An outline of the 'zero cost option' for electronic transactions in the developing world. By making electronic transactions as cheap and attractive to use as cash, governments can increase revenue while reducing administrative overheads for government departments, businesses and individuals.

1. 1www.rtpay.org
The potential for government
e-accounts to increase inclusion
A zero cost payments program?

2. 2www.rtpay.org
E-payments vs cash
Advantages
• Track data on all transactions
• Checks for fraud and suspicious transactions
• Transparency in financial flows
• Administrative costs much lower
• Speed and efficiency of transfers
• Financial inclusion
• Access to new markets and populations
Disadvantages
• Traditional views and methods
• Required technology infrastructure and hardware
• Cost of equipment
• Cost of transactions
• Lack of trust in the banks and financial institutions
• Vested interest of fraudsters and criminals

3. 3www.rtpay.org
Imperatives for adoption
To move from cash, e-payments must be:
• Easier
• Fairer
• Trusted
• Reliable
• More convenient
• Just as fast
• At least as cheap
And offer something more – the chance to gain!

4. 4www.rtpay.org
Government e-accounts:
Banking for the unbanked
A central clearing facility for the citizens the banks
don’t want
Distribution of benefits
Free P2P transfers
Payment card or phone app
Incentives for keeping funds on account
Fee for converting to cash

5. 5www.rtpay.org
Operation of the account
Accounts may be operated via a mobile phone e-
account
The government can issue a specific local debit card
Issuing of a card could be carried out in conjunction
with e-identity card (see example from Russia)
Merchants can be issued with mobile phone readers
to accept these (and commercial) cards

6. 6www.rtpay.org
Free processing for merchants
 Moving from cash should not cost the small merchant
 Provision of a mobile phone card reader
 Simple free online accounting service
 Real time collection of VAT for larger merchants
 Link to incentives and promotional tools
 Ability to accept bank cards (less a fee)

7. 7www.rtpay.org
Benefits for account holders
 Get transfers for free from family members
 No danger from carrying cash
 Extra bonus (interest) on saved funds
 Method to show accounts to justify investment in
small business
 Reliable, trustworthy payments on time
 No queues to pay utility bills etc
 Incentives and commercial partners

8. 8www.rtpay.org
What are the costs?
Set-up costs – initial software development
Clearing software
Servers
Debit cards/ national ID cards
Mobile phone card reader / POS hardware
Mobile phone app development
Ongoing costs: new cards, call center support, admin service, fraud control, transfer costs

9. 9www.rtpay.org
How can the system be afforded?
RTpay provides much of the initial software for free
Card production and distribution can be financed by third parties
International organizations may provide support for such a
program
Government could help from increased tax collection
Charge a fee for conversion to cash?
Benefits settlement will save money from administrative savings

10. 10www.rtpay.org
Central
Message
Hub
Stored Value
Management
System
Mobile
Management
System
POS Data
Management
System
Taxation
Hub
IVR
integration
to
GPS/CMH
Web
Based
integration
to
GPS/CMH
PC / tablet
application
interface
to
GPS/CMH
Government Central Accounts System (GCAS)
Optional
components

11. 11www.rtpay.org
Acquiring bank
Issuing bank
Card
Associations
Customer
Merchant
Funds transaction reports
/ chargeback reports
Settlement
files
Card billing
statements
Authorization
& Settlement
Purchase
transaction
Settlement
files
Traditional POS Model

12. 12www.rtpay.org
Acquiring bank
Issuing bank
Card
Associations
Customer
Merchant
Funds transaction reports
/ chargeback reports
Settlement
files
Settlement
files
Card billing
statements
Purchase
transaction
Payment
Gateway
Authorization
& Settlement
Authorization
Authorization
E-commerce Model

13. 13www.rtpay.org
Merchant’s account
Customer’s account
Card
Associations
Customer
Merchant
Payment
Gateway
Central
Government
Payments Hub,
Tax Calculation
Engine,
Virtual
e-accounts
Local Switch
Mobile Money
Operators
Data and transfer
instructions
Data and
transfer
information
Data and transfer
instructions
Central Server Model

14. 14www.rtpay.org
E-Gov virtual accounts
Receipts
FREE
• Settlement of
wages
• Settlement of
benefits
• Receipt of P2P
transfers
• Income for
merchants from
sales
Payments
FREE
• Payment by
national card at
merchants
• Transfer to other
account holders
• Payment of bills by
standing order
FEES
• Transfer to and
from bank account
• Drawing out of
cash at ATM

15. 15www.rtpay.org
The role of banks, card associations,
commercial partners and other stakeholders
 Clearing system can incorporate all payment types
 Merchants using mobile phone card readers can
accept credit cards as well
 Banks can learn from account data of non-banked
citizens – and add services
 Unbanked individuals can build credit record to take
advantage of banks and other financial services
 Commercial companies can target individuals,
regions with focused marketing (potential for fees)
 Mobile phone operators get more connectivity fees

16. 16www.rtpay.org
Risk Analysis
• Potential roadblocks
• Timescales
• Internal resource requirements
• Changing technology
• Conflicts of commercial interest
• Conflicts of political interest

17. 17www.rtpay.org
RTpay
A not-for-profit group promoting
Real-Time Payments for governments
Email rgray@rtpay.org or call +44.7809.524300
Our websites: www.rtpay.org and www.rtvat.eu
Richard Gray, Chris Williams
RTpay