In the run up to the first-ever World Humanitarian Summit in May, UN Secretary-General Ban Ki-moon called for the use of cash transfers as the default method of helping those in desperate circumstances.
It makes sense. Cash offers recipients more choice and dignity than other forms of aid as they have the ability to decide where they want to spend their money. Thus, it is an effective way of helping vulnerable populations rebuild local communities and markets. Yet, cash transfer systems face challenges.
One of the major challenges is security. Transporting large amounts of banknotes and coins in a crisis zone can be dangerous, and recipients who have to travel some distance to pick up their payment are potential targets. The extra security needed comes with extra expenses. Also, cash is prone to leakage from corruption and bribery.
The digitization of cash transfers offers charitable organizations an opportunity to fix the above mentioned problems, while also offering potential access to financial services that could help the poorest and most vulnerable cope and weather shocks in the future.
However, many digital payment schemes used so far are not living up to this potential. They tend to be either one-off or limited-purpose systems, custom built for the humanitarian agency and not connected to the broader payment ecosystem, providing a limited to negligible use case for end-users. As a result, they can be expensive to deploy with little to no use beyond that deployment: a disappointing return on investment.
Could a mobile wallet built for emergencies turn this problem on its head? At the World Humanitarian Summit this year, Ericsson, in partnership with and support from the Bill & Melinda Gates Foundation, committed to build an Emergency Mobile Wallet that can be deployed in the immediate aftermath of disasters or crises to support humanitarian organizations and affected populations. This seems like a good first step: a well-designed mobile wallet could open up new opportunities for affected communities and not only improve relief efforts but also offer longer-term access to financial services that can help coping with future negative shocks. Its success, however, will rely on a design that is adaptive to multiple contexts and customer needs.
A mobile wallet that makes access to emergency aid faster, cheaper, and more transparent is a must. Yet, as we discussed in a previous post in this blog series, for such solutions to lead to meaningful financial inclusion, they need to generate a positive end-user experience by providing the necessary convenience and value in the short and longer terms.
Applying that framework, we posit that a sustainable positive impact of an emergency wallet will be intensified if:
- Recipients are given choice and autonomy. They should be able to decide how they use the mobile wallet, particularly in terms of providers, agents, and merchants they choose to transact with in order to access their money or other services.
- The wallet offers transparency to donors and regulators. For example, application program interfaces can be structured in such a way that data can be used for monitoring and evaluation by both the humanitarian actor and regulators. At the same time, recipient data should be handled responsibly and be adequately protected.
- The wallet integrates with national or donor ID systems. This will allow faster registration and re-registration in cases where recipients have no ID documents or have lost them.
- User interfaces are designed to be simple and customizable. These interfaces should provide convenience through easy familiarization; transparency through clear and understandable disclosure of fees, terms and conditions of use; and simplicity that maximizes the user experience while minimizing common errors and risky behaviors.
- The wallet can integrate with or link to additional financial and nonfinancial services. Consumers may get access to and start using other financial instruments as livelihoods, communities and markets recover.
Designing such a wallet must be a collaborative effort. Other players in the mobile money ecosystem who want to use, support and leverage the tool, whether to improve emergency response now or build household resilience in the long term, will have a role to play in getting these aspects right, whether within their individual institutions or via powerful public-private partnerships.
superb. the FS product evolving with a marginal pace.good work team
While it is correct to work towards a cashless society at some stage, it is absolutely right to improve the availability of cash as the trusted, easy to use option for emergencies. What is needed is secure identity processes to reduce cheating, and to ensure as many people who need help are able to get it.
To this end, prior registration - as in the Indian Aadhaar system - can greatly enable rapid deployment of funds in case of emergency. Similarly, 100% reliable iris recognition programs are used by UNHCR and WFP to distribute funds to Syrian refugees in Jordan via ATMs and supermarkets to registered participants. This format enables other aid and remittances to be similarly delivered to those same registrants - on a regular basis.
This concept of assured recognition is now being increased in scope to enable healthcare providers in all parts of the world, including North America, to keep secure medical data on patients, and also to manage the financial support and billing on a reliable and supportive basis.
Linking incentives for medical checks and for educational achievement are the next aims of this program, as well as formalizing the flow of personal donations and remittances at the lowest costs (getting down to the 3% target within two years).
How the longer term conversion from cash to e.banking is achieved is another facet of the future which has great value for all people needing support, but for the first stage, we totally agree cash still has much to offer - as long as we can identify the recipient and recognize any AML risks in the frequency and size before it is too late.
There is an ample scope to leverage existing telco infrastructure. India seems to be one such potential emerging market with all favourable conditions. This post might be of additional interest to readers http://nextbillion.net/airtime-to-the-rescue-why-india-should-mobilize-…