When Mandating Financial Access for the Poorest Fails

Digitization of government-to-person (G2P) payments should be a financial inclusion “quick win,” but often it’s not. In fact, negative experiences with digital social payment programs actually sometimes have the adverse effect of steering low-income customers away from formal financial services. But they don’t have to.

In a recent CGAP Brief, "Understanding Consumer Risks in Digital Social Payments," we explored evidence around five common risks that recipients of digital social payment programs experience: network or service unreliability, insufficient liquidity, complex user interfaces and payment processes, poor recourse mechanisms, and fraud. These risks can adversely affect first-time users’ trust in formal financial services and their perception of the value of using them, as two recent examples from Ghana and Zimbabwe show.

Looking at the following two digital payment programs should compel us to identify practical ways to mitigate these risks, so digital payments might start low-income recipients on the pathway to broader usage of formal finance.

Complex interfaces and (perception of) fraud

Man writes down a record of a financial transaction, Ghana. Photo by Silvia Baur, CGAP.
Man writes down a record of a financial transaction, Ghana. Photo by Silvia Baur, CGAP.

The caterers serving the School Feeding Programme in Ghana rely on assistance by agents to access their mobile wallets, including revealing their personal identification numbers (PINs), since they have low literacy and limited experience with the payment service and mobile application. Now they are demanding an end to the electronic method of payment required by the government as they fear being defrauded by the agents. As agents are entering the PINs on behalf of the customers, they could obtain access to the customer’s wallet and an opportunity to misuse that information for personal gain. This concern has also arisen in other digital social payment programs.

Insufficient liquidity

The second recent case involves government payments to tobacco farmers in Zimbabwe. Last year, the Zimbabwean government informed tobacco farmers that they would need to open bank accounts if they wanted to keep trading their crops on the national auction platform, which has been “de-cashed” starting this year. Over 70,000 small farmers complied and many of them opened their very first bank account. Since late March they have been receiving their crop payments digitally. Yet, in Zimbabwe banks are currently struggling with a nationwide liquidity issue and consumers are desperately queuing at ATMs and bank offices to access cash for their daily purchases.

The rural Zimbabwean economy is still cash-dominated and there are not sufficient rural deposits that could help the banks achieve better liquidity. If the tobacco farmers are unable to cash out from their accounts, what will these newly included financial consumers think of the financial system and digital financial services? Are they likely to have sufficient confidence to deposit cash and start saving in these accounts? Probably not.

These two examples show us once more why financial inclusion will require more than opening accounts for currently excluded consumers. A cross-sectoral effort is required to incentivize merchants and suppliers to shift to electronic payments and transactions. This is especially important in markets where liquidity is hard to manage, and therefore a shift to more digital payments across the ecosystem would reduce the pressure on the cash market.

Possible solutions

Luckily, we are seeing new and effective approaches that do better in providing payment channels for low-income consumers.

For example, the HealthKeepers Network (HKN) in Ghana is benefiting from the shift to digital payments and has gone through a thorough process to make sure that the benefits extend to its “health keepers” as well. A local non-governmental organization, HKN aims to increase access to life-saving health products and information among rural and underserved populations while offering a livelihood opportunity to community-based entrepreneurs. They employ a distribution system in which community-based health keepers—both individual health advisors and licensed over-the-counter medicine sellers—are recruited and trained to counsel and sell essential health products in their communities for a profit.

When a health keeper asked to pay for the medical supplies through her mobile money wallet instead of using the network’s cash agents, HKN decided to revisit the in-person cash collection system they had been using to recover payments for supplies. First, HKN rolled out a member survey to assess access to, familiarity with and attitude toward using mobile money services. Ninety-six percent of respondents liked the ideas of using mobile money services to pay HKN once products have sold or to receive cash advances from HKN. The network then worked to build a strong collaboration with mobile network operators, donors, training providers, and recipients. The result of these efforts is a shift of about 44% of their payments to mobile money transfers.

The HKN example indicates that a successful shift to a more “cash lite economy” requires careful work by all players in the value chain. The end-to-end solution must be convenient and safe for the recipients, but also take into account the business incentives for payment service providers. Since digital social payment programs are targeted at vulnerable and often excluded populations, a first step will be to acknowledge recipients as customers with specific needs instead of “beneficiaries.” If providers succeed in delivering services that are designed to meet their needs, they will see recipients convert into an attractive, active customer segment.



Digital social payments (DSPs) are a fast-growing, yet often overlooked, digital financial services (DFS) segment. Acknowledging and addressing the most common and consequential consumer risks should be a priority for any program or provider seeking to unlock the potentials of DSPs for the poor.

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