Cash: The Unsung Hero of Digital Finance

Cash has often been derided as an obstacle to digital finance: a hang-over of more primitive days, evocative of the legacy systems that keep poor people poor. This argument is based on a misunderstanding of how poor people adapt and learn. Far from being a fossilized legacy, cash is arguably a potent tool that can help bring poor people into digital financial inclusion.

Here’s why.

A hand counts out cash A hand counts out cash

Photo Credit: Mahfuzul Hasan Bhuiyan, 2015 CGAP Photo Contest

Based on research by My Oral Village conducted last year, I reported in an earlier blog that many illiterate individuals around the world face difficulties reading large numbers—those that are 3, 4 or more digits long. Most people with little or no formal schooling can correctly recognize a one-digit number, but do not know “place value”—the set of arithmetic rules that determine how many digits are in a number like 6,030 or 325,000, how many zeros it has, and where those zeros are placed. This makes understanding larger numbers—especially in the context of entering them into a payment app—difficult if not impossible.

Graphic showing how oral users work with cash Graphic showing how oral users work with cash
Rather than being a hindrance to formal financial services, cash may actually be part of the solution to this “multi-digit divide.” More than any other technology or institution, cash makes larger numbers accessible to illiterate and semi-literate individuals. Oral individuals may ignore the text and numerals on the notes, and yet be able to use them because they recognize images, shapes and colors. In our study, three-quarters of the sample could count 107,500 units of their own currency, but only 15% could identify the same number in writing. While there are few related studies, Geoffrey Saxe at the University of California, Berkeley, conducted research with Brazilian candy sellers in 1988, concluding that they could better count and calculate large numbers using currency notes.

In societies where money is the norm but literacy is not, cash seems to be functioning as an intermediate counting and calculating tool that builds on spoken number, and does not rely on written arithmetic notation. As cash enables more people to be fluent in bigger numbers, it may be a key cognitive gateway to financial inclusion.

For instance, My Oral Village found from interviews and focus groups in 2015 that in village markets in Tanzania, vendors—often illiterate women—generally had mobile phones with calculators. But when transacting the vendors used neither written records nor calculators. Instead, they sold their vegetables in heaps based on standard prices, such as Tsh 500 or 1,000. If the price went up, the heap would shrink, but the price would not change. Most vendors had only a few types of heaps, and most transactions involved only a few items. Only regular numbers were used, and all transactions were done in cash. As a result, buyers and sellers had all the cognitive tools they needed to complete a transaction—without using a pen, paper or calculator.

Just as it is hard for sighted people to see the strengths of the blind, it can be hard for literates to see the strengths of orality. Yet illiterate people have shown remarkable adaptation to counting and calculating, without knowing arithmetic notation. In the world of large numbers, the illiterate analogue to a blind person’s sense of touch is cash.

Critics of cash have one aspect very right: oral individuals don’t trust it as a store of value. It is susceptible to all kinds of calamities—theft, loss, destruction by natural disasters—that lead poor people to quickly convert it into cows or building materials or favors to friends.

Can a safer, digital version of cash be designed for the oral market? Here are some ideas:

  • Visual representations of local cash denominations can be integrated into any mobile transaction. Any phone with the capacity to generate simple images can generate recognizable cues for the various denominations. The “smarter” the phone, the more intuitive the process can be.
  • Agents can display posters in their facilities that link cash quantities to arithmetic notation.
  • Agents can also provide spaces where their customers can use “play money” to support their calculations. Oral users need to feel confident that they will be able to complete their work correctly and unrushed.
  • Financial numeracy games that support acquisition of skills like place value and percent can be run on tablets (accessible offline) and deployed through savings groups, solidarity groups and informal financial groups.
  • Cash/image-based ledgers and passbook apps can be developed for savings groups and other informal financial groups.
  • A two-minute financial numeracy test, using cash, can be developed for integration into financial inclusion data sets.

It is useful and important to replace cash with digital payments in the formal sector. But it is also important to ease the integration of nearly a billion oral adults into the formal sector—and even to “digitize” the informal financial sector. To achieve these goals, we must grasp the role paper money plays in the oral world. It is a very effective learning and adaptation tool for illiterate and semi-literate individuals striving to enter the modern economy and financial system—and a critical predecessor to any type of payment, mobile or otherwise.


