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WWW.BETTERTHANCASH.ORG
1
Opportunities Digitizing P2G Payments
Washington DC, Dec 2nd 2016
The Better Than Cash Alliance
WE ADVOCATE
That accelerates the transition from cash to digital payments to reduce poverty and drive inclusive growth.
A United Nations based partnership
OF NEARLY
MEMBERS
GOVERNMENTSCOMPANIES INTERNATIONAL ORGANIZATIONS
WE RESEARCH WE CATALYZE
P2G payments in emerging markets represent an estimated USD 375 billion dollar opportunity for digitization
Global Low & lower‐middle income countries
of low and lower‐middle income countries report that they receive payments for taxes primarily in digital form. This figure is 80% in high income countries.1
Source: Dalberg research and analysis, data from World Bank, Organization for Economic Co‐operation and Development and Better Than Cash Alliance1 Self‐reported data from World Bank Payment Systems Survey (2012), which includes results from 31 high income countries, 24 upper‐middle income countries, 21 lower‐middle income countries and 10 low income countries.
USD 7.7 trillion
USD 375 billion
What payment types are considered P2G?
PAYMENT CATEGORIES P2G / B2G EXAMPLES
Statutory payments
Required to be paid by an act of law.
Tax paymentsFinesRoad license
Government services
Payments made in exchange for services rendered.
Utility paymentsBusiness registrationPassport feesDriving licensesTransport (Sea‐ports)National park fees (tourism)Health payments
Government Benefits
Co‐payments or payments for benefits provided by the government.
Social SecurityHealth Insurance
Examples that are being showcased
There are value added benefits from digitization of P2G payments…
Reduced operational costsDigitizing payments for passports has reduced processing costs by > 50% in Pakistan
Increased revenuesIn Tanzania, one year after launching a digital initiative for income and property taxes, ~15% of the tax base was paying via mobile money, including those with no history of paying taxes— suggesting reduced tax avoidance
Increased effectivenessCote d’Ivoire’s ministry of education is using a digitized student database (enabled through digital registrations) to make policy‐related decisions
Increased efficiencyEmerging evidence that buses that are cashless have faster‐moving routes than those that still use cash (Rwanda)
Source: Expert interviews; GSMA, Karandaaz
million
Revenue Potential
This would help push up the country’s tax/GDP ratio, currently at 12%.
Digital payments could boost tax revenue by nearly
mileach year and drive economic modernization in Tanzania
Annual Motor Vehicle license via Mpesagets a 31% boost in revenue
In 2013, Vodacom and the TRA forged a partnership allowing people to pay via mobile money.
Billionincrease in revenue in 3 weeks
jump in revenue, and less clogged TRA offices.
Until 2013, the port of Dar es Salaam was considered the most inefficient port.
TRA undertook a massive modernization effort. Launched TANCIS –Tanzania Customs Integrated Systems. In August 2015, TANCIS reported that the reduction in import clearance had reduced from the average wait time of 9 days to .9 days OR less than a day.
Led to an additional cost of 22% on container imports and 5% on bulk imports, increasing the costs for local businesses.
Digitization of national park fees reduces leakage, boosting revenues by 40%
In 2013, Tourism had 12.7% contribution to GDP Highest FOREX earner in the country today
Parks are today outfitted with POS machines (that accept Visa, Mastercard and TANAPA.
billion shilling ($9 million) yearly loss of revenues
Digital instruments are only one dimension of the payment digitization process
• Frontline staff play a huge role in the process of payment digitization.
• Informed and well trained staff can help on board customers on to a digital platform.
• User experience is not limited to payee staff.
• Design of digital product plays a huge role in on‐boarding new customers.
Easy to use and understand user interface, and simple payment processes, can help bolster new users.
“I hate waiting in line. So I asked one of the staff at the TRA if I could pay VAT by mobile money. She said – yes, but bring the paper receipt!”
‐Trader, Kariakoo market
Engaging stakeholders is key, else digitization can be met with resistance
• The tax authority first attempted digitization of VAT by introducing Electronic Fiscal Devices (EFDs) in 2010.
• It was met with huge resistance, especially as the TRA required traders to purchase these devices.
• TRA started the second phase of the EFD roll‐out for small traders in 2013 and traders have resisted this for 3 years!
• In 2016, the traders associations came to an agreement with the newly elected government and have agreed to use the EFDs.
‐
200,000.00
400,000.00
600,000.00
800,000.00
1,000,000.00
1,200,000.00
2009/10 2010/11 2011/12
VAT revenue growth (MN TZS)
jump in revenues due to the introduction of fiscal devices.
TRA witnessed a