to everyone</li>
	<li>Will actively and directly encourage the development of innovative financial services that will foster financial inclusion, and lead the field in terms of openness and fairness</li>
	<li>Will lead by example to affect a positive change for our members and stakeholders, and provide an uplifted standard of conduct for the financial community</li>
	<li>Will actively work with business partners and organizations that demonstrate a commitment to the well-being of their communities</li>
</ul>
The Cooperative is now signing up members and will soon be open to receiving start-up donations – from members and non-members. Once ample funding is secured, the prepaid debit card, to be called The Occupy Card, will be available. The card will have a monthly fee of $0.99. Additional details surrounding the card’s service charges remain to be disclosed. Prepaid debit cards often associate fees with ATM withdrawals, balance inquiries, and card re-loadings, among other services. The Cooperative hopes to offer checking and savings services to its members in time, but stated that due to the growing popularity of prepaid debit cards among the unbanked, this will be the first service offered.

Prepaid cards are indeed on the rise in the United States. Among the unbanked in the U.S, <a href="http://www.forbes.com/sites/laurashin/2013/07/23/the-occupy-movement-is-launching-a-money-cooperative/2/" target="_blank">use of prepaid cards increased</a> from 12.2 percent of unbanked households in 2009 to 17.8 percent in 2011. Among the total U.S. population, a 2012 <a href="http://www.nfcc.org/newsroom/FinancialLiteracy/files2012/FLS2012FINALREPORT0402late.pdf" target="_blank">financial literacy survey</a> found that 15 percent of adults had used a prepaid card within the last year. About three-fourths of this group cited convenience as their primary reason for doing so. About three-fourths indicated they enjoyed the cards’ preventing their overspending and the increased safety over carrying cash. Lack of other payment or banking options was cited as a reason for prepaid card use among roughly one-fourth of respondents.

Image credit:<a href="http://www.occupycooperative.com/" target="_blank"> Occupy Money Cooperative</a>

Have you read?

<a href="http://cfi-blog.org/2012/06/11/improving-prepaid-products-guidelines-for-a-growing-market/" target="_blank">Improving Prepaid Products: Guidelines for a Growing Market</a>

<a href="http://cfi-blog.org/2013/01/03/india-extending-inclusion-through-alternative-customer-identification/" target="_blank">India Extending Inclusion Through Alternative Customer Identification</a>

<a href="http://cfi-blog.org/2013/05/29/your-neighborhood-bank-walmart/" target="_blank">Your Neighborhood Bank, Walmart?</a>

Occupy Wall Street Movement to Offer Financial Services

Sarah Sassoon

Kathleen Yaworsky

Federico  Gomez Romero

Egypt, Arab Rep.

Middle East and North Africa

Brazil

Latin America and The Caribbean

South Africa

Sub-Saharan Africa

Mexico

Access Usage Gap

Agricultural and Rural Finance

Appropriate Product Design and Delivery

Challenges and Crises

Consumer Protection

Credit

Credit/Debit Cards

Customer Centricity

Delivery Channels

Digital Credit

Digital Financial Services

Enabling Environment

Financial Capability

Financial Health

Financial Service Providers

Financial Technology

Fintechs

Impact Investing

Mobile Banking

Payday Loans

Payments

Personal Financial Management

Product Pricing

Resilience

Responsible Digital Finance

Rural Populations

Underserved Groups

Partnerships

Advisory Services

Agent Banking

Alternative Data

Banks

Behavioral Insights

Consumer Credit

Data Analytics

Digital Transformation

Human Centered Design

Microfinance Institutions

MSME/SME Finance

Privacy

Risk and Credit Analysis

Entrepreneurs of MSMEs

Financial Inclusion Strategy

Responsible Investing

Smallholder Farmers

Valuation

Responsible Exit

Article

Video

Press Release

Hany Mahmoud works as a farm manager at Dina Farms, a large farm in the desert area outside Cairo, Egypt. As Egypt’s biggest dairy farm, Dina Farms supplies much of the country with fresh milk and dairy products, as well as fruits and vegetables like potatoes, wheat, oranges, bananas, and olives. The farm provides jobs to hundreds of Egyptians like Hany. “I supervise all station operations, from the milking of cows to feeding the cows to breeding cows. We do many things, and I’m responsible for all of them, with the help of farm engineers, doctors, and supervisors,” says Hany.

