The mobile payment movement has made it easier for millions of people to send money to their family, friends and business partners world-wide. It has the potential to revolutionize the way we transfer funds, whether we migrate from there to cryptocurrencies and the blockchain or not. GSMA, the global mobile network association, estimates that 300 m people, mostly in the developing world, had mobile payment accounts at the end of 2014.
A disturbing trend in mobile payments has been the emergence of ‘over-the-counter’ (OTC) transacting. In an OTC, a person who wants to send money gives her cash to an agent, and the agent sends it for her. OTC transactions are very common in countries — such as Bangladesh or Pakistan — where literacy rates are very low. This is not surprising, because it is difficult, if not impossible, for an illiterate person to send money on a mobile app without help.
History Doesn’t Repeat — But it Rhymes
The emergence of OTC should not surprise anyone who is familiar with microfinance, because it is occurring in the shadow of an even larger precedent that continues to define much of microfinance today: the thumbprint loan contract.
Disregarding better communications practices in the informal sector, where loans rarely rely on the ability to read, the microcredit industry has delivered the information accompanying loans in dense text for decades. Many millions of microcredit contracts are signed with thumbprints each year.
“The Medium is the Message” — And the Message of Text is Unfriendly
While a poor person will rely on memory to manage a loan, she won’t save that way. Would you keep your savings in a bank that tracked balances in hieroglyphics, because that was what your bankers were comfortable with?
No one should have to place the fruits of their life’s work and ingenuity at the mercy of the unintelligible, and poor people – like the rest of us – are generally smart enough not to.
It’s Time to ‘Leapfrog’ Over Legacy Information Practices
There is nothing impossible about communicating financial information to oral populations in language they understand or can easily decode. For thousands of years almost everyone was illiterate, and as civilizations emerged the ‘oral tools’ required to communicate financial information emerged with them.
Of course text exponentially increases our capacity to manage information. But the costs of ensuring the integrity of text in oral communities are high. Best practices in oral culture — especially once scientifically analyzed and systematically applied — can extend our capacities far enough to efficiently and effectively manage simple savings and loan accounts. These services can then be delivered through many channels, from cooperatives and NGOs to mobile banking platforms.