The webinar G2P Payments in COVID-19 context: Key areas of action and experiences from country emergency actions took place on April 14, 2020, and was co-organized by the World Bank Group, the Consultative Group to Assist the Poor (CGAP), the International Policy Centre for Inclusive Growth (IPC-IG), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and Australia’s Department of Foreign Affairs and Trade, (DFAT).
Amidst the COVID-19 crisis, the aim of this webinar was to present key aspects that must be considered when delivering social protection payments under emergency circumstances. The webinar also highlighted different country experiences to illustrate best practices.
The event was moderated by Luz Stella Rodriguez, Social Protection Specialist from the World Bank, who was joined by Douglas Randall, Guillermo Galicia, Fiorella Risso and Veronica Trujillo, also from the World Bank, and Silvia Baur-Yazbeck, Financial Sector Analyst from the CGAP.
Government-to-people (G2P) payments have been a crucial element in countries’ responses to the COVID-19 crisis: at least 80 countries have decided to horizontally or vertically expand cash transfers programmes during this pandemic.
Scaling-up G2P Payments: a framework
For cash transfers (CT) and pension delivery, programme design must consider ways of reducing contact to avoid putting people’s lives at risk. Therefore, it should ensure the availability of more access points, liquidity and security at access points, and establish clear communication with beneficiaries, among others.
G2P payments are complex systems, involving multiple aspects that could lead to significant inefficiencies if not properly addressed. When G2P payments need to be quickly scaled-up, there are at least 12 areas that require attention:
Source: Webinar presentation (access here).
Programme design, implementation and adaptation must segment the scaling-up within specific and achievable timeframes:
- Immediate actions: adapt existing systems within one week to quickly increase the beneficiary pool and facilitate social distancing and security at access points;
- Short-term actions: Upgrade existing systems within one to six weeks to increase the share of beneficiaries receiving account-based transfers and systemize health measures;
- Medium-term actions: Overhaul existing systems within one to six months to migrate most payments to account-based transfers and strengthen digital payments ecosystems.
Each of the 12 areas demands specific actions within each timeframe, and a few of them will be analyzed in detail below.
Providers, for example, are the key starting point for designing a scale-up of the system in an emergency situation. G2P systems rely on provider models that are designed, initially, to accommodate fairly static beneficiary groups, often in specific geographic areas with limited financial capabilities. In a context of emergency, the group of beneficiaries is likely to largely exceed the usual number comprehended by the provider.
Hence, a state provider hosting the benefits for a group of rural mothers may not have the necessary infrastructure to deliver benefits for more people in the rural area, even less so for people in urban contexts. In an emergency context, it is also wise not to expect people to go to different providers in order to get their benefits.
Expanding the number of providers (and consequently, the number of access points) is an essential and immediate point of concern. Governments must develop incentives to ensure a quick scaling up and to provide support solutions against legal and operational barriers that may hinder the addition of further access points, which will also be useful in a longer term.
While over-the-counter payments are far from ideal in an emergency context, they represent the reality of many countries, which cannot operationalize account-based payments in the short term. Playing a central role for the provision of cash, access points are also bound to be overcharged during a situation of crisis. The first and most important action to be taken in this regard is to classify financial access points as essential services, ensuring they will stay open and functioning. The second action is to leverage the full range of financial access points. Many systems are only using branches in countries where agents exist – however, agents typically tend to be the largest and most widespread type of financial access point, which makes leveraging them in the system really critical.
Some countries are reluctant to use agents because of liquidity and safety concerns - these are legitimate problems and they should be given due consideration. Nonetheless, limiting the number of access points available will certainly put pressure on the remaining ones, making them more likely to suffer from the same liquidity and safety issues.
Short- and medium-term actions for access points include the distribution of Mobile Points of Sale (mPOS) and mobile hotspots, leveraging networks of agents to address liquidity issues, monitoring access points systems and facilitating regulations to expand agents’ activities.
As mentioned before, account-based payments are preferable as they allow people to practice social distancing and reduce the pressure over the access points. While the current situation is likely to extend over a few months, investment in making the transition to accounts-based payments is really important and can have a significant impact in the long term.
A simple immediate action is requiring beneficiaries with existing accounts to register their accounts to receive their benefits, while enabling people who do not have bank accounts to open them remotely. Proper identification is a particularly relevant challenge in the COVID-19 scenario for two reasons: enabling remote account opening and preventing fraud.
Safeguard measures to ensure the proper delivery of money to beneficiaries should be put in place, including the use of simplified customer due diligence measures. Providers are also encouraged to accept basic forms of identification, instead of asking for multiple types of documentation, such as proof of address or employment.