Despite steady employment in an essential industry, many workers like Hany still live paycheck-to-paycheck and remain vulnerable to economic instabilities. Millions of Egyptians don’t have access to traditional financial services, like bank accounts and credit products, that provide financial security and help people manage unexpected costs that can be challenging to a tight household budget.

When Hany needed to purchase new tires and spare parts for his car so he could get to work reliably, he didn’t have the cash to pay for them up-front or put down a deposit. An HR manager at Dina Farms recommended a solution from <a href="https://khazna.app/" target="_blank" rel="noopener noreferrer">Khazna</a>.

Khazna is a fintech company in Egypt that provides affordable general purpose credit products through a mobile app and secure ATM card. <a href="https://www.accion.org/a-new-way-to-help-people-living-paycheck-to-paycheck-in-egypt" target="_blank" rel="noopener noreferrer">Accion Venture Lab invests in and supports Khazna</a> to help ensure that more Egyptians gain access to these critical financial tools so they can safely manage their money and build financial security. Khazna partners with businesses like Dina Farms to reach workers across Egypt with essential financial services they otherwise would not be able to use.

[caption id="attachment_28074" align="aligncenter" width="1024"]<img class="wp-image-28074 size-large" src="https://content.accion.org/wp-content/uploads/2023/05/fatma-khazna-founder-egypt-1024x683.png" alt="Fatma El Shenawy, Khazna founder" width="1024" height="683" /> Fatma El Shenawy at Khazna’s office in Cairo.[/caption]

“Khazna is a financial ‘super app’ that targets mid to low-income labor force across Egypt and is expanding to the greater Middle East,” says Khazna co-founder Fatma El Shenawy. “The core of what we do is credit. It's a multipurpose credit line that the users can use across cash, credit, bill payments, mobile top-ups, and so on. They can buy products in installments through our network of thousands of merchants all around the country. And we've recently launched our prepaid debit card linked to the Khazna app to allow users to have instant access to these services.”

Egypt is a populous country with a rapidly growing youth population. While citizens are unbanked at high rates, mobile phone penetration is high. This made Egypt a ripe market for a fintech company like Khazna to leverage technology to help Egyptians manage their short and long-term financial needs. 

“There are so many hurdles that prevent middle and low-income people from accessing financial services,” says Omar Salah, another co-founder at Khazna. “We're trying to fill that gap.” After three years in operation, Khazna boasts more than 300,000 active users and 100 partners across Egypt.

[caption id="attachment_28073" align="aligncenter" width="1024"]<img class="wp-image-28073 size-large" src="https://content.accion.org/wp-content/uploads/2023/05/hany-cows-dina-farms-1024x683.png" alt="Khazna customers in Egypt" width="1024" height="683" /> Hany speaks to Mohamed Salama, another Dina Farms engineer.[/caption]

As a Khazna user, Hany was able to purchase new tires and spare parts for his car at a fair price and seamlessly paid for them in interest-free installments instead. “I didn’t even feel like I paid for the tires in bulk,” he recalls. “It was deducted from my salary without interest.”

Hear Hany’s story in his own words:

[embed]https://youtu.be/DBg_Bo0DJXE[/embed]

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This app brings financial support to underbanked Egyptian workers

[embed]https://youtu.be/DBg_Bo0DJXE[/embed]

Millions of Egyptians don’t have basic financial tools, like bank accounts, credit products, or ATM cards, leaving them without a safe and reliable way to manage their money. It’s especially difficult for people in rural areas to access critical financial services and build financial security.

<a href="https://khazna.app/" target="_blank" rel="noopener noreferrer">Khazna</a> is an app that brings affordable financial services to workers across Egypt. Around the world, <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">Accion Venture Lab</a> finds and supports fintech startups like Khazna that are using innovation to improve lives. Watch how Khazna’s app makes a difference for people like Hany, a manager of a dairy farm outside of Cairo.

Fintech brings financial support to Egyptian workers

This article is the fourth of a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>.  

Data capabilities are essential to an organization’s digital transformation: from informing strategies that increase efficiency and revenue to creating new business models where data assets become products. In today’s world, where financial service providers (FSPs) must make unprecedented and rapid decisions, adjust business strategies, segment customers to understand portfolio risks, rethink credit models, and reach customers and staff remotely, data capabilities go hand-in-hand with digital transformation.

