On September 19, 2012, USAID Administrator Raj Shah said, "We are excited to be joining our partners in announcing the Better than Cash Alliance today. Committed to moving the global community onto electronic payments in place of physical cash, the Alliance will help the world's poorest families join the modern economy and realize the benefits of a more transparent, inclusive, cash-light world. I'm optimistic that this Alliance will help usher in a new era of opportunity for some of the most vulnerable people on earth."
As surprising as it may sound, physical cash can undercut many development objectives. From improving aid effectiveness to promoting transparency, cash gets in the way. That is why I am excited about the launch of the www.betterthancash.org, a global public-private partnership dedicated to accelerating the use of electronic payments in place of physical cash. I am proud to have USAID stand alongside forward-thinking partners like the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, Visa Inc., and the UN Capital Development Fund to move the world toward a more transparent, efficient, inclusive, cash-light society.
This Alliance wouldn't have been possible five or 10 years ago. But with the rapid rise of new technologies in the developing world, we can now leverage growing payment systems powered by electronic cards and mobile phones to reduce the presence of cash.
With electronic payments, people can store money safely and securely, a game-changer for the 2.5 billion people around the world without access to basic financial services. With electronic payments, companies and governments alike can improve transparency in their operations. You cannot track cash or see the hands it moves through, but it is possible to track how money flows when it is transferred electronically.
With electronic payments, organizations making payments or collecting fees can save money. Paying teachers their salaries or issuing social transfers is expensive. In some of the most distant areas of the world it requires couriers to lug big bags of cash around, and leakages are inevitable. For example, a World Economic Forum says that developing country governments can realize more than a US $100 billion in economic benefits by 2015 by making major payment streams digital.
The benefits of electronic payments are widespread and underpin so many of our development objectives. I'm not suggesting that it will be easy to realize a cash-light world. It won't. Over the last year, USAID has worked tirelessly to use our payments and presence as a force for good by promoting the use of safe, accessible, affordable electronic payments systems in place of physical cash.
But we know that we cannot do it by ourselves. This is a movement that should matter to all of us. It should matter to any company or NGO trying to save money or protect their employees. It should matter to any donor organization or government trying to improve the efficiency and effectiveness of development programs. It should matter to anyone who cares about the plight of the poor.
This vision will take time. But I'm excited about the steps we've taken and I wholeheartedly believe that we must do better than cash. We coined the term "Better Than Cash" because that's actually what we believe -- electronic payments, when introduced in a secure, equitable way, can offer enormous benefits for hundreds of millions of poor families trapped in a cash world.
Editor's Note: This entry also appears on USAID's Impact Blog.