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Card crusaders, cash infidels and the holy grails of digital financial inclusion


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This paper analyses the turn toward financial inclusion in general, and toward digital money and the end of cash in particular, in development policy. It examines the profit-oriented logics at work and raises critical questions about the moral crusade being waged over digitalising poor people’s money. It begins with a discussion of why financial inclusion has displaced microfinance on global development agendas, and is bringing new practices and players to the space of poverty finance. It shows how financial inclusion modifies the theory of change underlying poverty finance, with financial intermediation rather than income generation now being seen as crucial to poverty alleviation, and analyses and explains the particular emphasis on promoting cashless payment systems. As becomes evident, powerful actor coalitions (card crusaders) are assembling to push for an end of cash and the full digitalisation of poor people’s money. These crusaders pursue three holy grails: to capitalise on everyday transaction costs, to use big data generated by the poor for sale and analysis, and to exert greater governmental over poor people’s money. This raises serious questions about the possibility of empowerment through financial inclusion.
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BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
Card Crusaders, Cash Indels and
the Holy Grails of Digital Financial
Philip Mader
Keywords: nancial inclusion, mobile
money, micronance, international de-
velopment, cash, big data
Philip Mader is a Research Fellow at the Institute of Development Studies in Brighton,
United Kingdom. E-Mail:
This paper analyses the turn toward nancial inclusion in general, and digi-
tal money and the end of cash in particular, in development policy. It exam-
ines the prot-oriented logics at work and raises critical questions about the
moral crusade being waged over digitalising poor people’s money. It begins
with a discussion of why nancial inclusion has displaced micronance on
global development agendas, and has introduced new practices and play-
ers to the space of poverty nance. It shows how nancial inclusion brings
a modied theory of change, with nancial intermediation rather than in-
come generation now being seen as crucial to poverty alleviation, and ex-
plains the particular emphasis on promoting cashless payment systems in
the name of inclusion. As becomes evident, powerful actor coalitions (card
crusaders) seek the end of cash and the full digitalisation of poor people’s
money in pursuit of three holy grails: to capitalise on everyday transaction
costs, to seek and analyse big data generated by the poor, and to exert great-
er governmental power over poor people’s money. This draws into doubt
the prospect of empowerment through nancial inclusion.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
[1] I have gratefully beneted from inputs
from Axel Paul, Milford Bateman, Hugh
Sinclair, and an unknown reviewer. All
errors are my own.
[2] Source: notes made by the author, at
the “V. Congreso de Acceso a Servicios
Financieros, Sistemas y Herramientos de
Pago”, Cartagena de las Indias, 21 March
“We need to undertake a crusade against cash. We need to work together to
make people use cards and other technology more. We need nancial educa-
tion to make people understand the importance of these electronic tools”, the
head of a major Colombian card issuing company and payments network told
a congress of bankers in March 2014. [1] He reiterated the common mantra
that nancial inclusion helped poor people, but his speech to the Colombian
nance community, assembled in an upmarket seaside hotel, focused mostly
on other expected benets from the full digitalisation of payments, namely
the fees and the vast amounts of client data that payments providers could
gain. The prime ally that they needed in this crusade, the executive intimated,
was the state, which needed to be pushed to extend broader social welfare
programmes, because this would require every poor Colombian household
to have (and use) a digital payment account. [2]
Financial inclusion was already quietly ascendant before the great nan-
cial crisis of 2008, but has strongly gained impetus since then, and a series
of international declarations and keystone publications has cemented its
emergence (United Nations 2006; AFI 2012/2015; GFPI 2014; World Bank
2014). As World Bank President Jim Yong Kim highlighted in 2014:
“Financial inclusion has moved up the global reform agen-
da and become a topic of great interest […]. For the World
Bank Group, nancial inclusion represents a core topic,
given its implications for reducing poverty and boosting
shared prosperity. The increased emphasis on nancial in-
clusion reects a growing realization of its potentially trans-
formative power to accelerate development gains.” (World
Bank 2014, xi)
Financial inclusion follows on the heels of micronance as “a broader push
to extend nancial markets, and this push introduces new products, new
providers, and new target markets”; as World-Bank afliated authors explain
(Cull et al. 2013, 1). Although its specic form is novel, the new agenda’s rise
tessellates with the enmeshment of nance and poverty that has taken place
at least since the 1980s, a “nancialisation of poverty” of which micronance
was an integral part, and in which debt was the most lucrative and most
attended-to frontier (Mader 2015). Soederberg (2014) refers to that enmesh-
ment as “debtfarism”, wherein a nancial “poverty industry”, mandated by the
state, has come to administrate the welfare needs of the “surplus population”
in exchange for new opportunities for value extraction; prominent forms of
this include subprime lending and microcredit. But the gradual assembly of a
community of thought and practice under the banner of “nancial inclusion”,
roughly over the past ve to ten years, now signals a move at least partly
away from credit, and a shifting and widening of the agenda towards one of
“poverty payment” (Maurer 2015). In particular, digital money inscribed into
cards, on which this paper focuses, represents the most exciting emerging
frontier for the proponents of nancial inclusion, chiming into the broader
cacophony of calls to put an end to cash (Rogoff 2016). Digital monies and
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
cashless payment systems are pivotal to the “fast-evolving ntech–philan-
thropy–development (FPD) complex” which seeks to develop and deploy
individualised “xes” for poverty via digital nancial technologies aimed at
governing the behaviours of “risky populations” (Gabor/Brooks 2016, 2f.).
The nancial inclusion agenda builds on many established features of
micronance, above all the recognition that poor people can be protable
clients for nancial rms; but it vastly expands the scope, and assembles a new
coalition of actor groups (card crusaders) that includes international organisa-
tions, philanthropic foundations, NGOs, large banks, credit card companies,
governments, nancial regulators, educators and technology rms. Just like
the micronance mania that peaked around a decade ago, the contemporary
focus on extending nancial services, and digital payments in particular,
as drivers of modernisation and inclusion for the world’s poor, comes with
the trappings of a moral crusade. Proponents proclaim unequivocally that
the benets from “dethroning cash as king” (Inside Philanthropy 2016) are
manifold and would accrue especially to the most marginal and vulnerable.
For instance, as the managing director of the “Better than Cash Alliance”
(BTCA), Ruth Goodwin Groen, claims, moving away from cash will promote
women’s empowerment: “If you want to make sure women are participat-
ing in the economy and have economic opportunities, one way to do it is by
digitizing payments. Women in informal businesses not only increase their
economic opportunity by digitizing payments, but it helps them move their
business to formality.” (ibid.) Regardless of whether such claims stand up to
logical scrutiny or not – a hallmark of moral crusades being that they do not
need to –, in the peculiar world of “poverty nance”, where poverty appears
as an ill that is best engaged through nancial services extension (Rankin
2013), they ring undeniably true.
This article critically examines the moral crusade for changing poor people’s
money. It examines the prot-oriented logics at work, and raises critical ques-
tions about the implications of digitalising poor people’s money. For present
purposes, as a denition it will sufce to understand nancial inclusion as
the generation of access to and usage of formal nancial services by people
who currently do not use them, and digital nancial inclusion as modes of
nancial inclusion that eschew the use of cash in favour of electronic money.
Although it is generally discussed as a global issue, an important distinction
is between nancial inclusion in richer and poorer countries. In afuent
countries, nancial inclusion addresses a generally small minority of people
who, for whatever reasons, are unable to obtain a bank account and other
basic nancial services that are otherwise the norm in their society (which
may, for instance, make getting a job or renting accommodation difcult).
But nancial inclusion in the development sphere, the focus of this paper,
is a much more sweeping agenda: in many developing countries, using for-
mal nancial services is the exception rather than the norm, and nancial
inclusion is not about helping a left-behind minority to catch up, but about
tethering entire communities, territories and populations to formal nance
for the rst time. In line with the grander scale of this project, the promises
are more grandiose, and nancial services are presented as central to social
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
inclusion, cohesion and modernisation: a keystone for poverty alleviation,
nancial stability, and economic development (cf. World Bank 2014).
