During my last trip to Mexico, I bought tamales from a street vendor and paid by card—something that would have been impossible not long ago. The vendor, who had a Bluetooth card reader connected to his cell phone, told me that his potential customers are not always carrying cash, and as a result, accepting card payments has increased his sales. This anecdote illustrates a broader trend: as the adoption of financial technologies (FinTech) increases on both the supply and demand sides of the market (see Figure 1), both consumers and small retail firms benefit.
Across developing countries, only 63 percent of adults have a bank account, according to our friends over at the Findex. And we’ve seen a couple of papers with targeted populations that suggest savings vehicles could be good for some development outcomes. So is it time for a big push on banking the unbanked?