28 April 2016 Submitted by Jeffrey Ashe (not verified)

Thank you for your nuanced discussion of the role of cash and how cash of different denominations is used as a counter. As you said " As a result, buyers and sellers had all the cognitive tools they needed to complete a transaction—without using a pen, paper or calculator." To add to the discussion I recently heard of how members of ROSCAS in India use large denomination bills to store for major transactions as large bills are hard to change in the village. Similarly in Mali sticks and nuts are used as counters to calculate the group's outstanding loan balance quickly and accurately when none of the members is literate. I thought your idea of incorporating how villagers actually use cash to count into digital platforms has great potential. Jeff

03 May 2016 Submitted by Brett Matthews (not verified)

Thank you, Jeff.

There have been studies of how illiterate, but economically active, adults adapt to the cash economy. Perhaps the most systematic is Geoffrey Saxe's (not Jeffrey Sachs!) study of the Oksapmin in Papua New Guinea. I highly recommend his book "Cultural Development of Mathematical Ideas" (…) though not the Kindle version (which does an injustice to the tables). The Mali case is intriguing, and I am reminded that the British parliament only discontinued the use of split-tally sticks as an instrument of public record in 1834. They had been used as official records for tax collection for over a thousand years, often in preference in text, which illiterate people didn't trust as much. These practices are not unique to developing nations!

30 April 2016 Submitted by Krishnan Narasimhan (not verified)

Brett, Thank you for sharing this and I am in full agreement with your insights & hypotheses given that we have worked and talked about this a lot. I see a challenge emerging between rapid deployment of digital interfaces purely for commercial interests and the investments required in educating the masses and how service providers are going to balance the two and take a longer term view, especially if the last billion is to be meaningfully served.

03 May 2016 Submitted by Brett Matthews (not verified)

Thanks, Krishnan.

I agree with you about the evolving challenge, and have grave doubts that 'financial literacy' (in the sense we normally conceptualize it) can be done effectively at a scale consistent with the sustainability of financial institutions, at least in the context of the oral segment. In my view the solution involves digital interface re-design towards oral usability, and the integration of cognitive scaffolding that supports the acquisition of targeted skills. Commercial deployments can be profitable and friendly to illiterate people at the same time!

01 May 2016 Submitted by Kim Wilson (not verified)

This is an excellent post. It challenges our assumptions about how we interpret visual cues other than numbers to quantify money. I think the author is completely right when he poses smart phone solutions as a replacement of cash, at least for young people in an experimental mode (the only mode they know). For adults, I also think posters at agents would be of tremendous use. For those adults that feel shame at their literacy, I suspect they will have to have lots of opportunity for private practice, where they can learn a new system without revealing their lack of numeracy. But, there is no reason that this can't happen, too.

01 May 2016 Submitted by Kim Wilson (not verified)

This is post is most welcome. How people use cash to navigate their financial lives is crucial if the industry of financial inclusion is interested in impacting those whose worlds are primarily oral ones. Seeking assistance from literate counterparts is often not an option. Shame of revealing their illiteracy is too big a factor and my experience has shown that folks will go to great lengths to find alternative copying strategies. In terms of "playing" with digital interfaces, I think privacy - meaning playing in private - will go a long way. People don't want to risk looking in competent in front of others.

03 May 2016 Submitted by Brett Matthews (not verified)

Thank you, Kim.

Your emphasis on the concern that illiterate adults have to conceal their disability (and I think we can call it that) is most welcome. As I remark in a video that will soon be released, it is not stupid for poor people to hide their illiteracy. But it IS stupid for literate people to act as if what they see is, all there is.

From what I've seen illiterate people can often count and manage large numbers, but they need three critical ingredients to do it. 1. cash, 2. time (much more than a schooled person would need, and free of time-pressure) and 3. privacy. These conditions can be achieved in the mobile phone environment (even feature phones) but real world help would be extremely useful as well. Imagine if mobile money suppliers provided, instead of unread manuals, play paper-money to help people count and calculate?