The next section will discuss the evolution of the nancial inclusion agenda
out of the micronance agenda, and examine the changes in poverty nance
that have resulted, which include new players, new practices, and a new theory
of how nance benets poor people. Financial inclusion, we see, invites new
players such as payday lenders into poverty nance, and suggests processes
of nancial intermediation (rather than income generation) to be the key to
poverty alleviation. The following section then examines the crystallisation
of digital nancial inclusion, which aims for the use of electronic money and
the end of cash. Digitalisation via card money promises far easier outreach
for nancial service providers; but it also raises questions about who benets
in what ways, what drawbacks different types of money may have, and what
resistances the project may encounter. The nal section examines three “holy
grails” pursued by card crusaders. First, transaction costs: digital monies
promise efciency gains, and the potential (for those who control the infra-
structure) to capitalise on transaction costs. Second, micro big data: digital
monies create data that may be sold or used by nancial service providers
to enhance their own protability, and that is keenly sought after by the
economics profession. Third, governmental power: digital monies promise
greater transparency, which may also be used to discipline and control people
through monitoring and governing of their nancial behaviours. The conclud-
ing section raises questions about whether digital nancial inclusion can be
a progressive and empowering vision.
From micronance to nancial inclusion
Where does the agenda of nancial inclusion come from? In many ways,
poverty programming has long intermeshed with morally-driven changes
and expansions of the monetary and nancial system. As Viviana Zelizer’s
(1997) study of poor relief in early 20th century North America showed, social
reformers wrestled with, but ultimately settled on, cash rather than in-kind
forms of poor assistance, because they hoped that having to decide how to
spend their money themselves would nally make poor people more moral
and upright citizens. More recently, the United States’ subprime lending
sector proliferated as much thanks to efforts of activists since the 1980s who
worked to ensure that poor, predominantly black communities gained equal
access to mortgages as due to new nancial technologies and deregulation
initiatives (Rajan 2010; Rivlin 2010). Similarly, and contemporaneously,
in the Global South microcredit grew thanks to state welfare retrenchment,
deregulation, and the globalisation of nancial markets, but also due to the
moral promise of mass empowerment through small enterprise. This promise
was anchored in the public imaginary among other things through the Gandhi-
esque presence of Muhammad Yunus, who promised a poverty-free world
by ending “nancial apartheid”, and argued that credit was a “human right”
(Mader 2015, 62). In short, changes in the moral narratives around money
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
and nance go hand-in-hand with changes in the forms and boundaries of
money and nance.
The globally ascendant call for nancial inclusion incorporates the better-
known practices and narratives of micronance, particularly microcredit.
In some respects a simple switch of terminology has taken place; practices
formerly known as micronance are re-labelled as nancial inclusion. This
comes precisely at a time when the benecence of micronance is increas-
ingly questioned and challenged (cf. Dichter/Harper 2007; Bateman 2010;
Duvendack 2011; Karim 2011; Sinclair 2012), which has led some critics to
warily dismiss nancial inclusion as “an almost entirely fake agenda” (Bateman
2012). Their scepticism may be justied, inasmuch as key organisations have
simply adopted the new label without signicantly changing much in practice;
for instance, very prominently, the global micronance funder Accion has
placed itself at the helm of the new discourse by founding the “Center for
Financial Inclusion”, although Accion continues mainly to fund micronance
institutions (MFIs). Such moves recall an earlier terminological switch when,
in the mid-2000s, “microcredit” was superseded by “micronance”, while
most institutions simply continued to focus on credit (Mader 2016, 5).
But the power of labels can also easily be underestimated; particularly when
what to the sceptic appears just a hollow phrase acts as a powerful mantra for
the believer. Financial inclusion potently invokes contemporary social justice
vernacular, aligning practices of nance with broader discourses of social
and economic inclusion, such as those which frame the post-2015 Sustain-
able Development Goals. Statements like “[o]ne key component of inclusive
development is nancial inclusion” (from a headline African Development
Bank publication; Triki/Faye 2013, 25) illustrate how nancial inclusion is
inserted into broad donor agendas of “economic inclusion” and “market inclu-
sion”. And who could ever be in favour of nancial exclusion?
The shift to nancial inclusion evokes ideals of equality, while pursuing
(at best) a highly simplistic, binary notion of equality; one which, depend-
ing on the modalities of inclusion, may even serve to generate and obscure
new forms of inequality and difference (one is either included in nance
or excluded from it, but what recedes from view is the different quality of
inclusion received and price paid for it, such as differential interest rates).
By discounting questions about the terms of inclusion, as Kate Meagher
(2015, 837) notes, market inclusion and inclusive growth discourses work
to reframe “poverty and informality as a product of inadequate inclusion
in markets, rather than a result of inequities in the way markets function.”
Critical questions about market inclusion should be formulated in terms of
whether it generates (benecial) inclusion or “adverse incorporation”, which
hinges on the terms of inclusion (Hickey/Du Toit 2013). [3] The importance
of the terms is starkly illustrated by Fourcade and Healy’s (2013) research on
United States’ consumer lending, which nds that the differentiated pricing
of credit, calibrated through individual performances of creditworthiness and
assessed by algorithms, creates profound new class distinctions. As outright
class-based exclusion subsided, the vast majority of Americans have found
themselves included in credit markets on highly differential terms that reect
[3] For example, textile workers in Bang-
ladesh clearly are economically included
in global value chains, but their terms of
incorporation are often highly adverse.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
cumulative and mostly irreversible “classication situations” (Fourcade/Healy
Not only is the rhetoric changing thanks to the shift toward nancial inclu-
sion and away from micronance, but also the actors and their activities.
The mission for poverty nance is now inclusion, on as many dimensions as
possible (payments, savings, credit, insurance) and by whatever means that
appear suitable. As a result, even though much of what is called “nancial
inclusion” remains micronance, the change in implied mission is stark, and
a variety of new players and practices is entering the eld of poverty nance
as legitimate participants. Micronance has never been easily dened or
delineated; however, as the World Bank’s central promotion agency CGAP [4]
used to specify: “in practice” the term is often used “narrowly to refer to loans
and other services from providers that identify themselves as ‘micronance
institutions’(CGAP 2012, emphasis added). Micronance was pioneered
by small NGOs, many of which over time transformed into commercially
oriented MFIs under the auspices of the World Bank and other international
nance institutions (IFIs), with the aim to garner more ample capital from
private investors (Robinson 2001). MFIs presented themselves (and were
broadly perceived as) pro-poor alternatives to other formal nancial actors
and informal lenders, and micronance thus generally remained restricted to
MFIs (commercial and non-commercial) and some banks who “downscaled”
or founded their own micronance divisions.
The nancial inclusion agenda, however, opens the stage for a range of new
players and practices. It reintroduces many who were left out in the cold by
micronance programming, including community savings-and-loans associa-
tions, semi-formal village rotating savings and credit associations (ROSCAs),
nancial cooperative institutions, and even government lending programmes.
[5] It also, more ominously, brings in many who had previously not been
seen at all as interested in the welfare of the poor, such as payday lenders,
large banks, technology rms, mobile network operators, and credit card
companies. IFIs remain strongly involved in nancial inclusion, and donor
bodies and specialist MFI funder networks still play a role. At the core of
the actor assembly is the global Alliance for Financial Inclusion, which took
shape around 2010, and brings together national central banks under the
auspices of the G20 and the Bill and Melinda Gates Foundation. Much of the
global advocacy for nancial inclusion is performed by the Gates Foundation,
selected global nancial corporations such as Visa, and “independent” phi-
lanthropy bodies created by nance companies, such as the Citi Foundation
and MasterCard Foundation.
To understand the profundity of the shift, it is instructive to examine one
of the previously-unthinkable partnerships taking place under the nancial
inclusion umbrella: a recent deal that brought together the Christian micro-
nance network Opportunity International and the South African (Luxembourg-
registered) company MyBucks. In late 2015, Opportunity, a central player
among the international values-driven micronance networks, announced that
it was selling its “Opportunity Bank” subsidiaries in six African countries to
MyBucks, a “FinTech” company bringing a “unique blend of innovation and
[4] CGAP stands for “Consultative Group
to Assist the Poor”, which is rarely spelled
out. It no longer offers a distinct denition
of micronance, and only explains it as
part of nancial inclusion.
