Cashless economies: The 'new normal' for ensuring financial inclusivity, empowerment and resilience
4 June, 2021 | TerraPay | Articles

The year 2020 witnessed one of the most unprecedented health and economic crisis of all times – the COVID 19 pandemic caught us unaware and troubling times ensued as the world closed down. On the hindsight, the world was already transitioning towards digitally enabled cashless economies; the pandemic just accelerated the process and ecosystems emerged to aid this very transition. What would usually have taken over 2 to 3 years, happened in just 2 to 3 months - the pandemic compelled people to rely on digital corridors, with social distancing norms and no-contact exchanges in place. TerraPay came into being an independent organization, with new shareholders, at this time (March 2020), with a vision to build inclusive digital economies that leave no one behind.

One must also take into account the fact that, banks and other financial institutions majorly deal in high value, low volume payments. They cannot handle a billion transactions per day. However, mobile operators deal with low value, high volume payments. One can send a text message which costs one cent or make a phone call that costs five cents. Therefore, mobile operators can handle about a billion CDRs (call detail records) per day.

Moreover, there are many countries around the world where people do not have adequate or affordable access to traditional cross border payments or remittances channels like bank accounts and cash. TerraPay strives to bridge this gap by harnessing the power of digital mobility to not only foster financial inclusion, but also ensure financial empowerment, resilience and independence, and so far the company has made landmark achievements in providing access and adoption capabilities to the last mile, across countries.

TerraPay’s vision is in fact aligned towards achieving the SDG 2030 goal of fostering economic growth and equality, by reducing remittance costs and furthering universal digital acceptance. We did that by establishing a secure, agile and climbable collaborative model built to augment mobile money transactions, across the globe. It’s a build-once, use multiple-times, strategy we follow. Our mission, similarly, was to build a plug and play system and be a one stop shop for digital payments across borders.

At TerraPay, we leveraged our robust proprietary foundation and constantly adapted innovative technology to create a reliable digital payments highway that connects diverse cross-border payment systems and instruments (no matter how small), seamlessly and in real time. The digital interoperability engine enables customers and businesses globally, to send and receive payments through a scalable, compliant and transparent platform, with over 97% of transactions globally, reaching the recipient in under 1 minute. This customizable interoperability is central to a digitally connected payments ecosystem as it is the only way to connect more and more communities with these services and product solutions. The platform supports diverse payment instruments and types of payments while observing complex regulations and compliance standards in different markets.

TerraPay's journey started with Africa - a growing young population with a strong prevalence of mobile wallets, in a remittance market carrying huge opportunities. In fact, data shows that global remittance flows witnessed more resilience than expected during COVID-19, particularly for low and middle-income countries. TerraPay connects mobile wallets in Africa to senders in the Middle East, Europe, the US and Asia.

The initial step was sending small payments into wallets - an impressive count of 500Mn+ mobile wallets, globally, as on date. Over time, and across countries, also connecting bank accounts to our partner network (currently, 4Bn+ bank account partners, and growing) became pertinent. Driving digital wallet consumption is the next most important phase in deepening the connect with our partners and their customers. TerraPay expanded on its product and service offering by enabling people to spend money from their digital wallet in different parts of the world. In the near future, TerraPay plans on levelling up their products and services to facilitate these end customers to manage and grow that money.

From a bigger perspective, the banking payment rail and card payment rail already existed when TerraPay became operational; the need was to build a mobile payment rail, which carries small value instant payments. This is what TerraPay delivers today through a well-entrenched network partner channel present all over the world. The idea was to democratise the movement of money for the vast majority of the world’s population who are unbanked, or who just need to transfer as little as a 100 dollars, across the border to a loved one.

As I write this, a recent report by the World Bank states that worldwide remittances are expected to total $702Bn in 2020-21, down from $719 billion in 2019 (-2.4 percent). However, while aggregate remittances inflow took some hit due to the pandemic, some nations actually augmented it during the health crisis quite substantially. These are Mexico, the third-biggest remittance recipient in the world, as well as Egypt, Pakistan and Bangladesh. Even India received around $83.1Bn in remittances in the midst of COVID.

There are countries where remittances inflow are actually lifelines. Some of these are Tonga (37.7 percent of GDP) as well as Somalia (35.3 percent of GDP) and Lebanon (32.9 percent of GDP). This corroborates TerraPay’s objective to build an end-to-end infrastructure that promotes digital engagement and digital growth. Going forward, our goal will be to strengthen and offer more value added services on the digital payments front, thereby adding more and more participants to a unified financial ecosystem.