Tom Groenfeldt , CONTRIBUTOR writes about finance and technology. Opinions expressed by Forbes Contributors are their own.

The Bill and Melinda Gates Foundation announced an open source platform, Mojaloop, to allow companies to build a secure digital payments platform at scale. Across the developing world banks, developers and mobile carriers are developing systems to support payments. M-Pesa in Kenya is probably the earliest and the best known.

“Systems like M-Pesa are great, but most are a closed loop,” said Kosta Peric, deputy director, financial services for the poor, at the Gates Foundation speaking at the SWIFT Sibos conference in Toronto. In Kenya, an estimated 194,000 households have moved out of extreme poverty due in part to their access to M-Pesa, a mobile money platform, and users’ ability to save money more effectively.

The shortcoming is that users can only pay others who are on the M-Pesa system. Incumbent players have little immediate incentive to open up their platforms to users from outside, although experience with financial platforms such as debit cards shows that usage increases with greater usability. When they first were introduced most debit cards works at a single bank’s ATMs; when standards and interoperability permitted a user to access any ATM or POS, the debit card usage increased.

As the Gates Foundation looked at the challenges facing companies that deliver digital financial services to poor and unbanked people, two things became clear, the foundation said in its announcement.

“First, growth is being slowed by a lack of interoperability—the ability for customers to transact with any other customer, whether they use the same service or not. Second, the reason services aren’t interoperable is because every provider is more or less going it alone. They have no shared platform or technology to help them get off the ground, leaving them no choice but to build their own, independent of and incompatible with everyone else’s”.

An interoperable platform—something like the internet, but for digital payments—would benefit all providers, it added.

It calls the platform Mojaloop which is available now, free-of-cost, for software developers to adapt and banks, financial service providers and companies.

Building a platform that can deliver complex technology while maintaining a commitment to low-cost, inclusive services is a complex challenge for the private sector. This has led to a prevalence of consumer payment options that are out of reach for many people in developing economies, or which limit customers’ ability to transact across products, banks and borders. For the private sector even a successful platform would operate on a “not for loss” model, and wouldn’t be a big moneymaker.

For the foundation, with a goal of reducing poverty, P&L is different.

Source: Forbes