[5] This associates micronance/nan-
cial inclusion with unabashedly member-
based institutions, as though they were
involved in the same business. It appears
to help deect some of the rising criticisms
of nancial inclusion actors as being too
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
cutting-edge technology [that] will continue to rene the process of banking,
building credit and accessing other short-term nancial services” for Africans
(MyBucks 2016, 2-3). According to micronance industry expert Chuck Water-
eld, rather than some sort of cutting-edge tech rm, [6] MyBucks should
be understood simply as a payday lender specialised in making extremely
high-interest loans in Sub-Saharan Africa, at between 216 and 480 percent.
Watereld suggests MyBucks aims to use the six Opportunity Banks to gain
access to the low-/no-interest accounts of around one million mostly poor
Africans, to on-lend these savings at high margins to payday borrowers. Given
MyBucks’ two founders’ checkered history, having previously led another
payday lender into bankruptcy, he worries: “The savings and potentially the
economic welfare of over a million trusting poor clients in Africa appear to be
at risk.” (Watereld 2016) Another expert analysis highlighted the ambiguity
and novelty which this “inclusive” alliance represents:
“The key lies in how MyBucks’ mission will evolve over the
next few years. Its current model of high-interest loans,
high-cost funding, and high prots differs greatly from tra-
ditional micronance practice. Does the transaction signal
MyBucks’ pursuit of the vision […]? Or will it simply use
technology to push high-cost loans in pursuit of high prof-
its? Or will it create something in-between, and if so, how
will the new structure balance client protection with nan-
cial return?” (Rozas/Erice Garcia 2016)
The strange bedfellowship between Opportunity and MyBucks illustrates how
much change the turn to nancial inclusion brings to the poverty nance space.
On another level, a major shift has already happened. The underlying
theory (or expectation, or narrative) of how nance should benet the poor
has changed with the turn to nancial inclusion. The MyBucks-Opportunity
deal indicates the new centrality of nancial intermediation in poverty nance,
with the focus no longer being on lending to poor people, but rather con-
necting different types of nance with different users, by whoever can do it
best. While MFIs may have pioneered the credit technologies that made it
possible to channel loans to masses of poor people in the global South, the new
nancial inclusion logic suggests MFIs may soon be (legitimately) superseded
by more skilful players, such as large banks, mobile network operators, or
credit card companies, with far greater resources at their disposal. Financial
inclusion could represent a threat to MFIs.
[6] MyBucks justied the “FinTech” label
only with the fact that it uses algorithms
to produce individual credit scores.
Fig. 1 Schematic theories of change (own work)
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
The ‘original’ microcredit theory of change and poverty alleviation boiled
down to poor people using nancial services to raise their incomes (or absorb
losses, e.g. health crises or expensive existing debts), for which credit appeared
the primary tool (see Fig. 1). In the quintessential micronance story, a loan
facilitated an idle, underemployed or adversely employed poor person to
start or expand a business, which subsequently generated prots to grow
their incomes and assets. Although this theory has gradually been watered
down and modied under the weight of evidence to the contrary (Mader/
Sabrow 2015), such as the widespread use of loans for consumption, and
ndings that micronance does not measurably raise poor people’s incomes
(Bateman 2010; Duvendack et al. 2011), the stories of successfully entrepre-
neurial individuals have remained central to the micronance vision, starkly
encapsulated in Muhammad Yunus’ credo that “all human beings are potential
entrepreneurs” (Yunus 2003, 205).
By contrast, the nancial inclusion theory of change is agnostic towards
entrepreneurship, while it actively embraces consumptive borrowing. It hinges
on two intermediations, the rst of which operates at the micro level and
may be termed intertemporal intermediation (see Fig. 1). Entrepreneur-
ship is just one of the many reasons why, “like everyone else, poor people
need and use nancial services all the time” (CGAP 2001, 2), and there is
no longer an assumption that poor people need to generate money for loan
repayment. Instead of raising money through business or other investments,
it is assumed that poor people already effectively have the money, in the
form of either past or future income (Mader/Sabrow 2015). The key is now
that “nancial services allow people to reallocate expenditure across time
[meaning that] if you don’t have the ability to pay for things now, out of cur-
rent income, you can pay for them out of past income or future income, or
some combination of both” (Rutherford 2000, 2). This is why savings (and
to some extent insurance) become more central, as they allow poor people to
bundle and shift incomes and expenses (including probable future incomes
and expenses) over time, in order to buy what they need, cope with shocks,
and plan ahead (see Fig. 2).
While these new claims may appear more modest and more grounded
in reality than earlier suggestions that any person could entrepreneurially
“bootstrap” their way out of poverty, the underlying logic is nevertheless quite
strained. Debt and savings are treated as functional equivalents, as Ruther-
ford (2002, 2) makes clear: “Repaying loans depends just as much on the
act of saving as does saving up. The only difference is the lump sum becomes
available before, rather than after, a series of savings”. The suggestion is that
one can either “save up” or “save down” (borrow) to fund a purchase, and
therefore poverty is not primarily a problem of lacking money but, because of
nancial exclusion, a problem of just not having the right money at the right
place or time. The intertemporal intermediation theory of change thereby
suggests that shifting money over time is key to alleviating poverty; or at
least to making poverty more manageable through improving the efciency
with which poor people marshal their money. As the authors of Portfolios
of the Poor (endorsed by reviewers as the “new bible” for combating global
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
poverty) put it: “Not having enough money is bad enough. Not being able to
manage whatever money you have is worse” (Collins et al. 2009, 184). The
mission of nancial inclusion, Collins et al. therefore suggest, is to aid poor
people at improving their “portfolio management”:
“With added tools, the portfolios can perform better, mag-
nifying the value that households can squeeze out of each
dollar. To do this, they need, above all, reliable access to
three key services: day-to-day money management, build-
ing long-term savings, and general-purpose loans.” (Collins
et al. 2009, 184)
Fig. 2: intertemporal intermediation (as illustrated by Rutherford, 2000, 2-3)
The other theory of change, at the macro level, may be termed interspatial-
interclass intermediation (compare Fig. 1). The suggestion is that the freer ow
of money between different spaces and economic classes generates economic
growth which leads to poverty alleviation. The 202-page World Bank Global
Financial Development Report 2014, entitled “Financial Inclusion”, extensively
discusses country-level comparisons to show that nancial access correlates
with macroeconomic achievements (World Bank 2014). The implication is
that deeper nancial penetration fundamentally drives economic and social
development, due to lower transaction costs and more efcient allocation
of capital and risk. As the authors of CGAP’s 2014 summary of Financial
Inclusion and Development: Recent Impact Evidence put it:
“The well-established literature suggests that under normal
circumstances, the degree of nancial intermediation is not
only positively correlated with growth and employment, but
it is generally believed to causally impact growth. The main
mechanisms for doing so are generally lower transaction
costs and better distribution of capital and risk across the
economy.” (Cull et al. 2014, 6)
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
Financial exclusion, therefore, apart from the direct effects on the excluded,
also supposedly has the macroeconomic effect of preventing the efcient
allocation of capital because some potential sources and users of capital
remain disconnected from one another. Consequently, inclusion is about
facilitating a more efcient ow of capital from one place to another and
one class of economic actors to another. In the words of the G20 Financial
Inclusion Experts Group:
“Financial sector development drives economic growth
by mobilizing savings and investing in the growth of the
productive sector. The institutional infrastructure of the
nancial system also contributes to reducing information,
contracting and transaction costs, which in turn accelerates
economic growth.” (ATISG 2010, 44)
In the interspatial-interclass intermediation theory, the argument is about
efciency rather than distribution, and the rationale for including everyone
into formal nance is to ensure that all capital (including whatever capital
the poor may have) can be mobilised and channelled through the nancial
system to wherever it can be used most effectively. Notably, the exponents
of the theory make no rm claims about the direction in which money would
ow thanks to nancial inclusion, unlike in microcredit, where the presup-
position was always that poor people lacked money and needed to be able
to borrow more.
