The blueprint for financial inclusion – Mojaloop's vision for solving the unbanked problem

Friday 20 November 2020 08:45 CET | Editor: Alin Popa | Interview

The Paypers interviewed Paula Hunter from the Mojaloop Foundation to learn how financial inclusion can happen in vital regions across the world when an open source approach is embraced

What are Mojaloop and the Mojaloop Foundation for those who do not know it yet? How will your experience help advance the organisation’s mission?

Mojaloop is open source software designed to advance financial inclusion. It empowers nations to make their payment models more inclusive by connecting all digital financial providers with customers who will benefit from the emerging digital economy, especially the financially excluded. Rather than being a financial product or application in itself, Mojaloop offers an open source blueprint for removing the barriers—including time, money, and technical complexity—that often prevent payment models from meeting the digital financial needs of the world’s 1.7 billion unbanked people.

In May 2020, we formed the Mojaloop Foundation as a charitable nonprofit, so the Mojaloop project can continue to thrive as a public good. By evolving the project into its own foundation with a group of goal-oriented member organisations, Mojaloop has support, funding, and guidance from collaborative organisations dedicated to increasing financial inclusion. While I bring more than 25 years of open source and association leadership expertise, our Board of Directors, Technical Governing Board, and Mojaloop community bring decades of combined open source, fintech, payment, and financial inclusion experience to our organisation.

We are excited about recent progress! The Bank of Tanzania is in the process of implementing Mojaloop to serve Tanzanian citizens. Mowali, a joint venture between mobile network operators Orange and MTN, is an implementation of Mojaloop that has recently gone live. Its services are being phased in across Africa.

Our goal is to help organisations build interoperable, digital payment systems that enable seamless, affordable financial services between individual users, banks, government entities, merchants, mobile network operators, service providers, and technology companies.

Through collaboration, we expect wide adoption of interoperable financial services, which improves access to critical financial tools for more of the population.

Many people living in underdeveloped communities would benefit enormously from open, accessible, no-fee digital financial services that are as easy to use as cash. Please describe the interoperability challenge of achieving financial inclusion and how interoperability overcomes this hurdle.

One of the biggest technical hurdles for nations to solve is achieving interoperability across different real-time payments systems. While over 100 countries have adopted mobile money services, they are not all financially inclusive. According to the World Bank Global Findex, 1.7 billion people are unbanked. McKinsey estimates that adding interoperability to real-time payments systems could add as much as USD 3.7 trillion to emerging countries’ GDP by 2025.

In the informal economy, one challenge is the fact that people must walk, sometimes for many hours, to transport physical cash to pay for goods and services. Mobile money offers the potential to improve their lives, but only if it works like cash. Fees to make transactions or the inability to send or receive money across different services are barriers to the unbanked, even with mobile phones.

We are seeing a significant emphasis on the need for interoperable digital payment platforms on a country level to accelerate their financial inclusion goals within this decade. To grow the market and grow the transaction volumes, major mobile money operators and central banks realise that their real-time payment platforms need to connect to mobile money systems and all their country’s traditional banks and financial systems. So, in other words, the sender and receiver of the money will be connected to the same interoperable, affordable real-time payments system. The COVID pandemic has only highlighted the need for interoperable digital real-time payments, enabling governments to assist entire populations.

How can our industry support ‘mom and pop’ merchants and the unbanked through inclusive financial services?

Among millions of merchants—including extremely small mom-and-pops—only some have used or adopted a digital payment method. Others only use cash and are not part of the formal economy. Without a bank account or credit history, these merchants can’t get a loan or accept digital payments because they only deal in cash.

With internet and mobile penetration increasing, there is an opportunity to connect these small-business owners with financial products that will help them get loans, save, and get exposure to investments. An in-country, real-time payments system that leverages an interoperability model, like Mojaloop, can enable transactions—such as digital payments—to become merchants’ assets or a ‘credit history’. For example, a vendor or a food seller without a structured brick-and-mortar shop could leverage repeated transactions made over 15, 20, or 30 days to start creating a credit score. Banks and lending companies can begin to give loans, even as small as USD 10, to provide working capital to these merchants.

As more of the population becomes part of the formal economy, government benefits along with insurance, savings, and financial products can further help merchants save and make better use of their resources.

In your opinion, how do Central Bank Digital Currency (CBDC) initiatives around the world tie into the concept of financial inclusion? What about blockchain?

Mojaloop is designed to use national currencies and is completely agnostic to how digital money moves once it starts getting settled between participants. Mojaloop does not use blockchain. Rather, it relies on the Interledger protocol to operate, enabling it to be implemented in accordance with country and regional regulations related to payments, such as identity and ‘know your customer’ (KYC) processes.

Central Banks looking to adopt their own CBDC—the digital format of their nation’s legal tender—can use Mojaloop to design real-time payments systems to make a direct connection from the central bank all the way to the country’s citizens, merchants, and other institutions. By ensuring that the money being spent is guaranteed currency, central banks can pay the public directly and the public can pay for services, which ultimately advances financial inclusion.

About Paula Hunter

Mojaloop Foundation Executive Director Paula Hunter is responsible for the organisation’s strategic planning and direction, membership development, and evangelism. With over two decades of open source and association management expertise, she has the in-depth industry knowledge needed to enable the Foundation to advance its financial inclusion mission.


About the Mojaloop Foundation

The Mojaloop Foundation’s mission is to increase financial inclusion by empowering organisations with interoperable payment systems to enable digital financial services for all. The organisation operates as a 501(c)(3) charitable nonprofit, maintaining its free, open source software, Mojaloop, and community as public goods in service of financial inclusion. Visit

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Keywords: Mojaloop, Mojaloop Foundation, Paula Hunter, financial inclusion, charitable nonprofit, digital finance, Open Finance, interoperability, real-time payments, transactions , mobile money, Central banks, unbanked, SME, credit score, lending, central bank digital currency, CBDC, blockchain, KYC
Categories: Banking & Fintech
Countries: World
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