Ignacio Mas, Deputy Director, Bill & Melinda Gates Foundation, talks about stores acting as cash merchants and their basic need to periodically rebalance their cash and e-money holdings. He explains the basic options for doing so, including going to a bank branch.
There will be widely varying patterns by store: some will need to rebalance daily, some may go a few days without having to go to the bank, others will need to do it more than once a day. There are fairly regular variations by day-of-week and day-of-month, as well as seasonal variations.
Money transfers naturally tend to go urban to rural, placing a burden on rural stores to hold significant amounts of cash. But we also know that rural people are net savers, if they are given a convenient, safe place to save. So money transfers and savings have the potential to offset each other to some extent, easing the liquidity burden on rural stores.
Stores need to be incentivized adequately for (i) the working capital they have tied up in cash and e-value; (ii) the extra security risks they are running; and (iii) the cost and hassle of going to the bank branch to rebalance.
09:05 minutes