The explosion of available data, data-analytics services, and a growing digital ecosystem <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">creates unprecedented opportunities</a> for underserved communities and FSPs alike. The potential to unlock <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">greater financial health</a> for FSP customers is extraordinary, from prospecting and credit scoring for thin-file consumers to well-timed nudges for saving to intelligent chatbots, personalized recommendations, and remote client onboarding.

<img class="aligncenter wp-image-24081 size-large" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_11-Using-data-1024x512.png" alt="Using data to drive financial inclusion (examples)" width="1024" height="512" />

However, many organizations become overwhelmed by all the different ways they can use data and lose alignment when creating a focused data strategy. FSPs can take several steps to integrate data and analytics activities with their digital transformation goals:
<h3>Start with existing data</h3>
In the early stages of developing a digital loan product, Accion Microfinance Bank (Accion MfB) in Nigeria explored potential data-sharing partnerships to build a robust credit scoring model. But they struggled to find the right third-party data provider, so Accion MfB decided to look inwards at the lending data they had already amassed. For example, using what they knew about customers’ willingness and capacity to pay, they designed a pilot digital loan product and created a benchmark profile to compare incoming data against when onboarding new customers. Using their own internal data involved fewer operational and commercial complications, which helped Accion MfB quickly launch a viable pilot.
<h3>Be practical in moving from insights to action</h3>
Similarly, our longtime partner BancoSol, one of Bolivia’s largest banks, realized that leveraging their untapped data could uncover insights to help address four key challenges: driving digital adoption and improve usage, increasing cross-product usage, increasing savings balances, and maintaining customer relationships. A <a href="https://nextbillion.net/covid19-small-businesses-digital-financial-services-data/" target="_blank" rel="noopener noreferrer">36-hour datathon organized in partnership with Accion and Mastercard</a> yielded three key recommendations to tackle these challenges:

1. Start by understanding your typical digital customer. Analyzing customer demographic data and banking patterns can help identify, prioritize, and nudge those customers who are most likely to go digital. BancoSol learned that their typical digital app customer is more likely to be female and younger than the average BancoSol client.

2. Equip loan officers with insights to match customers with products that meet their needs. The datathon revealed that app users made nearly twice as many deposits as other users, linking digital adoption with increased use. As <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">research has shown</a>, greater use of financial products makes small businesses more resilient to shocks.

With these insights, BancoSol developed clear messaging for loan officers about the benefits of going digital and respecting privacy and security measures and implemented continuous testing and streamlining to improve the app experience so it matched customer expectations.

3. Retain customers by being proactive, not reactive. The datathon also showed that when customers stop saving or communicating with the bank, their risk for a loan default rises, while those who used digital channels maintained consistent relationships with the bank. With that in mind, data analysts created a risk propensity score, which BancoSol can use to intervene before a customer begins to disengage.

Having dedicated resources skilled in data analytics embedded within the product innovation team is crucial to jumpstarting a virtuous cycle of data-driven design.
<h3>Prioritize data management and governance</h3>
To derive value from data and ensure customers’ privacy is protected, microfinance institutions need to invest in structuring their data appropriately and maintaining deliberate data governance (policies and procedures) and management (use of data in decision-making).

While many institutions know they possess valuable data, it’s often stored in various places and multiple formats, leaving the organization to only manage the limited data they are required to, or that is easily accessible. To get ahead of the curve before messy data accumulates, Annapurna Finance Limited in India invested heavily in data management solutions that improve data reporting, data migration, and data storage for new digital platforms and products.

Nearly every financial institution struggles to maintain accurate customer contact information, a simple yet critical example of data management. For microfinance institutions with high-touch models whose loan officers regularly visit their customers, having a current phone number on file seemed like a low priority. But when lockdowns brought on by the COVID-19 pandemic began, Annapurna’s loan officers found themselves unable to communicate critical loan information — like payment dates, updates on moratoriums, or even introduce new loan offers via SMS to their group lending customers — without up-to-date contact details.

To address this challenge, Annapurna introduced a standard process to ensure that at every customer touchpoint — from field visits from a loan officer to customer visits to a branch — bank staff would confirm the customers’ phone numbers to ensure a high-quality database. In parallel, they implemented a new communication system that integrates their SMS system with their loan origination system. These two initiatives standardize communications with customers, create greater engagement, and ensure a more transparent flow of information.

