What are the best practices for designing payment systems for the unbanked population?

1 Understand the needs

The first step in designing payment systems for the unbanked is to understand their needs, preferences, and behaviors. This requires conducting user research, such as surveys, interviews, focus groups, and observations, to identify the pain points, motivations, and goals of the potential users. For example, some of the common needs of the unbanked are convenience, speed, reliability, privacy, and low cost. By understanding the needs of the unbanked, you can design payment systems that are relevant, useful, and desirable for them.

2 Leverage existing infrastructure

The second step in designing payment systems for the unbanked is to leverage existing infrastructure, such as mobile phones, agents, and networks, that are widely available and familiar to the users. This can help reduce the barriers to adoption, such as lack of trust, awareness, and literacy. For example, mobile money platforms, such as M-Pesa in Kenya, use mobile phones and agents to enable users to send and receive money, pay bills, and access other financial services. By leveraging existing infrastructure, you can design payment systems that are accessible, affordable, and convenient for the unbanked.

3 Implement robust security

The third step in designing payment systems for the unbanked is to implement robust security measures, such as encryption, authentication, and verification, to protect the users' data, privacy, and funds. This can help increase the confidence, trust, and loyalty of the users, as well as comply with the regulatory and legal requirements. For example, biometric authentication, such as fingerprint or facial recognition, can be used to verify the identity of the users and prevent fraud. By implementing robust security, you can design payment systems that are safe, reliable, and compliant for the unbanked.

4 Enable interoperability

The fourth step in designing payment systems for the unbanked is to enable interoperability, which means the ability of different payment systems to work together and exchange information. This can help expand the reach, functionality, and value of the payment systems, as well as foster innovation and competition. For example, interoperability can allow users to send and receive money across different platforms, networks, and countries, as well as access other financial services, such as savings, credit, and insurance. By enabling interoperability, you can design payment systems that are scalable, flexible, and inclusive for the unbanked.

6 Test and iterate

The sixth and final step in designing payment systems for the unbanked is to test and iterate, which means evaluating the performance, usability, and impact of the payment systems and making improvements based on the feedback and data. This can help ensure that the payment systems meet the needs and expectations of the users, as well as the objectives and goals of the designers. For example, testing and iterating can include conducting user testing, pilot testing, and impact evaluation, as well as collecting and analyzing user feedback, data, and metrics. By testing and iterating, you can design payment systems that are effective, efficient, and sustainable for the unbanked.