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Cash is the dominant form of transferring value in the remittance sector. Even though users can fund the transfer with bank transfers or credit cards, recipients will always get paid out in cash. Over in Ethiopia, the competition is heating up, as HomeSend plans to reduce cash usage for remittance services. Instead, they feel the mobile space may hold the solution to provide more security.
Regardless of how cash opposers want to look at things, financial inclusion cannot hinge on existing traditional payment options. Developing countries do not always have a high bank account penetration. Moreover, cash gives remittance recipients some level of financial freedom.
HomeSend Wants To Get Rid of Cash Remittances
HomeSend is trying to do things differently, as the company eyes the mobile ecosystem. Ethiopia is, similarly to other developing regions, seeing a significant growth in the number of mobile devices being used. Receiving funds in a mobile and digital format is not a viable option in the country right now, though.
That is why the company partnered with the Commercial Bank of Ethiopia to create a new remittance program. Their primary target is reducing cash usage in this sector, as it is an expensive and time-consuming resource. Keeping in mind how HomeSend is a joint venture partially backed by MasterCard, that opinion is not entirely surprising.
MasterCard Sub-Saharan Division President Daniel Monehin stated:
“One of the things that drives what we do is this shadow economy; it’s one of the banes of development. The formal economy is almost outranked by this gray economy that does not pay taxes, does not listen to government, and its lifeblood is cash.”
This new venture by HomeSend will allow users to send money to any mobile number in Ethiopia. The company feels that by going digital, they can formalize all money transfers in and out of the country. With over 80% mobile penetration, this is another initiative to boost financial inclusion in the country.
One thing that could be interesting to take note of is how this approach may boost Bitcoin adoption in the country over time. As consumers get used to storing and receiving funds digitally, Bitcoin transactions are only a small leap. At the same time, companies pushing consumers away from financial freedom may not have the community’s best interests at heart.
Header image courtesy of Shutterstock