The intertemporal and interspatial-interclass theories of change are logically
distinct, but nonetheless linked. As poor people intertemporally intermediate
their money over time – by “saving up” or “saving down” –, if they do so via
formal institutions, then money ows back and forth between them and other
users or providers of nance, producing intertemporal-interclass intermedia-
tion. Therefore, the overall “nancial inclusion theory of poverty alleviation”
may be summed up as follows: poor people intermediate between their past
and future incomes in order to meet their present and future needs, and
doing so alleviates their poverty; and in the process, they provide capital for
others, or they use the capital of others, and thereby facilitate a more efcient
allocation of capital, which leads to growth that alleviates their poverty. The
evident mission of nancial inclusion, therefore, is to make possible these
twofold gains, and where possible to connect them.
Critical questions need to be raised about the logical and empirical plau-
sibility of this theory of change, like earlier questions about the microcredit
theory of change (see Mader 2016). What counts here is to recognise how
actors’ and policymakers’ belief in this new theory validates the new practices
and players emerging in the poverty nance space. If nancial inclusion is
believed to alleviate poverty by facilitating intertemporal and interspatial/
interclass intermediation, it appears as socially and economically necessary.
MyBucks’ takeover of the Opportunity Banks then, for instance, is apparently
not a morally dubious capture of MFIs and their African clients, but one of
many necessary steps towards creating better channels for intertemporal
and interspatial-interclass nancial intermediation in the name of the poor.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
Digitalising nancial inclusion
Given how the practices, players, and theories of change at work in poverty
nance have been rearranged with the turn to nancial inclusion, what does
this mean for the form of money? In the eyes of many actors in the nancial
inclusion space, nancial inclusion means going digital and cashless. This
story begins with an irony: it was poor Kenyans, not the development donors
and commercial rms who have since claimed the success as their own, who
created the pioneering mobile payment system M-PESA. [7] It arose from an
unexpected reaction by the objects of an experiment with credit in Kenya, in
a partnership funded by the British Department for International Develop-
ment (DFID) between Faulu (an MFI) and Safaricom (a Vodafone subsidiary).
The project was set up in 2005 merely to test “a platform that would allow
a customer to receive and re-pay a small loan using his or her handset. We
wanted to allow the customer to make payments as conveniently and simply
as they do when they buy an airtime top-up.” (Hughes/Lonie 2007, 68) But
the data soon showed users engaging in perplexing behaviours, and after a
few months researchers had to be dispatched to understand such strange
phenomena as why, “aside from the standard loan repayments for which we
had designed the system” (76), the users were repaying loans for one another,
using the money on SIM cards for payments between businesses, using the
SIM cards effectively as “overnight safes”, journeying between the project’s
two areas depositing cash in one place and withdrawing it in another, or
buying airtime and gifting it to others. The borrowers in Nairobi and a town
called Thika, it transpired, had used the system – intended merely to lower
the transaction costs of credit – to effectively send money and save. Only a
year later did Safaricom even recognise a commercial value in promoting it
as a system for money transfers and domestic remittances, and the “ofcial”
M-PESA mobile money success story began (Hughes/Lonie 2007).
On the coattails of M-PESA’s rise to fame, mobile payment systems have
emerged as the grand new frontier in the nancial inclusion community’s
collective imaginary:
“M-PESA has prompted a rethink on the optimal sequenc-
ing of nancial inclusion strategies. Where most nancial
inclusion models have employed “credit-led” or “savings-
led” approaches, the M-PESA experience suggests that
there may be a third approach – focus rst on building the
payment “rails” on which a broader set of nancial services
can ride.” (Mas/Radcliffe 2011, 172)
Donor and practitioner ennui with credit, which is generally commonplace and
even oversupplied in some locales (by 2012, global microcredit nearly rivalled
global aid budgets) but also increasingly seen as morally and prudentially
suspect (thanks to successive overindebtedness crises and sector collapses),
is likely a contributing factor to the present digital nancial inclusion hype.
But more fundamentally, the imperative to go cashless has arisen from the
insight that low population densities, poor physical infrastructure, and high
costs of delivery are likely to make nancial services via traditional (“brick and
[7] With M-PESA having become an is-
sue of Kenyan national pride, debates
are waged over whether it was British
aid money, British companies, or Ken-
yan entrepreneurs that rst “invented” it
(e.g. The Founder Magazine 2015). None
of the ofcial histories in fact refer to the
creativity of the low-income users.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
mortar”) banking models unrealistic in many parts. Poor people often live in
rural areas, where no ATM or branch network is likely to reach. As the G20
nancial inclusion experts group argues: “Technological innovation changes
the cost and access equation making it economically viable for nancial
service providers, often in partnership, to reach poor people, with a wider
range of products and services” (ATISG 2010: V). According to the OECD
and the “Better than Cash Alliance” (BTCA), digital payments represent “a
more cost-effective, efcient, transparent and safer means of disbursing and
collecting payment” (Romon/Sidhu 2014: 14), and some enthusiasts even
bluntly claim that “cash is the main barrier to nancial inclusion” (Mas/Rad-
cliffe 2011, 181). The key to achieving nancial inclusion therefore is sought
in digital monies inscribed on plastic cards or (often preferred) SIM cards.
As the New Micronance Handbook sums up the change in thinking: “The
technology drivers of nancial inclusion will come from innovations in mobile
money, biometric identity systems, smart phones, and wireless broadband
Internet access” (Ledgerwood 2013, 2). Throughout the world of nancial
inclusion, card, not cash, is becoming king, and even the state-driven “largest
nancial inclusion scheme in the world”, Pradhan Mantri Jan-Dhan Yojana
(PMJDY “Prime Minister’s Money Scheme), launched in 2014 in India,
focuses on “RuPay” debit cards as a gateway to bank accounts, government
services and insurance (Sa-Dhan 2015, 1). [8]
Bill Maurer identies this transformation within poverty nance as a fun-
damental shift away from banking towards “poverty payment”, which has
unfolded roughly since 2010. In line with the new nancial inclusion theory
of change, the turn toward payments, Maurer (2015, 129) says, follows “the
idea that the design of digital platforms for the transfer of value, agnostic
as to what value is being transited or what it is being used for, has positive
spillover effects that ultimately benet poor people”. But in his analysis,
the ascendant emphasis on liberating poor people from their cash connects
with a much broader “troubling” of the status quo around money, ranging
from the libertarian critiques of state-issued money to contrarian proposals
for “sovereign” money, or the emergence of local alternative currencies and
cyberpunk techno-utopian cryptocurrencies (like Bitcoin). Maurer points out
that the project of untying money from its present physical forms as well as
from the nation-state need neither be necessarily utopian nor dystopian, but
either way raises deeper questions about the “democracy” of money, or its
“publicness”: “Something else is afoot here. And that something is a focus on
generating revenue from the privatization of the means of value transfer” (137).
The trajectory of nancial inclusion towards digital payments brings together
different sets of actors with an apparent interest in putting an end to cash (“card
crusaders”). A (non-exclusive) roll-call would include many large international
public and private nancial inclusion funding bodies (some created by digital
entrepreneurs themselves, such as Bill Gates), major payment systems and
credit card companies, large commercial banks, government agencies, select
international organisations, telecommunication rms, some poverty nance
providers (such as MFIs) willing to “go digital”, and the bewildering gamut
of FinTech companies. [9] Many of the key actors in this congregation are
[8] The connection with the Indian govern-
ment’s controversial decision to invalidate
larger banknotes practically overnight in
late 2016, and allowing only small amounts
to be exchanged for new notes while larger
amounts must be deposited in banks, can
hardly be overlooked.
[9] PayPal, for instance, is a FinTech. Pay-
Pal is a wholly owned subsidiary of eBay.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
organised in the BTCA, which is located in the United Nations Capital Devel-
opment Fund, and presents itself as a “global public-private partnership” of
governments, international NGOs, companies, and “resource partners” who
include the Gates Foundation, Ford Foundation, Omidyar Network, [10]
Citi Foundation, MasterCard, Visa, USAID and UNCDF [11]. Visitors to the
BTCA home page are welcomed by imagery of a well-attired South Asian
woman smiling at her smartphone, under the heading “Moving from cash
to digital payments to improve people’s lives” (see Fig. 3). Disavowing cash,
the image insinuates, brings modernity, empowerment, and joy to the exotic
and potentially poor “other”.
