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Step by step: Building the ladder from AePS to UPI for India’s last-mile users
Written in collaboration with PayNearby, this whitepaper offers a data-driven roadmap for accelerating the journey from assisted digital payments to true financial inclusion. Drawing on field insights and national trends, it addresses access, digital literacy, trust, and infrastructure, and points out actionable ecosystem enablers to empower last-mile users toward sustainable digital adoption at scale.
Scaling what matters: Empowering agents with meaningful communication design
Business correspondents (BCs), the backbone of India’s financial inclusion efforts, now struggle to remain viable. BCs are agents who enable the cash-in cash-out (CICO) expansion to drive growth and financial inclusion, especially in underserved, rural, and remote areas. Most rural BC agents earn just INR 8,000 (USD 97) a month, and some make as low as INR 600 (USD 7). While BCs in a few in high-footfall areas perform better, they remain the exception.
For most BC agents, CICO alone no longer provides a sustainable livelihood. Agents face a limitation on the number and type of financial products and services, or use cases, they can provide. They face high competition, shrinking margins, and the growth of digital payment modes that bypass them altogether. As a result, multiple partners or providers face high levels of inactivity or dormancy, as much as 30% to 65%, among agents.
MSC (MicroSave Consulting) and the Airtel Payments Bank (APB) embarked on a transformative pivot to respond to this growing crisis. We enabled agents to move beyond basic cash-in and cash-out transactions, such as deposits and withdrawals, and become providers of additional meaningful, value-driven financial products.
MSC and APB used Suraksha, a basic no-frills deposit product with multiple additional features, such as hospicash insurance, cashback incentives, and higher transaction limits, to achieve this. Suraksha was designed with the low-and moderate-income (LMI) customer in mind. It reflects the financial aspirations of underserved communities and provides agents with an opportunity to earn commissions beyond standard cash transactions. Although few APB retailer outlets sold Suraksha, its customers remained unaware of the products’ features, such as insurance, cashback, hospicash, and a seamless UPI experience.
MSC and APB sought to address this challenge and drew on insights from an earlier successful intervention to combat the lack of awareness. We took lessons from a behaviorally informed communication approach that had encouraged rural women to make small deposits. Based on this proof of concept, we designed a new communication toolbox that included a suite of sales pitches, posters, banners, short videos, and WhatsApp-ready messages. The intervention did more than simply design leaflets and banners. It designed materials that agents would actually use, and customers would remember.
The toolbox resulted in a surge in adoption. The number of agents who sell Suraksha increased more than 75-fold, from just more than 4,000 in 2023 to more than 3,00,000 by 2025. Customers opened more than 3.9 million Suraksha accounts, and 80% of those accounts remain active. Suraksha has now become a best-selling product at APB, and we have redefined it as a “safe second account.” Most importantly, agents’ incomes have increased by at least 5%, as they now have more relevant use cases to offer and the confidence and capability to sell them effectively, which brings them closer to economic viability.
This experience taught us that effective communication is an infrastructure in itself for inclusive finance. We also learned how:
- LMI customers think in terms of households, not individuals: LMI customers often view financial risk as a threat to the entire family. Based on this insight, we redesigned the visuals to highlight families instead of individuals. This shift aligned with how rural customers interpret risks as a collective burden. It made the product more relevant and reassuring.
- Functionality makes collaterals more durable and relevant: The sustainability of marketing materials has long been a concern for providers. APB, too, sought durable collateral that would not be discarded or covered up over time. To address the issue, we added functional elements, such as QR codes for customer payments, to ensure that the materials served a daily purpose. This practical value encouraged agents to keep providers visible and in use for longer.
- Simple, accurate messaging reduces the risk of misselling: Clear, easy-to-understand communication boosted product adoption, and importantly, minimized the risk of misselling, a growing concern among regulators. Suraksha equipped agents with precise messaging to ensure they could explain bundled products confidently and accurately, which efficiently aligned what is sold with what is understood.
This experience with Suraksha reveals a crucial shift. It addresses how new products alone cannot solve the agent viability crisis. We need to reimagine how we communicate, adopt, and embed these products into the everyday lives of customers and agents alike.
