Responding to crisis with digital payments for social protection: Short-term measures with long-term benefits


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Government-to-person (G2P) payments have never been more important, as governments worldwide seek for ways to respond to the economic and social consequences of the COVID-19 pandemic.  Eighty-four countries have reported changes to their social protection systems in response to the pandemic; fifty-eight countries of these are scaling up cash transfer schemes. During this current crisis, many governments are considering direct financial transfers to households and small businesses as well, outside of traditional social protection mechanisms. In many developing countries, the scale of these payments is unprecedented; in Argentina, Pakistan and Peru, new programs cover one third of their populations; in the Philippines, more than 70 percent of households will receive emergency transfers. For the 656 million people worldwide living in extreme poverty, immediate cash support can be lifesaving.  

Countries with advanced G2P payment ecosystems are able to push transfers out with lightning speed.

The challenge of making these massive payouts to the poor and informal sector workers is highlighting the differences between the G2P payment ecosystems across countries. Countries with advanced G2P payment ecosystems are able to push transfers out with lightning speed. In Chile, the national ID-linked basic account – Cuenta Rut – which covers most low income people will allow April payments of the “Bono COVID-19” directly into the bank accounts of more than 2 million vulnerable Chileans. In Peru, authorities are leveraging earlier successes in channeling G2P through accounts to increase payments to old and new beneficiaries during the emergency, and are expanding the set of financial service providers – to include private banks and mobile money providers like BIM – to reach additional beneficiaries. Taking advantage of Peru’s widespread retail agent networks will be critical to the success of these new models. Thailand’s recent reforms allow it to send payments to bank accounts through its fully interoperable PromptPay system in the context of a rapidly emerging digital payments ecosystem that also reduces the need to cash out. These countries have the added advantage of digital ID systems that uniquely identify recipients, which allows them to determine eligibility and deposit directly to the account the beneficiary has linked to their ID.  Importantly, both countries were also able to quickly rollout substantial cash transfer programs to mitigate the impact of COVID-19 on informal workers. More broadly countries with greater adoption of digital financial services (DFS) will find it relatively easier to ensure continued access to financial services and take advantage of and support digital economy developments like e-commerce, tele-medicine and distance learning.

Countries with greater adoption of digital financial services (DFS) will find it relatively easier to ensure continued access to financial services and take advantage of and support digital economy developments.

In countries where investments in payment infrastructure and DFS have not yet been made and where regulations have not been modernized, scaling up G2P and continued access to financial services will be more difficult. Recognizing how critical these functions are during the COVID-19 crisis, many governments are finding creative ways to distribute cash safely to expanded numbers of people. But there are limits to what is possible, particularly when physical interactions are discouraged. However, there are countries, that can easily enable large-scale infrastructure by making basic regulatory changes, such as allowing existing non-bank e-money providers to provide cash-out services. Further, countries that are fairly advanced in regulatory reforms can fast-track the entry of new players (e.g. money issuer licensing to mobile network operators) with the adequate regulatory frameworks and enabling interoperability.

As countries proceed, emphasis must be placed on ensuring that the digitalization of payments does not lead to exclusion of vulnerable populations, such as those without access to technology, the elderly, the disabled, and people living in remote areas. Problems with technology should not lead to denial of critical welfare services; all G2P programs should proactively address any barriers that may happen as a result of transitioning to digital payments.

As countries proceed, emphasis must be placed on ensuring that the digitalization of payments does not lead to exclusion of vulnerable populations.

We understand that it is not possible to create entirely new payment ecosystems from scratch in the midst of a crisis, and in many countries, this will be the reality.  The only recourse in the short-term will be measures that mitigate the public health and financial sector impacts of existing payment mechanisms.  In some cases, however, the crisis may represent an opportunity to fast track changes already in the works in areas such as interoperability and mobile money adoption and DFS in general.

Cash transfers will be critical to supporting recovery, rebuilding livelihoods, and preparing for future challenges.  They can also produce long-term benefits including financial inclusion, a key driver of resilience in the face of economic shocks, as well as the economic empowerment of women. This is especially important for women as having an account in her name with predictable deposits can provide her with more independence and control over household spending. These benefits arise when recipients get payments in a fully functional transaction account and have a clear understanding of how to use the account including for domestic and international remittances, spending at local shops, or paying school fees. This digital payment ecosystem – the objective for creating an environment that fully supports financial inclusion in normal times – is now more beneficial than ever in the light of the need for social distancing to stem the pandemic and keep individuals healthy. Likewise, as this digitalization accelerates, it is even more important to build strong institutional, legal and technical safeguards for data protection and privacy.

Modernizing G2P payments is a long-term priority for the World Bank Group since before the crisis.

Modernizing G2P payments is a long-term priority for the World Bank Group since before the crisis and teams working on social protection and the financial sector have been addressing this with country clients, with support of partners such as DFID and SECO over the last few years.  In early 2020, recognizing that we can maximize impact by bringing together different parts of the World Bank Group, we launched a new initiative G2Px in partnership with Bill & Melinda Gates Foundation. This brings together expertise across social protection, financial sector, governance, digital development, gender and data protection, aimed at improving G2P payments at scale for inclusion and empowerment in a comprehensive, cross-sectoral and responsible way. The initiative is now adapting quickly to ensure it can help government social protection programs address the new reality emerging from the pandemic.