Fig. 3: Screenshot from the Better than Cash Alliance home page [12]
The BTCA publishes toolkits, case studies, and reports, but closely guards
information about its governance and activities (it does not even name its
executives [13]). Only its purpose is made very clear: “to accelerate the transi-
tion from cash to digital payments globally through excellence in advocacy,
knowledge and services to members”. [14] The BTCA calls for an “ecosys-
tems approach” to accelerate this “transition”, highlighting that different
players must make concerted efforts to bring about the common goal – just
as in the vision outlined by the Colombian banker, above. In particular, the
BTCA emphasises how governments must facilitate the “transition” by mak-
ing regulation “proportionate” to the aim of digitalising money, and moving
their payments to citizens away from cash:
“Digitizing Government-to-Person (G2P) payments, such
as pensions, social welfare benets, and salaries is a key
driver of adoption and usage of digital payments. The large
quantity and scale of these payments provide access to a
large number of end users, and deliver key learnings that
help expand payment systems to other users.” (BTCA 2015,
There is no doubt that the card crusaders are a powerful collective, but this
does not mean digital money will inevitably sweep aside any resistance or
[10] Omidyar Network is a self-styled
“philanthropic investment firm” estab-
lished by eBay founder Pierre Omidyar
and his wife Pam, which has had a deep in-
volvement in micronance from the outset.
Although it lists these organisations,
the BTCA does not publicly disclose its
funding sources. Presumably, the “resource
partners” may be the funders. https://, 30 September
30 September 2016.
about/governance, 5 October 2016.
about/purpose, 5 October 2016.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
doubts. For all its talk of a “transition”, the BTCA does not at all appear con-
vinced that, without extensive lobbying and government intervention, the
digitalisation of money and of nancial inclusion will come about. Moreover,
understanding innovation as an inherently political process, in which there
are winners and losers from “creative destruction” (to borrow Schumpeter’s
terminology), it becomes clear that the digital nance trajectory pits these
crusaders against others who fail to see (or believe) the promise of cash-
lessness, or who rely on ‘older’ nancial inclusion models; whom we may
perhaps call ‘cash indels’. As Maurer (2015, 138) points out, some African
regulators have already begun to “vociferously argue with donor agencies
that ‘payments are a public good’”, not to be privatised by digital money
schemes. Digital nancial inclusion could also threaten existing apparatuses
to nancially include the poor (and to capture value from them), such as
“brick-and-mortar” micronance operations premised on group lending and
face-to-face interactions. For instance, as reported in the M-PESA case, it
soon “became apparent that the service was more user-friendly for the clients
than for the micronance institution”, and the MFI had major reservations
about expanding the project because
“clients no longer had the same compelling need to attend
the weekly group meetings. Opinion is divided upon the
value of MFI group meetings generally; Faulu was strongly
in the supporters’ camp and consequently found the drop
off in attendance disturbing.” (Hughes/Lonie 2007, 76)
Even key members of the Better-than-Cash camp have noted that enthusiasm
for digital monies is not universal, and mass buy-in to systems like M-PESA
has proven difcult to orchestrate in other countries. The MasterCard Foun-
dation (2014, 5) now argues Kenyan providers “don’t offer a template that is
replicable across all markets. To achieve the real dream of nancial inclusion,
new models and partnerships will need to be established.”
Finally, amid the frenetic battle cries of the card crusaders, one may almost
forget to ask the simple question of whether any particular form of money –
cash or card plausibly would to bring any major detriment or benet to poor
people, given their lack of it; to wit, whether money’s digitality or physicality
even matters to those who chronically simply have too little. Moreover, the
digitalisation of poor people’s nances could also deprive them (and others)
of any potential advantages from cash, such anonymity and ease. Too little
still is known about poor people’s economic lives to generalise about how
different groups of poor (and less-poor) people would gain or be harmed by
the nancial technologies currently directed at them and how, given that
they are not passive recipients or victims, they may appropriate them in
unexpected (benecial or harmful) ways (Gabor/Brooks 2016). In any case,
the claims made by the likes of the BTCA and MasterCard on poor people’s
behalf should not be taken at face value. These card crusaders are smitten
by three particular “holy grails” of digital nancial inclusion, which the next
and nal section examines.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
Card crusaders’ three holy grails
1. Transaction costs
The proponents of digital nancial inclusion never tire of emphasising the
expensiveness of cash systems vis-à-vis digital money, and how lower trans-
action costs promise efciency gains for societies. For instance, as a BTCA
and Gates Foundation contribution to an OECD Observer issue highlights:
“governments can save up to 75% with electronic payment programmes
because the costs of handling, securing and distributing cash and administering
these cash programmes is so expensive.” (Romon/Sidhu 2014, 13) Payment
systems based on digital money, meanwhile, are suggested to be practically
free (e.g. Mas/Radcliffe 2011).
Yet this is far from true. Digital monies, just like cash, depend on physical
and institutional infrastructures, which include networks of agents, sales
terminals, mobile network towers, data processing centres, regulatory bodies,
etc., which clearly do not come for free. One key difference is that the users,
rather than the system providers, could conceivably be brought to pay for the
costs of the payment system. Digital monies might even bring considerable
extra costs particularly for poor people. To illustrate with mobile money
systems: while the costs of using cash are practically zero for a hypothetical
rst-time user – even an old plastic bag or a rubber band can act as a wallet
–, a person who wishes to be (or has to be) “digitally nancially included”
must acquire a suitable handset. They must charge it regularly with electricity.
They must buy airtime. Access to the system and the ability to make payments
depends on the presence of relevant local infrastructure (network signal;
agents who exchange physical into digital money; point of sale terminals,
etc.). Transactions might require more time and effort than cash handovers.
These costs alone could add up to be anything but insignicant. But even
more importantly, unlike with cash, transactions on a proprietary payment
infrastructure incur a fee. In the case of M-PESA, clients are charged for
withdrawals as well as transfers of money to others. Fees are much higher
(relatively) for the smaller money amounts which poor people move around,
rising to as high proportions as 44 Kenyan Shillings (KSh), or US$ 0.43, for
transfers of between 101 and 500 KSh. And even if customers are not made
to directly pay a fee, then the payment-receiving business will (as with credit
cards) and will mark up the price. Generally, as can be illustrated with M-PESA
or PayPal, private monies have a lock-in effect, as exchanges into other forms
of money incur a fee, which the service provider determines.
The real holy grail for the card crusaders here thus lies not in transac-
tion costs per se, but being able to capitalise better on them, while perhaps
reducing them just enough to lure and lock users in. As Maurer’s (2015)
analysis highlights, gaining control of the infrastructure for transferring value
grants actors the power to extract value from value. To illustrate: the global
revenues of the payments industry amounted to approximately $1.7 trillion
in 2014, equal to a (slowly rising) share of 40 percent of total bank revenues
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
(McKinsey 2015). Credit card companies – which are the most established
players in the beyond-cash space earned an average 1.76% “interchange
fee” charged to merchants on each transaction, in addition to any fees and
interest income obtained from consumers. The interchange fees amounted
to $35.5 billion in the United States in 2013 alone (Merchant 2016, 328)
hardly a “no-cost” system.
For payments companies, the global South now beckons as a vast and
exciting frontier. India’s population rivals that of all OECD countries taken
together, and is growing faster. As books like Portfolios of the Poor (Collins
et al. 2009) highlight, poor and low-income people do not own substantial
amounts of money but they often exhibit a very rapid turnover of money. The
vast informal economy, which accounts for at least 30 percent of GDP in the
majority of countries worldwide – including Brazil, Mexico, and almost all of
Sub-Saharan Africa (Schneider et al. 2010, 27-29) – and clearly prefers cash,
shows immense revenue potential when its small transactions are aggregated.
As a recent report commissioned by Visa enumerated, micro and small mer-
chants in developing countries transact over $6.5 trillion a year, which could
be tapped for an estimated $35 billion transaction fees, (Carlberg et al. 2016).
Moreover, digitalising monies could allow payments companies to capture
revenues from an entirely new source: governments. Welfare payments have
expanded with the spread of conditional cash transfers (CCTs, increasingly
“cash” only in name) as a remedy for the worst forms of poverty (Hanlon et al.
2010). As our Colombian friend suggested, above: social policy and taxpayer
money, when digitalised, serves the nancial industry.