04 May 2016 Submitted by Robert Smith (not verified)

Given most illiterates are able to understand voice, and given the original use of mobile phones - voice!! - then simple solutions that give a recording in the account holder's own language of transfers that are being made on the account would provide even stronger familiarity. Easy to program and real value added. The only downside I can see relates to people queueing behind overhearing the "voice", no worse than the rubber necks in a bank queue seeing the cash you are paying in. See this as an example:

04 May 2016 Submitted by Brett Matthews (not verified)

Thanks Robert!

If I understand you correctly, you are not simply advocating the use of voice (the mainstream approach and one I agree with, well discussed elsewhere). You seem to be advocating the superiority of voice-only (or voice + arithmetic notation) over mixed solutions such as those I would advocate.

Mixed solutions provide oral populations with more than one way to verify a transaction. Remember how cheques have always required a ‘double-entry’ approach (arithmetic notation plus the number in writing)? This doesn’t just make central banks feel safer, it reduces the risk of error and increases the sense of safety of the user as well. As I point out, an illiterate user cannot rely on arithmetic notation to validate voice, so we need other methods.

Remember also that voice is the solution for many illiterate people already. They prefer to rely on the voice of the agent (who they can correct in real time in case of error) than their own phones. The ‘over-the-counter’ market, which I’m referring to, diverts a majority of potential mobile money users from personal account use in some countries now. We need mobile solutions that offer more compelling value than the agent.

04 May 2016 Submitted by Jeffrey Ashe (not verified)


Fascinating bit of information about split-tally sticks. Seeing the women in the groups quickly tallying the pile of sticks and shea nuts that represented the outstanding loan balance I felt that I was seeing the invention of arithmetic - or at least Roman Numerals. Now if the number of sticks were recorded on a of paper ..... I am reminded of the tallying of sheaves of grain used by the Sumerians. The great part about oral recordkeeping that the the digital systems or paper systems will never replicate is that everyone has a role - each needs to remember their transactions and the person sitting next to them who is their witness. It's also very fast and very accurate. Jeff

07 May 2016 Submitted by Paul Rippey (not verified)

Thanks Brett. This all makes perfect sense.

I'll add a slightly paranoid note to the discussion: I almost never use cash myself, at least not in the US, and as I flash my credit card and other pieces of plastic, I am aware that I am leaving behind a trail of information about where I have been and what I have bought, and this feeds into an incredibly large mass of data about me being held by Google, The Banking System, and the NSA.

Now, this has NEVER done me any harm, and in fact, the weird truth is that the more Google knows about me, the easier my life is. I'm also sad to say that my website,, isn't nearly subversive enough to be of interest to the government.

But lots of non-literate people live under governments that might be more willing to abuse information, more prone to see particular ethnicities as their enemies, insecure enough to worry about the spending patterns of villagers, and ready to use any pretense to interrogate people that they think pose a threat to their power. I don't know of this happening yet, but it's likely that any abuse of information that CAN happen WILL happen.

The Killing Cash movement just appeared out of nowhere in my experience, armed with millions of dollars to make it happen. It's all a little... creepy.

08 May 2016 Submitted by Brett Matthews (not verified)

Thanks Paul! I'm sure you are aware that your 'slight paranoia' is really the novelty of entrusting your own economic value to a new (digital medium). Spare a thought for the pre-literate villager who is still filled with many doubts about the cash-based media (ledger accounts, passbooks, loan contracts etc) that took centuries of practice and institutional development to evolve in our modern world. Many villagers are like you: they fear it all but still find that the more they rely on written records, the better their lives become. But there are no shortage of tragic tales along the way. On both sides of the literate divide this process is trial and error, hit and miss, and slow, slow, slow ... But we CAN help speed it up if we see it for what it is ... !

18 June 2016 Submitted by Michael S. Kaddu (not verified)

Does using cash mean exclusion?

Brett and Paul,

An amazing eye opener to the realities of Financial Inclusion. A general perception held is that cash is no longer a ''worthy' financial Instrument'. I would imagine that the digital revolution can only represent a documentation of a value, process or activity. However, the real value represented must hold.

Therefore, the digitization creates efficiencies in the monetary system represented In values but human beings will ultimately relate to a value that can be felt physically.

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