The Bill & Melinda Gates Foundation has announced the release of new open-source software for creating payment platforms that provide the "unbanked" with access to digital financial services.
Designed to provide a reference model for payment interoperability, Mojaloop can be used to overcome barriers that have slowed the spread of financial services among the poor and unbanked populations in the developing world and will be made available free of charge to developers, banks, financial service providers, and companies. Created by the foundation's Level One Project in partnership with fintech developers Ripple, Dwolla, ModusBox, Crosslake Technologies, and the Software Group, the software comprises four components — an interoperability layer that connects bank accounts, mobile money wallets, and merchants in an open loop; a directory service layer that navigates the different methods that providers use to identify accounts on each side of a transaction; a transactions settlement layer that makes payments instant and irrevocable; and components that protect against fraud.
According to the World Bank, nearly two billion people in developing countries lack bank accounts and cannot access the benefits and security that basic financial services provide. While digital financial services are available in nearly a hundred countries, the expansion of services for the poor has been hampered in large part by a lack of interoperability between digital financial services and payment platforms.
"Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome," said Kosta Peric, deputy director of Financial Services for the Poor at the Gates Foundation. "With Mojaloop, our technology partners have finally achieved a solution that can apply to any service, and we invite banks and the payments industry to explore and test this tool. Just as the internet revolutionized digital communication, open-source solutions like Mojaloop can spark innovation and democratize access to digital payments, empowering billions of new customers and driving massive economic growth in developing markets."