Tuesday, June 24, 2014

Does Ubiquitous Access to Payment Systems mean the End of Poverty?

I often thought that people be they in the Bronx, or Outer Mongolia, need access to payment systems as retailers not as consumers, more than they need education, clothing, or proper housing.  If the underserved can sell their goods or services to a worldwide market with immediate payment guarantees, then the despair of poverty must decline. 

The trouble with the concept is there is no money in it. Placing a commercial small payment hub equipped with enough functions to make international commerce viable in a sparse agrarian culture costs quite a bit, especially if a crude infrastructure needs placement there first. Not only is there no money in it, it takes money out of the pockets of wholesalers that function as the sole buyer in many communities, and force them to compete with a broad retail market.

Allow me dear reader(s) to design a payment hub for an impoverished community with minimal modern infrastructure.  First it needs secure connectivity to a small value payment hub outside the region. Next it needs to create accounts for all members of the population that want to sell goods or services. Finally it needs to place funds in escrow, and, pay delivery costs from received amounts.  Such a hub means the community must have electricity, transportation, electronic communication, a viable means of currency conversion, and ability to physically redeem funds. Finally, the payment hub is not viable if the community has no way to communicate to the world what it is selling. Without demand, a supply has no value.

Is it possible to build such a system and ultimately make money from its operation? I think it is, if there is enough of these micro hubs supplied by the same firm that can make a small fee from currency conversions and fund redemption. The key to profitability is taking the same design and replicating it so many times that in the aggregate the small fees eventually pay for the infrastructure and start making a profit. I am not talking about turning a profit in the next fiscal quarter or the next fiscal year, and maybe not the next fiscal decade. How long before the US GDP showed increases due to the expenditure on construction of a national highway system? Can we do the same thing worldwide with Governments working together in harmony for the benefit of people in the Bronx and Mongolia? Yes, but only by recognizing national self interest is an integral part of worldwide growth.

Next Blog: Payment Torus and the gradual removal of payment hub controls or response to comments, or some other topic.

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