In developing economies, women are 20 percent less likely than men to have an account at a formal financial institution and 17 percent less likely to have borrowed formally in the past year. This means women as compared to men are more prone to take lesser decisions on their personal finance. Making and receiving payments digitally has the potential to change this status quo. But what are the key interventions in Digital Payments use cases that can help make this shift?

1. Digitize Wages for Women Workers in Private Sector Companies or Government Livelihood Programs

230 million individuals globally still accept cash wages majority of whom are women. Apart from building inefficiencies in the respective businesses, this practice throws various challenges at the female wage earners – from risks of theft, to succumbing to social norms of handing over the cash to the male member of the family. But, if we think at a higher level, cash wages are responsible for women to continue to get deprived from participating in the formal economy.

In Bangladesh, Bill and Melinda Gates Foundation through their HERfinance Program drove digital wages for about 60,000 female wage workers in private garment factories and found interesting results. While 20% of women started to make joint decisions about using their wages, 10% stopped giving it to anyone else. 1 out of 5 women started to save regularly, and 1 out of 8 women felt confident about their future financial health.

A similar example from India shows how digitizing wages can lead to increased supply of motivated female workforce in the labour market. Through a randomized control trial in Madhya Pradesh, women received their wages from MGNREGA in their bank accounts directly instead of the bank accounts of their husbands. A random subset of these women also received training on how to access their bank accounts. One year later, women who received direct deposit into their own accounts plus training increased their participation in both the public and private labour markets, despite no change in market wages. Women that benefited from the reform were also more likely to agree that a working woman is a better caretaker, mother, and wife than were those that were excluded from the reform, and their husbands were less likely to perceive social costs from having wives that worked.

Today, 99% of the wages in MGNREGA are paid digitally as compared to 37% in FY 13-14. Additionally, the act mandates at least one-third of the beneficiaries to be women and emphasises local administration to drive opening individual bank accounts for men and women job card holders rather than a joint account. This ensures a female MGNREGA wage worker gets her wages electronically in her own bank account.

2.Digitally Transfer Government Welfare Money into Bank Accounts of Women

Disbursing welfare schemes are high volume, high value Government to Public (G2P) payments. If we can create the right infrastructure and locate the right account, then e-transfer of Government Welfare Schemes can improve decision-making of women on her personal finance besides being efficient for the Government.

Over the last 7 to 8 years, India’s direct benefit transfer (DBT) program has evolved impacting the lives of several low-income women. The Government had taken bold steps in creating the right infrastructure – bank accounts for all through the Jan Dhan Yojana Program and seeding of beneficiary bank account with Unique Identity Number through Aadhaar.  Today, numerous DBT initiatives run by the Government from Janani Suraksha Yojana (maternity and child benefits), to subsidies on Cooking Gas are transferred directly into the accounts of women – giving them the opportunity to control the use and making the decisions.

From points 1 and 2, it is interesting to note how the Government of India digitally transfers wages and welfare schemes to the bank accounts of women. There is an opportunity for developing countries to learn this as a good practice and replicate in their own contexts.

3.Introduce a Mobile based Digital Payments Platform for Female Micro Business owners

A 2018 McKinsey Report highlights – two billion individuals and 200 million small businesses in emerging economies today lack access to formal savings and credit.

While mobile money is not the only way to combat that, but it certainly is the most efficient way for low income business owners to start accepting payments digitally. From bKash in Bangladesh, UPI in India to M-Pesa in Kenya and easypaisa in Pakistan – mobile based digital payments solutions have pioneered inclusion of micro business owners in formal savings and credit.

When micro business owners start accepting payments digitally, they reduce the risks of handling cash, are able to trace back the payment source, and maintain records which otherwise becomes a challenge in cash led businesses. It is even more useful for women, who can now enjoy the benefits of increased control over their income including awareness, building credit score and improved decision making.

However, introduction of mobile based digital payments platform in isolation will have limited effectiveness. An ecosystem with access to strong infrastructure like stable high-speed internet and access to mobile phones, customers willing to pay in digital, and nudges like QR Code Board will deliver the desired effectiveness.

4.Training Women to Pay Digitally for her personal, household or business expenses

While the first three intervention talks about receiving money digitally, improved decision making for women will also require uptake and usage of making payments digitally. When women start to make payments for her own, or family members or her business she decides what to pay for, how much to pay for and where to purchase the products or services from. Training women in making digital payments to execute the same will empower her to take these decisions on her own. But how?

When a woman opts to pay in cash there are chances the cash has been handed over by a male family member, often her husband and gave her directions on where and how to spend it. This limits the opportunities of the decisions she could have taken otherwise.

Compared to that when she opts to pay digitally, in most cases the money will be debited from her own bank account or mobile money account. This gives her the first-hand awareness on how much she has in her savings, and enables her to create her own point of view how much should she spend and on what.

Training on setting up the digital payments solution, educating on secure payments, and hand-holding in the initial stages of adoption will go a long way in empowering women to take decisions in their personal finance.