In an article on the HuffingtonPost today, Elisabeth Rhyne, managing director at the Center for Financial Inclusion, explains that a cashless society is crucial for the poor, but argues that it's not enough to make electronic payments if people can't use them in their villages:
A few years ago I visited some coffee farmers in a mountainous section of Uganda. When they were due to be paid for their coffee they spent most of a day traveling down the mountain to the provincial capital. At the office of the coffee marketing company each farmer received an envelope with his payment in cash. On the long journey home the farmers often fell prey to attackers who knew their pockets would be full. A few attacks had been fatal.
For people like those Ugandan farmers, yesterday's launch of the Better than Cash Alliance by seven major public and private organizations is potentially very good news. The seven founders of the Alliance - Citi, the Ford and Gates Foundations, the Omidyar Network, Visa, UNCDF and USAID - have joined to promote the transition of the economic lives of the world's poor from cash to electronic.
...But the early steps of that transition may not be as life-changing as one might hope, she goes on.
Consider the Ugandan coffee farmers. Sometime after my visit, the coffee marketing company arranged to pay into a cooperative bank, which distributed the payments (electronically) into bank accounts in each farmer's name. At this point the farmers still traveled to town. Rather than standing in line at the coffee company, they stood in line at the cooperative bank. They still went home with cash, because they could not use the money in the village if it was in the bank in town, although they might leave some money on deposit as savings to use on their next trip. They were still prey to robbers, and their lives did not change much. However, they would now show up in national statistics as at least partly "financially included". The [Alliance's] white paper calls this stage "Few to Many", a situation in which major payers like government sent payments to recipients through electronic means. Because the few payers are usually big, sophisticated organizations, it is relatively easy to convince them to make the electronic switch, and that is why "Few to Many" is step one.
Read the rest of Rhyne's article, "The Better Than Cash Alliance Is Out to Create a 'Cash Lite' World" at the Huffington Post.