As the sector looks ahead, one thing is clear: Sustainable financial inclusion will depend on what financial service providers offer and how they enable agents to deliver it. We need to empower agents with the right products and the right narratives. This will enable them to move from dormant touchpoints to dynamic engines of trust and transformation.
Although the CICO model faces challenges, it remains fundamentally sound. The model simply needs constant reimagination to serve the communities that depend on it and empower our invisible business correspondents.
“This article was first published on “The Pioneer” platform on 30th September 2025.
Resilience at the water’s edge: Lessons from deploying the locally led adaptation (LLA) for Inclusive financial service providers (IFSPs) toolkit in Varanasi
Perched along the mighty river Ganga, the holy city of Varanasi bustles at sunset with countless micro, small, and medium enterprises (MSMEs). Silk weavers in their workshops, boat-makers on the ghats, flour mills, and roadside tea stalls serve as the economic heart of the region and are repositories of centuries of tradition. Yet, today, they find themselves on the frontlines of climate change.
Heatwaves, floods, and cold snaps have become increasingly common in the Varanasi district. Seasonal floods, intensified by heavy monsoon rains and river overflow, repeatedly disrupt supply chains, damage infrastructure, and erode livelihoods. Even a short interruption in work devastates MSMEs with their already razor-thin margins as it cuts their income, creates debt, or destroys businesses entirely.
MSC sought to understand these climate risks better and explore adaptation opportunities with assistance from the Sai Institute of Rural Development. We used our Locally Led Adaptation (LLA) for Inclusive Financial Service Providers (IFSPs) Toolkit in two villages of Varanasi, Ramna and Sarai Mohana. The toolkit helps IFSPs and their MSME clients assess climate risks and cocreate adaptation strategies (see figure below). It includes six tools:
- Hazard mapping;
- Vulnerability assessment using the Department for International Development (DFID’s) five capitals framework;
- Identification of direct and indirect impacts;
- Assessment of adaptation strategies using the ACTA framework (Accept, Control, Transfer, Avoid);
- Appraisal and prioritization of adaptation options;
- Development of MSME adaptation plans and thus opportunities for IFSPs to develop, test, and deploy financial products to support them.
Our researchers held semi-structured discussions with six types of MSMEs: Shopkeepers, potters, flour mill owners, ironsmiths, weavers, and boat-makers. The findings revealed significant differences across sectors and within the same community, which underscores the importance of localized, sector-specific approaches to adaptation.
Our first stop for the study was Ramna, a village of about 3,300 people situated just 10 km south of Varanasi city. Despite some infrastructure improvements, flooding remains the dominant hazard and affects almost every enterprise.
Women entrepreneurs face particular risks. One flour mill owner, who started her business with a microfinance loan, worries that the floods will reduce the demand for flour. Floods also threaten the stability of the traditional brick structure from which she operates, possibly even the milling machine itself. Her risks go beyond the business risks and permeates into the domestic sphere where floods add dual care-giving burden to her infant alongside the responsibility to keep her mill safe. Her husband works in construction, which halts completely during floods and leaves the household doubly vulnerable. She is willing to invest in flood-proof infrastructure, but only if affordable finance is available.
Fruit and vegetable sellers face the most precarious position. Perishable stock, flooded roads, and a decline in consumer spending leave them unable to maintain their income during floods. Their adaptation strategy is to accept the risk, rely on savings, and hope for better seasons.
“Customers have no money during floods. Even if I stock goods, no one buys them,” recounts a vegetable shopkeeper from Ramna.
From Ramna, we went to Sarai Mohana, known as the “weaver’s village,” which sits precariously on the Ganga’s banks east of Varanasi. Here too, flooding is the primary hazard, but enterprises respond differently. Flooding also indirectly devastates the lives of the weavers. Although this resilient community tries to ensure safeguards against the lack of material, they face losses that threaten their livelihoods.
Beyond the looms, boat-makers on the river’s ghats face unique challenges. Power outages are common during floods, which makes it difficult to use electrical tools and lighting. Flooding disrupts orders and delays deliveries. Furthermore, any unfinished boats in low-lying areas risk being damaged or swept away.
Boat-makers seek to avoid the risk in response. When they have adequate advanced warning of impending floods, they relocate raw materials to safer areas and try to complete orders before peak floods. Yet, they cannot invest in better tools or more resilient infrastructure without formal credit. Their adaptations remain piecemeal and self-funded.
