Extending Financial Services with Banking Agents
Banking agents are retail vendors, lottery outlets, and post offices-trusted local establishments that can double as a kind of bank branch for their customers, processing everything from bill and pension payments to deposits, withdrawals, and money transfers. Banking agents' lower set-up and running costs promise to help banks and microfinance institutions reach more and poorer people living far from the nearest branch, with more financial products, at lower cost, than traditional microfinance or banking channels. Banking agents process transactions with point-of-sale (POS) card readers, barcode scanners, and sometimes personal computers that connect with the bank's server using a dial-up or other data connection. The clerk at the retail or postal outlet collects and disburses cash and, in some cases, opens bank accounts for new clients and fills in credit applications. The retail outlets earn a portion of the transaction fee. Some generate so much business from handling these transactions that they dedicate an employee to operating the POS device. Some banks use management companies to identify, equip, train, and support banking agents and to assume all liabilities for the cash they handle. These intermediaries are compensated with a portion of the transaction fees.