From Protection to Inclusion: Shifting to Cashless Payments

In Colombia, Luisa used to arrive before dawn to collect her monthly Familias en Accion payment in person. Now, she can go to any of over 700 Banco Agrario branches and 350 ATMs across 800 municipalities to withdraw whatever portion of her payment she desires whenever she likes. Maria in Brazil uses her MasterCard debit card, linked to her CAIXA Conta Facil account where she receives her monthly Bolsa Familia stipend, to pay bills and buy groceries, but she can keep a small amount stored for next month’s expenses. Yaneth, a beneficiary of the social protection program Juntos in Peru, saved enough of her payment in her Banco de la Nacion account that she purchased a sewing machine for her microenterprise.

All around the world, social protection is evolving into much more than a safety net for the poor. It is becoming a tool for financial inclusion and economic opportunity. Interestingly, stories like these, and the trends behind them, were barely on the radar of the global financial inclusion field three years ago when CGAP published the first official estimate of financially-inclusive G2P payments. Since then, government, donor and NGO efforts to link financial access to government payments has become a swiftly growing movement, culminating in both individual efforts as well as indications of a global multi-stakeholder alliance called Better than Cash. These stakeholders, such as USAID, cite not only the potential to leverage payments for effective financial inclusion, but also improvements in transparency, security, corruption and potential cost savings for both governments and intermediaries (banks) as motivators of their efforts.

In 2009, when New America Foundation also published its original think-piece on linking cash transfers to savings opportunities, CGAP estimated that only 25% of all government payments were being delivered through a financially inclusive account. Today, this number appears to have shifted dramatically. According to data collected by the Global Savings and Social Protection Initiative at the New America Foundation, of the over 560 million beneficiaries of social protection transfers (not including pensions), nearly 400 million now receive their payment, or a portion of it, in some electronic form.

These are surprisingly high numbers. Yet we know that electronic payments do not necessarily imply financial inclusion. And indeed while store of value (a loose term for the ability to save even in the absence of a formal savings account) may be possible, it is rarely encouraged by the cash transfer programs themselves, or the financial institutions or NGOs that serve as intermediaries. In fact, according to initial estimates from our research, less than one-tenth of one percent of cash transfer beneficiaries are enrolled in programs that attempt to encourage any sort of productive asset building. It is not even clear whether beneficiaries know that they could indeed save some of their benefit.

So the challenge in front of us is clear: There is a growing shift away from cash payments to electronic platforms, and yet there is a long way to go to sequence to accounts that are used by unbanked beneficiaries for their household’s financial needs. According to a recent report by CGAP that evaluated some of the biggest social protection programs in the world, the business case for financial intermediaries is fully dependent on government fees, rather than on the opportunity to cross-sell new products to this new client base. Beneficiaries, even when they could, do not always choose to save any portion of their benefit or take advantage of the bank for other financial services. To be sure, the examples of Luisa, Maria and Yaneth above are among a growing variety of examples of innovation that also includes as far reaching geographies as Haiti, to India to Fiji. However, there is room for much more.

The Global Savings and Social Protection initiative, funded by Ford Foundation, Citi Foundation, CGAP and Nike Foundation, was established in 2011 to nurture a solutions-oriented environment at the nexus of cash transfers and financial inclusion.

As a critical first step, the New America Foundation and CGAP are co-hosting an event tomorrow, June 19 in Washington, to launch a new website that uncovers the latest data and analysis on the field’s opportunities and challenges. A range of mobile money experts, from UNDP, Care, Visa, Citi, CGAP and others, will share their perspectives on the path forward for this growing movement. Join the discussion as we continue to think about how to move this growing potential into an actual reality.

- Jamie M. Zimmerman & Sarah Rotman -



13 August 2012 Submitted by Anonymous (not verified)

Hi Jamie and Sarah

Rightly said, its the G2P payments, which if brought under the ambit of agents, would give the much needed essence of “Scale” and “Volume”, glued together with margins, to make this electronic payment model via agents viable.

It has been our experience at MicroSave ( , through our extensive research work in Bihar, that, one of the most successful, pilot projects of Eko ( of Micro Save’s clients) and Government of Bihar, for remittance of salaries ASHA ladies,(health workers, appointed, for aiding medical deliveries), has made their life real easy. Now, the ASHA workers, have to just go to the nearby, CSP (customer service points, any grocery,airtime shop), and get their money, by use of a ten digit unique pin code. It is superbly hassle free, convenient, and secured mode of mobile money transfer.

Also, the recently launched e-Zay card for the student of Bihar, for receiving their scholarships, is working wonders. SBI (State Bank of India), issues these cards to beneficiaries (scholarship students), who can withdraw their scholarship amount, from any SBI ATM through these E Zay cards. This helps students, who residing outside state of Bihar as well.

True, that cash less payment, has helped in bringing Convenient, hassle free, affordable access to financial service even more real. Issue is, making the varied models of cash less transfer (agents, POS based) more viable, and sustainable.

In the days to come, as more and more G2P payments (old age pension, disability scheme, NREGS, Prime minister unemployment scheme)come into this ambit in India , the “cash less payment” will posit a meaningful business proposition for all stakeholders involved- Agents, Investors, Clients, Banks , BCs (business correspondents) and Government.

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