Author information:
Márta Somogyvári: University of Pécs, Associate Professor. E-mail: somogyvari.marta@ktk.pte.hu
Abstract:
The digitalisation of payment systems is accelerating and appears unstoppable. Today, we use mixed payment systems based on cash and digital money, but an increasing number of central banks are exploring the possibility of introducing central bank digital currency and full digitalisation. The greatest obstacle to this is not only the increase in the amount of cash in circulation, but also the situation of those social groups that do not use electronic payment methods and are excluded from financial services. There are several reasons for the latter, including economic and intellectual access difficulties, low levels of digital and financial literacy, banks’ business policies and difficulties in accessing digital infrastructure. Subsidising digital access and various educational training programmes can help reduce financial exclusion, but the most impactful solution may be developments that use artificial intelligence to replace face-to-face contact. This requires rapid, safe, transparent innovations that take into account the specific characteristics of the heterogeneous groups affected by financial exclusion.
Cite as (APA):
Somogyvári, M. (2021). Financial Exclusion in the Digital Payment Space. Financial and Economic Review, 20(4), 65–85. https://doi.org/10.33893/FER.20.4.6585
Column:
Study
Journal of Economic Literature (JEL) codes:
E42, D14, G20, G53
Keywords:
financial exclusion, electronic payment systems, financial literacy, digital finance, cash usage, payment infrastructure, bank of the future
References:
Bech, M. – Faruqui, U. – Ougaard, F. – Picillo, C. (2018): Payments are a-changin’ but cash still rules. BIS Quarterly Review, March, pp. 67–80. https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
Beck, T. – Senbet, L. – Simbanegavi, W. (2015). Financial Inclusion and Innovation in Africa: An Overview. Journal of African Economies, 24(Issue suppl_1), i3–i11. https://doi.org/10.1093/jae/eju031
Bhattacharyya, S. (2017): WTF is Conversational Banking? DigiDay. 7 February. https://digiday.com/media/what-is-conversational-banking/. Downloaded: 14 January 2021.
Boobier, T. (2020): AI and the Future of Banking. Wiley. https://doi.org/10.1002/9781119596165
Brühl, V. (2020): Libra – A Differentiated View on Facebook’s Virtual Currency Project. Intereconomics, 55(1): 54–61. https://doi.org/10.1007/s10272-020-0869-1
Burkáné Szolnoki, Á. – Merényi, Zs. – Székely, J. (2017): Küldetések a pénz világában (Missions in the world of money). https://penziranytu.hu/sites/default/files/tananyag/tankonyv/Kuldetesek a penz vilagaban tankonyv.pdf. Downloaded: 14 January 2021.
Business Insider (2019): The Payments Ecosystem: The biggest shifts and trends driving short- and long-term growth and shaping the future of the industry. Business Insider Intelligence, November.
Claessens, S. (2006): Access to Financial Services: A Review of the Issues and Public Policy Objectives. World Bank Research Observer, 21(2): 207–240. https://doi.org/10.1093/wbro/lkl004
Cleland, V. (2017): Insights into the Future of Cash. Bank of England. https://www.bankofengland.co.uk/-/media/boe/files/speech/2017/insights-into-the-future-of-cash.pdf. Downloaded: 14 January 2021.
DB (2019a): Cash demand in the shadow economy. Deutsche Bundesbank Monthly Report March 2019, pp. 43–58. https://www.bundesbank.de/resource/blob/793190/466691bce4f27f76407b35f8429441ae/mL/2019-03-bargeld-data.pdf
DB (2019b): The costs of payment methods in the retail sector. Deutsche Bundesbank Monthly Report June 2019, pp. 65–79. https://www.bundesbank.de/resource/blob/800766/0462923c3587a2d98f2c2db5b71047ae/mL/2019-06-kosten-zahlungsmittel-data.pdf
Demirgüç-Kunt, A. – Beck, T.H.L. – Honohan, P. (2008): Finance for All? Policies and Pitfalls in Expanding Access. Policy research report, World Bank.
Demirgüç-Kunt, A. – Klapper, L. – Singer, D. – Ansar, S. – Hess, J. (2018): The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington, DC: World Bank.
Didenko, A. – Zetzsche, D.A. – Arner, D.W. – Buckley, R.P. (2020): After Libra, Digital Yuan, and COVID-19: Central Bank Digital Currencies and the New World of Money and Payment Systems. https://doi.org/10.2139/ssrn.3622311
EC (2020): A digitális gazdaság és társadalom fejlettségét mérő mutató (DESI), 2020 – Magyarország (Digital Economy and Society Index (DESI), 2020 – Hungary). European Commission. https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=66944. Downloaded: 14 January 2021.
El-Meouch, N.M. – Fellner, Z. – Marosi, A. – Szabó, B. – Urbán, Á. (2020): An Estimation of the Magnitude and Spatial Distribution of Usury Lending. Financial and Economic Review, 19(2): 107–132. http://doi.org/10.33893/FER.19.2.107132
EU (2014): Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0092
Gosztonyi, M. – Havran, D. (2021): Highways to Hell? Paths Towards the Formal Financial Exclusion: Empirical Lessons of the Households from Northern Hungary. In: The European Journal of Development Research. https://doi.org/10.1057/s41287-021-00434-9
Greenham, T. – Travers-Smith, F. (2011): Cashing Out: The hidden costs and consequences of moving to a cashless society. RSA Action and Research Center. https://www.thersa.org/globalassets/pdfs/reports/rsa-cashing-out.pdf. Downloaded: 14 January 2021.
