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E-Payments in Microfinance: Evolution and Benefits

E-Payments in Microfinance: Evolution and Benefits

Kavita Joshi (Amity University, Noida, India) and Ritesh Dwivedi (Symbiosis Institute of Business Management, Noida, India)
Copyright: © 2024 |Pages: 27
DOI: 10.4018/979-8-3693-1503-3.ch011
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Abstract

The integration of e-payment systems in digital microfinance marks a pivotal intersection between financial inclusion and fintech innovation. This chapter traces the evolutionary trajectory of e-payment methods, from their origins to contemporary tools like mobile wallets. It underscores the profound benefits of these platforms, emphasizing unparalleled accessibility, efficiency, and benefits for underserved regions. However, merging technology with finance presents challenges, including limited adoption, technological barriers, and regulatory complexities. The chapter highlights the RBI's regulatory role, showcasing how e-payment platforms are reshaping the microfinance sector through real-world examples. Ultimately, it advocates for these platforms as essential drivers for achieving comprehensive financial inclusion.
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2. Historical Background Of Microfinance

Microfinance has made progress over the time and it has recent history compare to others in finance sector. The concept of involving poor people in financial services is very ancient but now these services are tagged with the name “Microfinance”. In 19th century microfinance can be traced as financial initiative in North America and Europe(Copestake et al., 2016). At earlier time in Asia, micro financing was done by moneylenders from their own funds imposing high interest rates(Zainuddin & Yasin, 2020). The thought of microfinance gained traction when professor Muhammad Yunus and his formation, the Grameen Bank came up with collateral-free model of micro financing to impoverished, especial focus on women, collective lending system was used. This strategy utilized trust, social capital and peer oversight to mitigate information discrepancies. The successful models by Grameen Bank, along with other similar organizations, paved the way for global proliferation of microfinance(Yunus, 1999).

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