What the toolkit revealed
Several patterns emerged across both villages. Although floods are seen as inevitable, their impacts vary by sector. MSMEs from different sectors face the same hazards but respond differently due to variations in supply chains, financial models, and operational structures. Shopkeepers struggle with direct damage to goods and infrastructure, while potters and weavers suffer supply chain disruptions. Boat-makers deal more with fluctuating demand than with direct losses.
“Flooding is the same for all of us, but it breaks our work in different ways,” laments a boat-maker from Sarai Mohana.
Most MSMEs have weak physical capital, especially shopkeepers and potters who work in fragile stalls and mud-based structures vulnerable to rising waters. Most MSMEs we interviewed reported limited financial capital, while their enterprises rely on daily cash flows and minimal savings. Social networks provide some support to microentrepreneurs in Ramna, but seem weaker in Sarai Mohana, where floods affect everyone equally. Human capital is under strain as younger generations increasingly leave traditional trades and head to the city for better livelihood opportunities.
Most entrepreneurs are resigned to their fate and accept the drastic changes that floods wreak on their operations. Adaptation strategies often fall under “accept.” Few entrepreneurs transfer risk through insurance or access credit for resilience. Most cope through informal means, with low-cost “control” measures to minimize the damage. They relocate shops, stockpile materials, or diversify their income sources. We found little evidence of long-term planning or capability to finance it.
Lessons for IFSPs
The Varanasi pilot highlights the urgent need to bridge MSMEs’ adaptation needs with customized financial solutions. For IFSPs, the insights are clear:
- Recognize adaptation as bankable: Just as we learned how boreholes or feed reserves transformed lives in Uganda, flood-proof structures, improved storage, or resilient equipment should be seen as logical and valuable investments in Varanasi.
- Design flexible products: Seasonal repayment schedules and affordable loans for minor infrastructure upgrades could enable key adaptation strategies.
- Bundle finance with services: Loans linked to technical advice, collective procurement, weather forecasts, and group insurance programs could enhance resilience and reduce portfolio risk.
- Segment MSMEs by sector: Different MSMEs face the same hazard but at various points in their supply chains. Sector-focused financial products, whether for weavers, potters, or boat-makers, will be more relevant and practical than generic credit products.
From flood risk to financial resilience
Our research in Varanasi highlighted that MSMEs are well aware of the risks they face. They know floods will come, if not always exactly when. They understand where their vulnerabilities lie and already use the short-term coping mechanisms outlined above. Yet, they lack financial support to move from simple coping to planning and management. This is why they cannot move from acceptance to robust adaptation and resilience.
As one potter put it, “We know the floods will come. The question is whether our work will survive them.”
For IFSPs, risk management is both a challenge and an opportunity. Ignoring climate risks threatens loan portfolios and constrains MSME growth. However, by integrating locally led insights into product design, IFSPs can catalyze adaptation and resilience and transform MSMEs into active partners in climate adaptation. The MSMEs of Varanasi cannot afford to wait. Their survival depends on financial products that acknowledge climate realities.
Roadmap to strengthen digital transactions in Bangladesh by 2031
MSC assisted the Bangladesh Bank in charting a roadmap toward building a cashless economy by 2031. Despite widespread account ownership, digital usage remains constrained by literacy, affordability, trust, and infrastructure gaps. The roadmap defines 12 strategic goals, including reducing transaction costs, expanding connectivity, enabling interoperability, strengthening consumer protection, and promoting inclusion. These coordinated actions will accelerate adoption, enhance economic participation, and drive Bangladesh’s transition to a fully digital economy.
Scoping study to support the Bangladesh Bank to scale digital transactions in Bangladesh
The study, conducted in Singair Upazila as a microcosm, examines Bangladesh’s transition toward a cashless economy. It highlights widespread infrastructure for DFS but low-value digital transactions. Findings show adoption varies by occupation, with salaried personnel and traders leading, while farmers and daily laborers lag. Key barriers include high transaction costs, low digital literacy, trust concerns, limited merchant acceptance, and infrastructure gaps, even though DFS is valued for its convenience and efficiency.