2. Micro big data
The digitalisation of payments also promises vast amounts of accessible data,
which has long represented a holy grail to businesses and researchers alike.
Indeed, money in all its forms is always a carrier of information essential to
fullling its functions, such as means of payment, store of value, and unit of
account (Jevons’ famous triad). The information-transmitting function of
cash, however, remains limited, almost binary, in that it primarily records
its holder’s claim on value. Transactions of cash, when recorded at all, tend
to leave minimal traces; they simply note that an exchange of values has
occurred. But digital money transactions are, by necessity, always recorded,
and the information generated may include place, time, persons, object or
service exchanged, and much more. If cash represents a “point” in monetary
space, digital money is a “vector”, with magnitude and direction.
Maurer (2015, 130) identies the payments industry globally as being in a
transition from “a world of fees to one of data”. But he remains agnostic about
whether the “big data” generated by the micro transactions of the world’s poor
actually has signicant monetary value. Given that the purchasing power of
those to whom it pertains is relatively small, it may well have a diminished
monetary value to marketers; which is not the same as wholly insignicant.
For instance, companies seeking to extend “bottom of the pyramid”-type
sales operations for consumer products might use nely aggregated data to
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
better target specic neighbourhoods or market segments with their products.
Whether the world’s poor are likely to be as bothered about issues of privacy
and sale of personal data, as people in the North have traditionally been, is
another question altogether.
Either way, the riches of micro-transactional data generated by digital
nancial inclusion also would hold more immediate value for actors in the
nance sector, inasmuch as the data can be used to assess users’ eligibil-
ity and prot potential for nancial products, such as loans. Some service
providers in developing countries already employ various non-nancial data
gleaned from phones, such as airtime purchases, call histories, and social
network information to generate credit scores for people with no formal
credit history (Almazán/Sitbon 2014). The transaction data generated by
poor people promises vast quantities of even more pertinent data, allowing
nancial service providers to better ne-tune their services and discrimi-
nate more easily between worthier and less worthy clients. As Fourcade and
Healy’s (2013) work suggests, in order to disburse the “right” quantity of
credit to individuals at the “right” price, nancial systems depend on acutely
monitoring the performances of nancial responsibility by their subjects.
This concern is especially pressing for a poverty nance sector shaken by
recent overindebtedness crises, borrower revolts, and growing doubts about
the “nancial capabilities” of its borrowers (Guérin et al. 2014). Transaction
data appears to hold the key to more selectively expanding the operations of
inclusive nancial service providers and enhance their protability; inclusion
for the “deserving poor”, at the right price.
Lastly, not to be underestimated is the keen interest of the economics
profession (whose members congregate at development nance institu-
tions) to glean new riches of data about the nancial lives of the poor. This
is particularly salient given the behavioural turn in economics, specically
development economics, which gels with the emergent “New Behaviourism”
(Harrison/Hemingway 2014) in social policy and development practice. The
new behaviourist approach and the concurrent research agenda emphasises
individual responsibilities and failures of poor people, and seek ways to better
inuence their behaviours through incentives, “nudges”, conditionalities and
commitment devices. Given how the data of wealthier people are generally far
better-protected, and that eld studies like Portfolios of the Poor are expensive
and time-consuming, the data of masses of poor people has a strong allure.
What better way to gain the data with which to indulge the behaviourist fetish
for monitoring the alleged cognitive decits and behavioural anomalies of the
poor, and study the effects of small “nudges” and tweaks (Berndt/Boeckler
2016), than to design a digital eye into their wallets?
3. Governmental power
The third holy grail is the change-inducing and governmental power which
digital monies promise. At a basic level, they hold the potential to expand
the reach of government via more efcient and targeted welfare payments, as
noted above. Advocates like the BTCA also routinely foreground that digital
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
monies’ are more transparent and would help governments battle corrup-
tion, graft, leakage and crime (although some assessments also suggest digi-
tal nancial inclusion to signicantly complicate crime-ghting, especially
money laundering and terrorism nancing; FATF 2011). One undiscussed,
but evident, concern in this connection is that governments could use the
data generated not just to ght serious crimes, but also to tax or criminalise
the informal sector, which would most strongly affect the poor. But the real
holy grail in terms of governmental power lies in the subtler powers, sought
by proponents of the New Behaviourism, to channel individual behaviour
through digital surveillance and to “upgrade” the nancial subject (Gabor/
Brooks 2016). Their hope, as regards nancial inclusion, is that nancial
tools might help the poor be more disciplined and make better nancial
decisions, allowing them in time to escape poverty; an idea encapsulated very
prominently in the 2015 World Development Report (World Bank 2015),
Mind, Society and Behaviour.
Many recent studies have disappointed with their failure to nd poverty-
reducing effects from micronance, but some have proved rich in ndings
about small but welcome changes in clients’ behaviour. For instance, commit-
ment-based savings devices were found to help notoriously “present-biased”
poor people manage their “time-inconsistent preferences” and save money,
when given the chance to lock it away (Dupas/Robinson 2013). A study on
the “miracle of micronance” in India found that microcredit did not raise
borrowers’ incomes, but it got them to reduce spending on ostensibly frivo-
lous “temptation goods” (Banerjee/Duo 2015). The emerging “libertarian
paternalist” [15] desire of policymakers and economists to help poor people
make more virtuous choices seizes on these ndings, but also obviates the
need for sharper tools than the blunt instruments of commitment savings
devices or monotonously-scheduled loans. If, as Berndt and Boeckler (2016)
paraphrase the discourse, “the world’s poor are poor because they tend to make
the wrong decisions”, would not greater power for well-intentioned guardians
over their purse-strings be the key to helping them avoid “wrong” choices?
Unlike cash, digital money could be disbursed with strings attached, to
“nudge”, incentivise, manipulate, discipline, or otherwise guide its recipients
toward the right choices. Unlike cash transfers, digital monies from the state
and developmental agencies to citizens could even be conscated if used
“incorrectly”, or may come “earmarked” only for specic purposes (like food
stamps). This makes particular sense in the context of what Lena Lavinas
(2013) refers to as “21st Century Welfare”, which has at its heart the transfer
payments that have gradually replaced public service provision with conditional
entitlements in minimal social safety nets. [16] Conditionalities often include
such things as levels of school attendance and completing vaccinations for
children, for which monitoring may be costly and prone to subversion. While
the digitalisation of benet transfers, as advocated by the BTCA and other
card crusaders, would not necessarily ease the monitoring of such choices as
education or vaccinations, it offers a panoply (or Panopticon) of new, smaller
direct and indirect indicators for “responsible” behaviour and attitudes, and
As Hansen (2016) claries, the focus
on “nudging” people is not necessarily co-
terminous with “libertarian paternalism”,
but both hinge share the notion that the
subjects of social policy must be helped
to take the “right” decisions in a way that
makes them “perform rationally in their
own self-declared interests” (Hansen 2016:
[16] Cash transfers arose originally from
progressive Latin American governments’
experimentation in the 1990s, and have
since been fully adopted by the World
Bank as a core social protection policy,
albeit under the condition that they be
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
perhaps even appropriate inection points for better disciplining the poor,
for their own good, of course.
We started out with our Colombian friend’s call for a “crusade against cash”,
to frame the discussion of the turn to nancial inclusion, specically digital
nancial inclusion. We saw how nancial inclusion opens the poverty nance
space to new players, such as payday lenders and telecommunication rms.
Financial inclusion proposes a new theory of change, whereby efciency gains
built on intertemporal and interspatial-interclass intermediation, rather than
activities which raise poor people’s incomes or which bring redistribution,
are presumed to alleviate poverty. We saw why nancial inclusion increas-
ingly comes premised on the spread of new forms of money inscribed onto
cards – SIM or plastic –, and how this pits the organised collective of “card
crusaders” against the disorganised indelity of adherence to cash. The holy
grails pursued by the crusaders, we saw, are threefold: to (perhaps) reduce
transaction costs while (denitely) capitalising on them by privately control-
ling the infrastructure for transferring value; to gain micro big data which
may have market value and which can be used to make the nancial market
through greater discrimination; and to gain governmental power and extend
“libertarian paternalist” control over poor people’s money.