HCSO (2018): A háztartások életszínvonala (Living standards of households), 2018. Hungarian Central Statistical Office. https://www.ksh.hu/docs/hun/xftp/idoszaki/hazteletszinv/2018/index.html
Helmeczi, I. (2010): A magyarországi pénzforgalom térképe (The map of payments in Hungary). MNB Occasional Papers No 84, Magyar Nemzeti Bank. https://www.mnb.hu/letoltes/mt-84.pdf. Downloaded: 14 January 2021.
Horn, D. – Kiss, H.J. (2019): Who Does Not Have a Bank Account in Hungary Today? Financial and Economic Review, 18(4), 35–54. http://doi.org/10.33893/FER.18.4.3554
Ilyés, T. – Varga, L. (2015): Show me how you pay and I will tell you who you are – Socio-demographic determinants of payment habits. Financial and Economic Review, 14(2): 25–61. https://en-hitelintezetiszemle.mnb.hu/letoltes/2-ilyes-varga-en.pdf
Kempson, E. – Whyley C. – Caskey, J. – Collard. S. (2000): In or Out? Financial Exclusion: A Literature and Research Review. Financial Services Authority, London. http://www.bristol.ac.uk/media-library/sites/geography/migrated/documents/pfrc0002.pdf. Downloaded: 14 January 2021.
Kerényi, Á. – Molnár, J. (2017): The Impact of the Fintech Phenomenon – Radical Change Occurs in the Financial Sector? Financial and Economic Review, 16(3): 32–50. http://doi.org/10.25201/FER.16.3.3250
Kirwan, S. (2021): Financial inclusion. Agenda Publishing Limited.
Kovács, L. – Terták, E. (2019): Financial Literacy Theory and Evidence. Verlag Dashöfer, Bratislava. https://bankszovetseg.hu/Public/publikacio/Financial literacy.pdf. Downloaded: 16 October 2021.
Lloyds Bank (2017): Consumer Digital Index 2017: Benchmarking the Digital and Financial Capability of Consumers in the UK, Lloyds Bank.
MNB (2020): Payment Systems Report, 2020. Magyar Nemzeti Bank. https://www.mnb.hu/en/publications/reports/payment-systems-report/payment-systems-report-2020
NDS (2019): Nemzeti Digitalizációs Stratégia 2021–2030 (National Digitisation Strategy 2021–2030) Ministry for Innovation and Technology, Ministry of Interior. https://2015-2019.kormany.hu/download/f/58/d1000/NDS.pdf
Rogoff, K.S. (2016): The Curse of Cash. Princeton University Press. https://doi.org/10.1515/9781400883219
Scardovi, C. (2017): Digital Transformation in Financial Services. Springer. https://doi.org/10.1007/978-3-319-66945-8
Schmiedel, H. – Kostova, G.L. – Ruttenberg, W. (2013): The social and private costs of retail payment instruments: a European perspective. Journal of Financial Market Infrastructures, 2(1): 37–75. https://doi.org/10.21314/jfmi.2013.020
Turján, A. – Divéki, É. – Keszy-Harmath, Z. – Kóczán, G. – Takács, K. (2011): Nothing is free: A survey of the social cost of the main payment instruments in Hungary. Occasional Papers 93, Magyar Nemzeti Bank. https://www.mnb.hu/letoltes/op93-fmtk.pdf
Végső, T. (2020): Comparative Analysis of the Changes in Cash Demand in Hungary. Financial and Economic Review, 19(1): 90–118. http://doi.org/10.33893/FER.19.1.90118
Végső, T. – Belházyné Illés, Á. – Bódi-Schubert, A. (2018): Készpénz vagy kártya? A magyar lakosság fizetési szokásainak feltáró elemzése (Cash or card? – An explorative analysis of consumers’ payment behaviour in Hungary). Pénzügyi Szemle, 63(4): 455–479.
Xu, L. – Zia, B. (2012): Financial Literacy around the World – An Overview of the Evidence with Practical Suggestions for the Way Forward. Policy Research Working Paper 6107, The World Bank, June 1–56. https://documents1.worldbank.org/curated/en/264001468340889422/pdf/WPS6107.pdf
WHO (2020): The top 10 causes of death. https://www.who.int/news-room/fact-sheets/detail/the-top-10-causes-of-death
World Bank (2021) Automated teller machines (ATMs) (per 100,000 adults). https://databank.worldbank.org/reports.aspx?source=2&series=FB.ATM.TOTL.P5
Zeranski, S. – Sancak, I.E. (2020): The Wirecard Scandal: The High-speed Rise and Fall of a FinTech Company and Its Implications for Developed and Developing Economies. Oxford Business Law Blog. https://doi.org/10.13140/RG.2.2.19897.80482