Digital Social Payments and

Financial Inclusion

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Silvia Baur

29 April 2016

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Cash transfers proved to

• have transformative potential for local communities

• strengthen local markets

• are a more dignified way of providing assistance across sectors

• are more cost-efficient and transparent for governments

Expansion of access to digital financial services

Build long-term resilience and minimize vulnerability

Build the bridge from transfers to sustainable

development

4Source: The World Bank F&M GP

Build the bridge from transfers to sustainable

development

Digital social payment programs – Case studies

5

The Pantawid Pamilyang

Pilipino Program (4Ps)

The Ti Manman Cheri

(TMC) Program, Haiti

Digital social payment programs – Case studies

6Sources: CGAP 2014; Findex 2014; Corruption Perception Index

country rank is out of 174 countries (Transparency International 2012)

The PhilippinesHaiti

Account at a financial institution (% age 15+) 17.5 28.1

Mobile account (% age 15+) 3.8 4.2

Used an account to receive G2P transfers

(% age 15+)3.5 4.0

Used an account to receive G2P transfers

(% poorest; age 15+)2.8 3.0

Bank branches/100,000 people 2.7 8.1

ATMs/100,000 people -- 17.7

SIM penetration (%) 61 106

Corruption Perception Index (country rank) 165 105

Digital social payment programs – Case studies

7Sources: CGAP 2014

Administered/

managed by

Social and Economic

Assistance Fund (Gov)

Department for Social Welfare

and Development (Gov)

Funded by DonorsGovernment and donors

(WBG, ADB, AusAid)

Target recipients Mothers of school children Poor HH with children

Year started 2012 2007

Conditionality Yes: school enrollmentYes: school enrollment and

health care

Number of

recipients80,234 (2015) 3,967,517 (2013)

Delivery method Mobile money and cash Cash card and cash

The Pantawid Pamilyang

Pilipino Program (4Ps)

The Ti Manman Cheri

(TMC) Program, Haiti

Digital social payment programs – Case studies

8Sources: CGAP 2014

Average grant per recipient USD 15.00 USD 63.01

Payment frequency Bimonthly Bimonthly

Weighted average fee per

payment (all methods)USD 1.36 USD 0.75

As % of average grant

(all methods)9.1% 1.2%

Cost by type of payment

Cash payment USD 1.67 (11%) USD 0.96 (1.5%)

Limited-purpose e-payment USD 0.50 (3%) USD 0.45 (0.7%)

The Pantawid

Pamilyang Pilipino

Program (4Ps)

The Ti Manman

Cheri (TMC)

Program, Haiti

Ti Manman Cheri in Haiti

9Photo Credit: CGAP Photo Contest 2015

Core objectives

• Support poor mothers with school-age children

• Ensure school attendance and retention of recipients’ children

• Empowerment of Haitian mothers

Delivery method

• 30% via Digicel’s TchoTcho Mobile Account (receive SMS notification)

• 70% through Unitransfer paper vouchers

Objectives for using e-payments

• Minimize time to scale up (efficiency)

• Minimize recipients access costs and time

• Minimize leakage

• Potential for financial inclusion

TMC - Challenges

Country-level readiness, especially for mobile solutions, was overestimated

• Digicel’s mobile money agent network not strong enough outside of Port au

Prince

Technical capacities required were often underestimated

• data errors and inconsistencies between data in the Digicel and the government

systems

Internal and external pressure on design and implementation was inevitable

• Government put unexpected pressure on Digicel to expand payments to areas

where agent network was not yet fully developed

Agents affected the experience of recipients and inadequate agent behavior

put recipients at risk

• Tension between processing payment quickly versus teaching recipients the

payment method

Appropriate recipient recourse mechanisms built confidence and trust

• Digicel had foresight to implement a TMC-only call center

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Pantawid Pamilyang Pilipino Program

Core objectives

• Provide short-term poverty alleviation

• Break the intergenerational poverty cycle through investments in health

and education

Delivery method

• 41% have account-linked “cash card” from the Land Bank of the

Philippines (LBP) that they can use at LBP and partner ATMs

• 59% collect transfers in cash over the counter from LBP and partners

Objectives for using e-payments

• Minimize leakage

• Promote dignity of the recipient

• Required by regulator

11Photo Credit: Zimmerman and Bohling 2014

4Ps - Challenges

Country-level readiness, especially for mobile solutions, was overestimated

• Service unavailability: limited agent and ATM network, liquidity, service hours

Technical capacities required were underestimated

• Unitransfer vouchers had to be cashed out in full

Internal and external pressure on design and implementation was inevitable

• Political pressure to scale up and use only one PSP

Agents affected the experience of recipients and inadequate agent behavior

put recipients at risk

• Unauthorized fees, unofficial group payments, agent-controlled payment

process, agent incompetence

Recipient capability was greatly affected by program and payment method

training

• Confident use of ATMs (security guards implemented) and PINs--but 60%

transact OTC

Appropriate recipient recourse mechanisms built confidence and trust

• Recipients are aware of complaints mechanism, yet inefficient resolution, no

specific support hotline for agents12Photo Credit: CGAP Photo Contest

5 learnings how digital cash transfers will work better

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Photo Credit: Zimmerman and Bohling 2014

1. Ensure reliable payments

first

2. Create sufficient

communication channels

with recipients

3. Incorporate contingency

planning and risk

assessments

4. Ensure a value

proposition for all

stakeholders

5. Be willing to invest

Build the bridge from transfers to sustainable

development

Three characteristics of a financially inclusive transaction

account

1. Safe storage

2. Transaction capacity

3. Accessibility

14Photo Credit: CGAP Photo Contest

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Please find further publications and studies on these and

more digital social transfers on www.cgap.org

Silvia Baur sbaur@worldbank.org

Thank you for your attention

Photo Credit: Silvia Baur

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Advancing financial inclusion to improve the lives of the poor

www.cgap.org