A clear data strategy can help inclusive FSPs accelerate their digital transformation, make organizational changes to better leverage their data and become more customer-centric, and ultimately set low-income households and microentrepreneurs on a path toward greater financial health.

To assess your organization’s current data capabilities and gain insights into priority areas, take our <a href="/you-cant-go-digital-without-the-right-data-strategy" target="_blank" rel="noopener noreferrer">Data Maturity Diagnostic</a>. <a href="https://www.accion.org/advisory-contact">Reach out to us</a> to see how we can help plan a roadmap of strategic data initiatives to support your institution’s digital transformation journey and business goals.

Malavika Krishnan contributed to this article.

Devise a clear data strategy to unlock financial inclusion

Brazil has been hit especially hard by the COVID-19 pandemic, and the crisis is changing every aspect of society. Now that the most obvious and immediate effects have set in, we are beginning to see what the mid- and long-term consequences will be in the country.

I strongly believe that fintech will be one of the sectors that will emerge from this crisis both reinvigorated and transformed. As a fintech entrepreneur, you have the chance to rebuild a better Brazil.
<h2>Transforming uncertainty into new opportunity</h2>
It’s not a surprise that the macro landscape looks grim right now. The economy is <a href="https://blogs.imf.org/2020/06/26/outlook-for-latin-america-and-the-caribbean-an-intensifying-pandemic/" target="_blank" rel="noopener noreferrer">expected to contract around 9 percent</a> this year, and although analysts predict a positive rebound next year, the main players in the financial sector are still in shock. As a consequence of increased payment deferrals for loans, the current level of non-performing loans is unknown and financial institutions are navigating in the dark. The CEO of Itau referred to their strategy around managing these loans as <a href="https://www.fool.com/earnings/call-transcripts/2020/05/06/itau-unibanco-holding-sa-adr-itub-q1-2020-earnings.aspx" target="_blank" rel="noopener noreferrer">"more an art than science.”</a> I cannot find a better phrase to describe the current situation of the traditional financial sector. Amid all of this uncertainty, it is clear that fintech players will be better positioned to recover from the economic downturn if they can use alternative data sources to access updated financial information.

Those tech companies who already have access to real-time data will have an added advantage due to <a href="https://www.businessinsider.com/brazil-moves-forward-with-open-banking-2020-5#:~:text=The%20Central%20Bank%20of%20Brazil%20has%20released%20open%20banking%20regulation,the%20customer%20agrees%2C%20per%20Finextra." target="_blank" rel="noopener noreferrer">an open banking regulation released by The Central Bank of Brazil</a>, which will be fully implemented next year. In addition to the data they already have, fintechs will benefit from accessing additional information from their clients that allows them to provide a better, more personalized service. At the same time, the opportunities for fintechs to partner with banks will increase as banks seek to connect to third party providers and enrich their businesses.

But negatively hit sectors aren’t the only place where tech startups can find opportunities to offer financial services to the underserved. For example, agriculture is <a href="https://www.world-grain.com/articles/13958-record-soybean-shipments-forecast-for-brazil" target="_blank" rel="noopener noreferrer">posting record results</a>, and some industries within the gig economy, like last-mile delivery, are also growing more than ever before. There is a huge potential to layer digital financial services in these and other thriving sectors.
<h2>Data is king</h2>
Fintech companies are in an advantageous position when they have rich and timely data needed to make the right business decisions. And those data-driven companies that build strong relationships with customers by solving problems that aren’t financial — before embedding fintech solutions — are in an even better position. In the past, <a href="https://www.forbes.com/sites/vikasraj/2019/11/20/platform-fintechs-are-cominghow-should-startups-respond/#742436bb2b0f" target="_blank" rel="noopener noreferrer">we have explored how super-platform tech companies are doing this</a>, and now this approach is expanding across multiple sectors. For example:
<ul>
 	<li><a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">Terra Magna</a> has spent years building a huge database of farming regions and crop performance using high-tech satellite images. With a unique knowledge of the business, it is now starting to provide responsible financing to farmers.</li>
 	<li><a href="https://www.loopa.digital/" target="_blank" rel="noopener noreferrer">Loopa</a> is a startup that provides a free platform to MSMEs for credit card reconciliation, allowing them to have a better understanding of their business and solve cashflow inefficiencies. That type of relationship with customers is the one that provides infinite possibilities to add financial services.</li>
 	<li>Finally, <a href="https://www.smartmei.com.br/" target="_blank" rel="noopener noreferrer">SmartMEI</a>, one of our portfolio companies, is building solutions for the future of work. They understand the needs of a workforce that is changing every day and have built targeted financial products for an evolving workplace. The company started by providing simplified accounting services and has grown to offer a full suite of products.</li>
</ul>
<h2>But who is investing right now?</h2>
At the onset of the pandemic, capital immediately dried up for entrepreneurs. Many investors had to concentrate their efforts on helping their portfolio companies stay afloat, and others were too wary of the situation to keep investing. As Nigel Morris, partner of QED Capital, recently said in an episode of <a href="https://www.accion.org/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">VentureKast</a>, “We are going to see fewer tourists involved in VC in the fintech space.” The ones that will keep betting on the sector — and that have already restarted actively investing — are the true fintech specialists.

