Most digital financial services users around the world live in cash-based societies. They often are paid in cash and conduct many of their everyday financial transactions in cash. They may be able to use digital services to meet some of their needs, such as sending money to a family member or getting a small loan, but not others, such as buying produce at the local market. These users require a cheap and easy way to switch between the worlds of cash and digital currency. Local storeowners doubling as cash-in/cash-out (CICO) agents have typically served as this bridge. The CICO services they offer play an essential role in building digital financial services at scale. Yet digital financial services providers have struggled to establish viable CICO agent networks in rural areas, where sparse populations lead to low transaction volumes and weak incentives for entrepreneurs to serve as agents. This makes it difficult to advance financial inclusion at the last mile.

Global evidence gathered by CGAP and the Bill & Melinda Gates Foundation shows that a variety of emerging CICO models have improved agent viability in rural areas. We find that some these new models diversify the range of customer transactions that agents can facilitate, which provides them with extra sources of income. E-commerce companies in Asia are leading the charge in this respect, building agent networks on top of distribution channels originally meant to deliver goods and services traded online. New types of agent network managers are also enabling agents to facilitate many public and private service transactions for customers across Africa and Latin America. Overall, our analysis of the global experience with CICO agents reveals six principles for more inclusive agent networks.

Putting principles into practice for stronger agent networks

In the resources below, CGAP provides practical recommendations for how financial services providers, policy makers, and regulators can deploy these six principles all the way to the last mile and expand financial inclusion. Developments in countries such as India and China demonstrate that when the public and private sectors work together, they get the best results.