Contemporary digital nancial inclusion thus represents a challenge to
a certain status quo. At the start of the 20th century, as Zelizer (1997, 130)
reports, “modern cash posed a serious challenge to the reform-oriented char-
ity workers” because of fears that the poor might not make moral choices if
they were free to spend money. Yet social reformers at the time ultimately
concluded that poor people could only really learn morality if they controlled
their own money and were forced to learn self-responsibility and be empow-
ered to participate fully in society. Thus, cash lost its morally dubious status,
and was “tamed” (Zelizer 1997). What an ironic turn of events it would be if
cashless digital nancial inclusion undid this hundred-year old “taming” of
cash; if 21st century welfare instead sought the causes for poverty again in
the shortcomings of the poor themselves, and imposed new forms of mon-
etary control on them. Progress in digital nancial inclusion is by no means
necessarily “pro-poor”; rather, it would prove regressive and disempowering
if it meant that people had to use money that costs money just to spend it
(transaction fees) [17], that generates data which is used to supervise and
further discriminate among poor people (micro big data), and generates new
paternalist forms of power over poor people (governmental power).
Where does this leave the cash indels? Those who stand outside the
faith may resist, or may repent and join the crusade. MFIs and stalwarts of
“traditional” micronance, for instance, look likely to be among the rst to be
lured by the promise of higher margins, cross-selling opportunities for data,
lower transaction costs, and greater outreach, as micronance is absorbed
into nancial inclusion. But more broadly, should we seek to protect cash? In
the face of the powerful coalition that is assembling for the “crusade against
[17] Spending money costs money when
the ability to transact comes only for a fee.
BEHEMOTH A Journal on Civilisation
2016 Volume 9 Issue No. 2
cash” and its hard moral suasion, one may well retreat into denial and in-
delity. Or one may endeavour to illuminate the ambiguities, contradictions,
and insecurities in the crusade – and for safety’s sake, keep some cash in the
back pocket. One does not have to be convinced that the BTCA and other
digital money proponents are pursuing a sinister “Orwellian plan” (Durden
2015) [18] to see clearly that digital nancial inclusion, if fullled, would
immensely empower whoever controls the new monetary infrastructures.
Cash, and public monies in general, might yet have unrecognised meanings
and benets over private digital currencies.
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... Based on transaction cost analysis, Lohrke et al. (2006) studied the extent to which SMEs can use the internet to connect directly with customers and confirmed the significant advantages of internet use in lowering transaction costs of SMEs [41]. As financial inclusion introduced new practices and players to the space of poverty finance [42], the transition of technologysupported financial intermediation was recognized as a key to poverty reduction. The emergence of the internet has prompted the excessive development of the financial market towards a non-intermediary financial market and stimulated it to approach the Walras general equilibrium. ...
... Based on transaction cost analysis, Lohrke et al. (2006) studied the extent to which SMEs can use the internet to connect directly with customers and confirmed the significant advantages of internet use in lowering transaction costs of SMEs [41]. As financial inclusion introduced new practices and players to the space of poverty finance [42], the transition of technology-supported financial intermediation was recognized as a key to poverty reduction. The emergence of the internet has prompted the excessive development of the financial market towards a nonintermediary financial market and stimulated it to approach the Walras general equilibrium. ...
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The study aims to investigate how the internet has affected China’s financial inclusion from the standpoint of developing internet technologies. Firstly, using the coefficient of variation method and the principal component analysis method, the financial inclusion index (IFI) and the internet development index (INT) were built from multiple dimensions based on the 2006–2016 provincial panel data of China. Then, the fixed-effect panel threshold model, the fixed-effect estimate, and the 2SLS estimate were used to empirically test the impact of internet development on inclusive finance in China. We found that China’s financial inclusion was significantly and positively affected by internet development. Additionally, this effect was nonlinear, and there was a threshold effect on the proportion of internet users. The development of the internet had a significant positive effect on financial inclusion when the internet user proportion (ISP) was higher than 19%, and the effect on IFI became stronger when ISP rose above 53%. This study complements earlier research, in which internet finance is usually perceived as a composite notion, by thoroughly examining the effects of internet information technology on the growth of financial inclusion. Based on our findings, we further put forward policy recommendations for the sustainable development of inclusive finance in terms of the intelligent integration and collaboration of internet communication technologies. Financial inclusion is critical for achieving sustainability because it provides access to affordable financial services to underserved individuals and businesses, and brings them into the formal financial sector, thereby improving their livelihoods while reducing poverty and inequality.
... Finally, they get burned by the debts of the microfinancing industry and trap themselves in the web of ever-growing increasing debts. Another factor, that new startups in rural areas fail is because the locality and neighborhood is very poor, thus, enable to purchase their services (Mader, 2016). ...
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This Chapter is to evaluate whether or not a request from a Facebook friend is verified, we employ machine learning, especially the concept of artificial neural networks. The students and libraries engaged are also depicted. We'll also go over the sigmoid function and how its weights are calculated and applied. Finally, we'll look at the social network page's settings, which are critical to the solution. Bots and false accounts are further threats to obtaining personal data and using it fraudulently. Bots are computer programmes that collect user information without the user's awareness. Scraping the internet is the term used for this technique. What's worse is that this behavior is perfectly acceptable under the law. To obtain a user's sensitive information, bots can be disguised or seem as a faked friend request on a social networking site.
... de capter des rentes et d'accéder aux actifs des utilisateurs en croisant et amalgamant des infrastructures et des pratiques nouvelles et anciennes, formelles et informelles, technologiques et humaines, digitales et non-digitales (Langley etLeyshon, 2017 ;Mader, 2016). En mettant la main sur les ressources des pauvres, les acteurs de l'argent numérique instaurent des monopoles sur de nouveaux marchés monétaires et financiers qui transforment, voire substituent les pratiques préexistantes, souvent informelles. ...
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Le numérique joue un rôle central dans les politiques de développement et l’argent numérique y est présenté comme un levier d’inclusion financière. Sa diffusion rapide repose sur des promesses sociotechniques héritées en partie du mouvement global de la microfinance. Proposant une approche multiscalaire, reliant des observations ethnographiques à micro-échelle aux tendances structurelles globales, cet article offre une analyse à la fois critique de l’argent numérique et attentive à ses ambiguïtés et ses ambivalences. Dans la lignée des recherches qui mettent en évidence l’extractivisme et la reproduction des inégalités, nous proposons de questionner les promesses de l’argent numérique au regard d’exemples de plateformes d’argent et de crédit en Afrique et en Asie. Adoptant une approche par le bas attentive aux usages et aux effets des économies politiques et morales, notre analyse s’appuie sur la notion d’appropriation, prise dans son double sens de propriété et d’adaptation.
... However, much of the research and policy-related literature on FinTech has been concerned with prioritizing 'financial inclusion' at the 'bot-tom of the pyramid' in the Global South (Mader, 2016;Aitken, 2017;Langevin 2019 access to financial instru-ments for credit and savings). Using the smartphone as a delivery mechanism, FinTech platforms have gained rapid market traction, especially in countries where formal financial institutions have failed to offer the basic financial services to a large section of the population, or where there is a problem of last-mile reach, or where the banking infrastructure is fragile. ...
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This essay is part of IT for Change's Digital Futures in Asia series. In a post-Covid context, the rapidly unfolding datafication of the economy has acquired heightened momentum. The Digital Futures in Asia series looks to assess and understand the impact of critical digital transformations in the Asian region in sectors such as work, finance and social media – which are at a crucial conjuncture and stand to be wholly transformed through the process of digitalization.
... The latter is data that will allow solar entrepreneurs, so they hope, to establish markets beyond solar and to, in the future, disburse the 'right' quantity of credit, for the 'right' customers. Further, this data and the classification that is derived from them, will determine the ability of solar users to purchase other consumer products on loan (Fourcade & Healy 2013;Mader 2016). ...
... tHe Key uPlIFtInG clAIMS For FIntecH Are ActuAlly quIte ProBleMAtIc However, as a model of development and poverty reduction the serious limitations of fintech soon began to emerge into view. As Mader (2016) reports, many of the key claims made on behalf of the fintech model are simply not based on any firm empirical evidence, but are instead based on false assumptions and, often, mere wishful thinking. For instance, consider the widely assumed safety angle of fintech -that transacting with cash opens the individual up to the possibility of a robbery, whereas an electronic transaction is assumed to be perfectly safe. ...