So, the big question is: who should you pitch your startup to in Brazil? Many great investors come to mind. This complete <a href="https://www.contxto.com/en/brazil/venture-capital-brazil-2020/" target="_blank" rel="noopener noreferrer">cheat sheet recently published in Contxto</a> lists some of the most active equity investors divided by industry and stage.
<h2>Don’t miss the chance to grow your startup, with some caution</h2>
The pandemic, despite all its negative connotations, is creating a temporary blue ocean for many fintechs. Now may be an excellent moment to fundraise and accelerate growth, but you should consider a few things before doing so:
<ol>
 	<li>Don’t be afraid to be selective. Choose your customers wisely and make good use of your data collection and analysis capabilities.</li>
 	<li>Mind your unit economics. This is a moment to grow, but definitely not at all costs. Bear in mind that this is a time ruled by uncertainty. The less you burn, the more runway to have to survive through the storm. VCs are certainly looking at this before investing.</li>
 	<li>Valuations are coming down. Early-stage valuations in Brazil reached astronomical levels in recent years, and now it’s not uncommon to see up to 30 percent cuts. Believe it or not, this could be a good thing for your startup as you can align incentives with your investors and reduce the risk of a down round in later stages.</li>
 	<li>Banks will catch up. This blue ocean won’t last forever, and open banking will facilitate access to information for all players. Start preparing for what will come after COVID-19, whether or not you work directly with banks.</li>
</ol>
<h2>Accion Venture Lab is here to help the ecosystem grow</h2>
Accion Venture Lab’s mission is to support innovative companies that help the financially underserved. We are always working to grow the fintech ecosystem — even outside our portfolio. This the first in a series of blog posts and webinars we will be hosting in the coming months, made possible by support from FedEx, to help the Brazilian fintech ecosystem thrive through the COVID-19 crisis. We invite you to follow along and <a href="mailto:accionventurelab@accion.org">reach out</a> if there is any way we can support you.

Now is the time for fintechs to accelerate growth in Brazil

South Africa is a global hub for fintech innovation. Accion supports and advises South African innovators using technology to help entrepreneurs expand their businesses and families protect their homes around the world.

<h2 id="5537" class="graf graf--h4 graf--startsWithDoubleQuote graf-after--h3 graf--subtitle"></h2>
[embed]https://vimeo.com/239923765[/embed]
<a class="markup--anchor markup--p-anchor" href="https://www.yoco.co.za/" target="_blank" rel="nofollow noopener noreferrer">Yoco</a> is a point-of-sale payment solutions company based in South Africa. Its smartphone app and wireless card readers allow small businesses to accept credit and debit card payments easily and affordably. In this interview, Yoco cofounder and CEO Katlego Maphai discusses the company’s origins, and how he and his colleagues began to identify the market gap they could fill. “You have a lot of consumers with cards, but not enough businesses accepting cards,” he says. At the same time, he adds, “Small businesses are heavily underserved. Nobody’s building products or tools for them.” And thus, a business plan began to take shape.
Maphai clearly identifies with the clients Yoco serves. “We’re an SME, we’re entrepreneurs. Our customers are SMEs, they’re entrepreneurs too. So we’re the same… We’re in this together. We only grow when our customers grow,” he says.
Looking toward the future, Maphai is thinking of how his own SME can grow. Building on the network of entrepreneurs he’s established, he says, “We’ll be able to offer additional services, and we’ll also be able to plug in third parties… anyone who wishes to distribute to smaller businesses can do it through us,” he says.
<img class="progressiveMedia-image js-progressiveMedia-image alignnone" src="https://cdn-images-1.medium.com/max/720/1*-eqVvpkalIaQaBCflJCIig.png" alt="&quot;In Africa, small business is big business.&quot;" width="720" height="360" />
This interview took place at the June 2017 <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/inclusive-fintech-leaders-meet-to-accelerate-innovation/" target="_blank" rel="noopener noreferrer">CEO Forum and Fintech for Inclusion Global Summit</a>, hosted by <a class="markup--anchor markup--p-anchor" href="https://www.accion.org/venturelab" target="_blank" rel="nofollow noopener noreferrer">Accion Venture Lab</a>, <a class="markup--anchor markup--p-anchor" href="https://www.fmo.nl/" target="_blank" rel="nofollow noopener noreferrer">FMO</a>, and <a class="markup--anchor markup--p-anchor" href="http://www.quona.com/" target="_blank" rel="nofollow noopener noreferrer">Quona Capital</a>.
Yoco and the Accion Frontier Inclusion Fund, managed by Quona Capital, have partnered since 2017.