Whether in a time of crisis or otherwise, getting cash transfers right requires a whole of government approach, bringing together government ministries.  The World Bank is ready to support countries in the scale-up of modern G2P payments.

As social protection programs adapt and scale up G2P cash transfers, we encourage them to consider how they can improve outcomes both for recipients and the government.

This crisis calls for an effective, comprehensive, and immediate response. At the same time, governments worldwide will need tools that support long-term resilience and recovery. As social protection programs adapt and scale up G2P cash transfers, we encourage them to consider how they can improve outcomes both for recipients and the government. While we do not expect this scale-up to be easy, we are confident that any challenges can be addressed through coordination and collaboration. We look forward to working together with all our partners to create the cross-sector, cross-government momentum required to change the G2P payments paradigm to support both the crisis response and long-term financial inclusion and empowerment goals.


The World Bank Group and COVID-19 (coronavirus) 

September 10, 2021

Thank you very much for this clear and enlightening work. You may have seen images yesterday in Argentina of endless lines of elderly reitired people standing and gathering outside banks in order to cash their payments all in the middle of the COVID19 pandemia crisis and regardless of the governement efforts to avoid this kind of situations. So I am wondering if any steps are or will be made in order to install the G2P ecosystem in Argentina that could certainly help solve this and many other situations alike. If crisis means an opportunitty then what a better time (and example) than this one to act upon now before it is too late. Once again many thanks and congrtulations on your work and efforts. Best regards. Javier

Erick Mugambi
September 10, 2021

It a good plan ,I hope it will work mostly to the poor people and elderly, but my question is when will it be implemented, cause like now we citizens are suffering much,the lockdown carfew has blocked us from access our daily duties where we go to hustle for food,sometimes it very shameful for a father like me to watch my kids sleep without food,asking me dad since the day u stopped going to hustle we are suffering much,this conv19 is traumatizing our kids same with us parents, you as world bank u give money to my government and we don't receive the help from it,so surely are we going to die cause of no food ,no need to be afraid of conv19 better to die cause of it than of hungry.. So please I appeals to world bank to expedite that program to save humans

Wyne Ei
September 10, 2021

I am working at the INGO. During this COVID-19 pandemic, I find that cash transfer in person is difficult, as well mobile banking transfer or E- payment is not available for some group. So, herewith, I would like to gain knowledge about how to overcome those barriers for some people and how to make a smooth way for all.

Cyrille Turatsinze
September 10, 2021

The G2P is wonderful program and is coming at the right and critical time of COVID-19 and where the world is trying to achieve SDGs (including SDG1, 5 and 8). Yes, It is important to work with Governments to lead the policy/initiative, however emphasis on the role of civil society and private sector should be highlighted and is paramount as they are closer to the community. In addition to the presented plan and methodology, some other areas that G2P should invest in, in form of PPP, is to ensure rural population especially women, youth, farmers and other vulnerable groups have access to digital devices such as smart phones, access and affordability to internet as well as electricity and required skills to optimally utilize the technology . We have started an initiative which goes in line with G2P implementation titled "ICIC (Integrated Community Innovation Centre) which is sort of “One Stop Centre’’ (combining social and business model) to facilitate access to digital services by the rural and vulnerable population while improving their level of digital literacy in line with the ‘’No one should be left behind policy’’ and I would like to share more about it and seek possibility for collaboration.

Beatriz Marulanda
September 10, 2021

We are finding that even countries like Colombia with a strong tradition of CCT payments to accounts need to push further to supoort households and microentrpeneurs out of the traditionla safety nets. It was already a challenge to pay 1 million subsidies to benficiaries with bank accounts last week, admitió al to the 2.8 millón CCT beneficiaries. The big push will take place next week with four fináncial institutuons of which three are banks and the other one an e-money issuer, with the help of MNOs, starting a process of digital onboarding of aprox 800,000 beneficiaries to have them open simplified KYC accounts to receive their subsidies and from then on hopefully take advantage of P2P transfers, digital bill payments etc. Etc. avoiding cash.

Zar Ni Kyaw
September 10, 2021

G2P cash transfer via digital platform is good and effective idea. But most of the developing country are weak in digital platform and technology. As our country, Myanmar which is trying to develop e-payment and settlement. We have no smart card ID. But to give cash is not effective. Because if you give cash to them, they will use in other place or other purpose. In these years, almost everyone of our citizens have mobile phone. Requesting to mobile phone operators to register the biography of mobile holders. And then G2P to mobile phones with digital cash. They have to use that digital cash in food and health or some good purpose. Government can easily trap or check how they use effective.

Shagari Hosea Mbu
September 10, 2021

I will suggest that the world bank should begin transferring to individuals of corrupt countries instead of giving to the corrupt governments who end up embezzling the funds.

Also, developed countries should no longer refund loots to governments of corrupt countries but give them to citizens as business grants etc.

The world bank can source relevant data of poor people through setting up of non governmental organizations solely for this purpose.

Thank you.