Report: The Future of Supply Chains: Why Companies are Digitizing Payments

  • Date Posted: August 24, 2018
  • Authors: Marketlinks Team
  • Document Types: Evidence or Research
  • Donor Type: Non-US Government Agency


Agnes Tumuramye, a Uganda coffee farmer. Photo by Karen McKenna, USADF.
Agnes Tumuramye, a Uganda coffee farmer. Photo by Karen McKenna, USADF.

Drawing on data and interviews with around 40 companies and organizations, the report shows how digitizing supply chain payments is having a profound impact on global businesses, economies, and individuals. For example, in Kenya, small Unilever retailers grew sales by 20 percent thanks to accessing digital working capital loans. In Bangladesh, when H&M, Marks & Spencer, Target, Li & Fung, Lindex, Debenhams and Fast Retailing partnered with HERfinance, the number of instances when a woman was unable to save dropped by almost 70 percent.

These companies’ experience underscores why digital payments are a key pillar of a strong business model, and the lessons documented in the report are designed to help other brands know how to get started.

About 30 percent of the world’s adults struggle to get by without the basic financial services they need to protect themselves against hardship and invest in their futures. Financial inclusion seeks to unlock economic opportunity for all, especially the poor, by expanding access to these catalytic financial services. In the past few years, digital payments have proven to be an effective tool to drive financial inclusion, enabling hundreds of millions of people to make transactions faster, cheaper, and more safely. Not only can digital payments create incentives for people to open an account, they can also reduce the problem of account dormancy by offering new applications that customers will actively use. For example, an increasing number of innovative digital payment solutions are making it possible for individuals to afford and access services such as clean water and electricity for the first time.

Governments in developing and emerging countries have made important moves to foster digital payments. They are investing in vital infrastructure such as payment systems and connectivity, and they are digitizing their own payments, including wages and social transfers. That said, further action is needed to truly scale up progress.

A growing group of companies are realizing how digitizing payments can have positive effects on their business and on people’s lives. Key private-sector actors in retail, consumer goods, garment, and agribusiness can play a crucial role in supporting financial inclusion by digitizing their salary and supply chain payments. Currently, about 230 million financially excluded people still receive their wages in cash, and 235 million unbanked adults in developing countries receive cash for their agricultural products.

The 2017 Global Findex data shows us that more than half a billion adults gained an account since 2014. But several groups such as women, farmers, and small- and medium-sized enterprises remain critically underserved. I have found in my own work that a diverse range of major companies recognize that financial inclusion can improve the performance of their businesses. And they are ready to take steps that can expand financial inclusion. We need more companies to step forward in similar ways — not for the sake of CSR but because this makes business sense for everyone involved.

This paper provides interesting examples of powerful partnerships that have succeeded in digitizing supply chain payments. I hope that these insights and evidence will help digital payments gather force and deliver the benefits of financial inclusion to many, many more people.

Click here to read the full report.