Katlego Maphai of Yoco

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

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Washington, DC, February 14, 2017– Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, announced today that it has marked its second successful exit, further demonstrating the potential for early-stage investments to generate social and financial returns. Venture Lab has sold its stake in Clip, a Palo Alto and Mexico City-based company that provides cost-effective and efficient digital payment solutions to the often financially underserved segment of micro, small, and medium enterprises (MSMEs) in Mexico.
<a href="http://payclip.com/" target="_blank" rel="noopener">Clip </a>combines a card reader plug-in for smartphones with an innovative back-end risk management platform to enable nearly any merchant in Mexico to accept all types of debit and credit cards. In doing so, it provides a pathway for small businesses to transition from cash-based systems to more efficient digital approaches that enable transactions that were previously too costly to be viable.
Venture Lab co-led the first institutional investment round in Clip in February 2013. As of December 2016, with Venture Lab’s active support, Clip has become one of Mexico’s largest digital payment solutions providers for MSMEs.
“After reviewing thousands of start-ups and working with the dozens of innovators in the Venture Lab portfolio, we’ve seen how creative and responsive fintech leaders like Clip can be in responding to the business challenges of the world’s underserved small businesses,” said Venture Lab Managing Director Vikas Raj. “We are honored to have been a part of Clip’s success in providing a pathway for small businesses to transition from cash-based systems to digital payment solutions that lower costs and enable them to serve more customers.”
“Accion Venture Lab was the first investor that trusted us with this crazy idea of bringing card-acquiring services to small businesses on every single corner in Mexico. Thanks to their initial support we are on our way to fulfilling our vision. It was a pleasure working with the Accion team,” said Adolfo Babatz, CEO and Co-Founder of Clip.
“Accion advances financial inclusion by investing in sustainable, scalable, well-managed companies that generate both social and economic returns,” said Accion President and CEO Michael Schlein. “Venture Lab’s second successful exit demonstrates the viability of achieving both profit and purpose by investing in early stage start-ups that promote high-quality financial services for underserved customers.”
Venture Lab is the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching Venture Lab in 2012, Accion has deployed over US$10 million across more than 25 start-ups that work in over 20 countries worldwide.

Venture Lab announced its first successful exit from India-based lender Varthana in November 2016.
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About Accion

Accion is a global nonprofit dedicated to building a financially inclusive world with economic opportunity for all, by giving people the financial tools they need to improve their lives. We are building the next generation of top-tier microfinance institutions, and over more than 50 years have helped build 65 such institutions in 32 countries on four continents that today reach millions of clients. Our impact investing initiatives are pushing beyond microfinance to catalyze more than 30 innovative start-ups dedicated to improving the efficiency, reach, and scope of financial services for the poor. And our Center for Financial Inclusion is helping to build a stronger industry with high standards and broad engagement. Currently, our work spans nearly two dozen countries, including the U.S., where we are the nation’s largest nonprofit microfinance network. For further information, visit <a href="http://www.accion.org/">http://www.accion.org</a>.
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MEDIA CONTACT

Katie Mounts
<a href="mailto:kmounts@accion.org">kmounts@accion.org
</a>+1 202.280.5859

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Accion Venture Lab Marks Second Successful Exit, Driving Social and Financial Impact from Investment in Clip