Country Examples: Ecuador, Peru, Colombia and Jordan
Ecuador was delivering its Bono Contingencia for informal workers below the poverty line. The Government would transfer resources to 18 ‘concentrators’ - larger financial institutions - who would then distribute the money among smaller financial actors and agents. With the rise of the COVID-19 crisis, the government relaxed the criteria for the operation of banking agents, doubling the number of access points available and preventing agglomeration.
Using the data available in their social registry, the government sent text messages to beneficiaries indicating their eligibility, also making available a call center and a website to clarify any doubts. To avoid overcharging the cash points, the government established different payment dates based on the last digit on the beneficiaries’ ID number.
Peru has the majority of its labour force in the informal sector, and only 42 per cent of the country’s adults have bank accounts. The Yo me quedo en casa (I stay home) Bono offered 50 per cent of the minimum wage to 2.7 million of households to cope with the crisis. The target population was established through the National Household Targeting System (SISFOH) and other administrative databases. An internet platform was set up so beneficiaries could check their eligibility and check date, time and place to receive their payments.
Beneficiaries with active bank accounts received the benefits directly, while users without accounts could receive their benefits by showing their IDs in bank branches assigned according to their location. Grant loans were granted for banking agents to ensure liquidity and the government also waived the fees for cash withdrawals in ATMs.
The country also has the Bono Independiente scheme for informal workers. Beneficiaries who have an account with the National Bank would receive their benefits directly in their accounts. The ones who did not have an account would receive, through SMS, a code and a link to access a simplified mobile banking system. By inserting the code in the system, beneficiaries could select withdrawal options and get their payments from the selected access point.
Colombia’s Ingreso Solidario will provide benefits to millions of beneficiaries, including three million households that had never received social payments before. The beneficiaries were identified through the social registry and databases from different ministries. Additionally, the government crossed checked information from financial institutions, identifying the beneficiaries with active bank accounts.
The Colombian government worked with the Mobile Network Operators (MNO) to associate potential beneficiaries with mobile numbers and identify the type of connectivity they have in place. Beneficiaries who already are bank account holders would receive an SMS informing that their payment will be made directly on their accounts. If they did not have a bank account, they would receive an SMS with different instructions depending on their level of connectivity (download app or use USSD technology) to open a bank account.
This was only possible because Colombia has implemented a simplified customer due diligence process, allowing their beneficiaries to open bank accounts remotely by providing basic information. The government also assigned specific bank branches based on beneficiaries’ location and the provider’s capacity, avoiding problems of liquidity and agglomeration.
An important aspect of the implementation of these programmes is that the government was responsible for identifying the beneficiaries. In many other countries, eligible people must apply for the benefit and have their application assessed before received the payments.
Jordan had a similar approach to Colombia, leveraging the payment system they already had in place. Beneficiaries were selected through the National Aid Fund (NAF) database, which identifies beneficiaries for the Takaful Cash Transfer and, more recently, the Bread Subsidy compensation programme. The NAF database is updated regularly with information from different ministries.
Selected beneficiaries receive a message to choose a provider or to open an account in order to receive their payments. The providers also receive information when selected by beneficiaries to follow up and provide assistance in opening or operating their accounts. Again, the government simplified the requirements for opening accounts remotely.
All these cases present interesting approaches to the COVID-19 emergency, highlighting crucial factors for successful payment delivery in emergency contexts. Cooperation between the public and private sector, especially among government agencies and financial institutions, is key to identify bottlenecks and operationalize the whole G2P payment system.
Effective collaboration can also expand the reach of distribution networks and support payments once beneficiaries are identified. Nevertheless, connected and updated public registries and databases are key for proper targeting and can support communication with beneficiaries. The use of mobile technology has also been proved to be essential, along with support for cash-out operations, which include facilitation of financial processes and regulations, ensuring liquidity and operations throughout the crisis.
To ensure that programme objectives are fulfilled, it is important to provide choice and convenience to the beneficiaries. Moreover, governments must develop a long-term strategy to integrate payment infrastructures and enable the operation of multiple programmes simultaneously, ensuring more efficiency in regular and emergency contexts.
This blog post is part of the Social protection responses to COVID-19 webinar series. The series is a joint effort initiated by the IPC-IG, GIZ on behalf of the German Federal Ministry of Economic Development and Cooperation (BMZ), and the Australia Government's Department of Foreign Affairs and Trade (DFAT) collaboration with the socialprotection.org platform, and in cooperation with partners from different organisations. Join our online community ''Social protection responses to COVID-10 [Task force]" to learn more about the initiative and future webinars.
 Mobile Point of Sale (mPOS) systems are wireless mobile devices that conduct financial transactions using mobile applications and function as credit/debit card readers