Innovative digital payment systems (DPS) are a crucial solution for greater financial inclusion assisting low-income households in overcoming poverty using lower-cost methods for managing their finances. The advancement in internet communication technologies and the arrival of e-commerce and e-business simulated digital payment systems providesvarious electronic payment options such as payment cards, mobile payments, mobile wallets, electronic cash, and contactless payment methods. This chapter discusses the current state of the art in digital payment systems in emerging markets. Also, it analyzes the advantages of DPS in emerging economies, challenges in emerging economies, the economic impact of DPS in emerging economies, cyber security issues in DPS, and the future of the DPS in emerging economies.
Buy now, pay later (BNPL) is a new, increasingly popular form of short-term credit used for everyday items. While critics are concerned that these typically unregulated products pose risks for financially vulnerable people, many BNPL companies argue their app-based products are more responsible than other forms of credit. In this study, I use Davis’ (2020) mechanisms and conditions framework of affordances and Light et al.’s (2018) walkthrough method to analyse how three popular BNPL products (Afterpay, Klarna and Zip) define responsible lending and spending. I argue these BNPL companies claim they are more responsible than credit cards because they are more inclusive and have fairer loan terms, and that these claims are made possible by the platformed nature of BNPL products. At the same time, these BNPL companies define responsible consumers as those who make their repayments on time. This redefinition of responsible consumption encourages increased spending and normalises the use of BNPL credit for that consumption. These products, which challenge traditional regulatory responses to consumer credit, are disproportionately used by lower-income families, who are increasingly reliant on credit for everyday purchases.
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Riedke engages with the processes of digitization that accompany the selling of solar off-grid products to the so-called ‘unelectrified poor’. The chapter draws attention to how the selling of solar goes hand in hand with the establishment of people’s ‘credit worthiness’, aimed at advancing financial inclusion in markets beyond solar. From an ethnographic perspective, the chapter engages with a German-Kenyan solar start-up and a software it has designed to manage sales processes to keep track of current and future customers. Exploring the details of this software, the chapter contributes to our understanding of how solar power is provided to meet a basic need, a most basic level of human well-being, but simultaneously also to form new consumer subjects for new markets.
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In recent years the concepts of 'nudge' and 'libertarian paternalism' have become popular theoretical as well as practical concepts inside as well as outside academia. But in spite of the widespread interest, confusion reigns as to what exactly is to be regarded as a nudge and how the underlying approach to behaviour change relates to libertarian paternalism. This article sets out to improve the clarity and value of the definition of nudge by reconciling it with its theoretical foundations in behavioural economics. In doing so it not only explicates the relationship between nudges and libertarian paternalism, but also clarifies how nudges relate to incentives and information, and may even be consistent with the removal of certain types of choices. In the end we are left with a revised definition of the concept of nudge that allows for consistently categorising behaviour change interventions as such and that places them relative to libertarian paternalism.
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Winner of the bisa ipeg book prize 2015 Under the rubric of ‘financial inclusion’, lending to the poor -in both the global North and global South -has become a highly lucrative and rapidly expanding industry since the 1990s. A key inquiry of this book is what is ‘the financial’ in which the poor are asked to join. Instead of embracing the mainstream position that financial inclusion is a natural, inevitable and mutually beneficial arrangement, Debtfare States and the Poverty Industry suggests that the structural violence inherent to neoliberalism and credit-led accumulation have created and normalized a reality in which the working poor can no longer afford to live without expensive credit. The book further transcends economic treatments of credit and debt by revealing how the poverty industry is extricably linked to the social power of money, the paradoxes in credit-led accumulation, and ‘debtfarism’. The latter refers to rhetorical and regulatory forms of governance that mediate and facilitate the expansion of the poverty industry and the reliance of the poor on credit to augment/replace their wages. Through a historically grounded analysis, the author examines various dimensions of the poverty industry ranging from the credit card, payday loan, and student loan industries in the United States to micro-lending and low-income housing finance industries in Mexico. Providing a much-needed theorization of the politics of debt, Debtfare States and the Poverty Industry has wider implications of the increasing dependence of the poor on consumer credit across the globe, this book will be of very strong interest to students and scholars of Global Political Economy, Finance, Development Studies, Geography, Law, History, and Sociology.
In 2006 the Grameen Bank of Bangladesh won the Nobel Peace Prize for its innovative microfinancing operations. This study of gender, grassroots globalization, and neoliberalism in Bangladesh looks critically at the Grameen Bank and three of the leading NGOs in the country. This book offers a new perspective on the practical, and possibly detrimental, realities for poor women inducted into microfinance operations. In a series of ethnographic cases, this book shows how NGOs use social codes of honor and shame to shape the conduct of women and to further an agenda of capitalist expansion. These unwritten policies subordinate poor women to multiple levels of debt that often lead to increased violence at the household and community levels, thereby weakening women’s ability to resist the onslaught of market forces. A compelling critique of the relationship between powerful NGOs and the financially strapped women beholden to them for capital, this book cautions us to be vigilant about the social realities within which women and loans circulate—realities that often have adverse effects on the lives of the very women these operations are meant to help.
This article examines the stratifying effects of economic classifications. We argue that in the neoliberal era market institutions increasingly use actuarial techniques to split and sort individuals into classification situations that shape life-chances. While this is a general and increasingly pervasive process, our main empirical illustration comes from the transformation of the credit market in the United States. This market works as both as a leveling force and as a condenser of new forms of social difference. The U.S. banking and credit system has greatly broadened its scope over the past twenty years to incorporate previously excluded groups. We observe this leveling tendency in the expansion of credit amongst lower-income households, the systematization of overdraft protections, and the unexpected and rapid growth of the fringe banking sector. But while access to credit has democratized, it has also differentiated. Scoring technologies classify and price people according to credit risk. This has allowed multiple new distinctions to be made amongst the creditworthy, as scores get attached to different interest rates and loan structures. Scores have also expanded into markets beyond consumer credit, such as insurance, real estate, employment, and elsewhere. The result is a cumulative pattern of advantage and disadvantage with both objectively measured and subjectively experienced aspects. We argue these private classificatory tools are increasingly central to the generation of "market-situations", and thus an important and overlooked force that structures individual life-chances. In short, classification situations may have become the engine of modern class situations.
This book helps to understand the enigmatic microfinance sector by tracing its evolution and asking how it works as a financial system. Our present capitalism is a financialized capitalism, and microfinance is its response to poverty. Microfinance has broad-ranging effects, reaching hundreds of millions of people and generating substantial revenues. Although systemic flaws have become obvious, most strikingly with the 2010 Indian crisis that was marked by overindebtedness, suicides and violence, the industry's expansion continues unabated. As Philip Mader argues, microfinance heralds less the end of poverty than new, more financialized forms of poverty. While microfinance promises to empower, it generates discipline and extracts substantial resources from the poor, producing new crises and new forms of dispossession.
This paper examines the growing importance of digital-based financial inclusion as a form of organising development interventions through networks of state institutions, international development organisations, philanthropic investment and fintech companies. The fintech–philanthropy–development complex generates digital ecosystems that map, expand and monetise digital footprints. Its ‘know thy (irrational) customer’ vision combines behavioural economics with predictive algorithms to accelerate access to, and monitor engagement with, finance. The digital revolution adds new layers to the material cultures of financial(ised) inclusion, offering the state new ways of expanding the inclusion of the ‘legible’, and global finance new forms of ‘profiling’ poor households into generators of financial assets.
This chapter explores some general issues in the book which looks at the positioning of social control practices in welfare arrangements for disadvantaged households, and identify some of the political underpinnings. There is a tentative hyposthesis promoted that identifies how a 'new behaviourism' in the UK social policy has been running since the 1990s through to the current Coalition era. The analysis indicates that the close interweaving of support with disciplinary interventions that persisted historically in some practice areas has been reinvigorated and reinterpreted through contemporary politics, particularly in low-income and vulnerable groups. There is a specific case study regarding disability and social control, demonstrating how this group are having a harder time under the Coalition government.