Digital Payments - and the Last Mile to the Unbanked

The Federal Reserve Board (FRB) of Atlanta has published an article by Oz Shy, ‘Digital Currency, Digital Payments, and the ‘last mile’ to the unbanked.’ As the number of cashless locations increases, vending machines, toll booths, parking, shops etc., the article considers what stops people going digital and looks at policy options in response.

The Bank for International Settlements (BIS) issue a paper in 2016 that pointed out that most electronic payments are based on an account. Those with a low or variable income, in financially isolated communities and ill at ease with technology find this a problem. Bank accounts need identity documents and cost money to own and use, money they don’t have. Making a digital payment, if even possible, is an expensive activity for the unbanked.