What can digital do for cash transfer programming?
30 October 2015
Mobile money, prepaid cards, SMS vouchers: these are but a few electronic mechanisms for cash transfers. As well as the actual transfer mechanism, there are many products and tools designed to solve other discrete pieces of the cash transfer programming puzzle, including registrations, digital data capture and two-way communications or feedback.
With a rapidly increasing number of options, the application of information communication technologies (ICTs) in cash transfer programming can be incredibly confusing.
So the Bond Technology for Development Group has decided to link up with some existing initiatives to try to make the contribution of digital technology to cash transfers that little bit easier to navigate.
Increasingly in humanitarian and development programming, cash is used as the default option to meet needs. Cash empowers people to make their own decisions about what they want to buy and reinforces local capacities and markets. And digital technology is opening up new frontiers for how it is delivered.
There are over 230 mobile money options in the world offering digital transfers without even requiring a bank account. In addition there are "closed loop" options such as single-purpose cards where payment processing is limited to a specific vendor or location, and "open loop" prepaid cards, which can be used like cash wherever credit cards are accepted. Where some restrictions on spending are required, purchases can be limited to a basket of goods or vouchers can be delivered electronically.
But how do we chose which mechanism is most appropriate? Should technology be driven by the overall objectives and design of a cash initiative? Or should our judgement on the right tool be based on cost effectiveness, popularity and ease of use? And how do we determine minimum standards of security?
As well as thinking about the ways in which new payment mechanisms can make cash distribution wider-reaching and more efficient, we should also be considering registrations and two-way communications, as brought to life by the CaLP new technologies report.
ICTs have a role to play throughout the cash transfer lifecycle: in targeting, registration, delivery, monitoring, complaints and feedback. There is a plethora of registration systems to choose from, including World Vision’s Last Mile Mobile Solutions (LMMS) and RedRose, and in-house systems like Scope and ProGres, used by the UN.
Regulatory requirements, such as "Know Your Customer", are increasing the pressure on humanitarian and development practitioners to be transparent about where funds are distributed. This means accountability in registrations and record keeping is more important than ever. And the authentication of individuals can pose ethical dilemmas, especially when it comes to protecting privacy. For example, there is currently a debate about the risks involved in adopting biometric technologies to verify the identities of individuals by, for example, fingerprints or iris scans.
Interoperability is the buzzword of the moment. This is partly because too few tools address multiple steps of the cash transfer process, and also because people are asking whether cash transfer programming opens up scope for digital financial inclusion.
It is evident that the line that once clearly divided commercial entities and humanitarian and development actors is becoming increasingly blurred. But what are the implications for organsiations' legal and ethical obligations? Is it appropriate to preposition private sector partnerships or should NGOs always call for tender based on need?
Maybe the key to answering these questions and overcoming the various challenges lies in a better understanding of what each of the different options do and how we can rate them by transparent criteria.
Oxfam has been working alongside other humanitarian agencies as part of the electronic cash transfer learning action network (ELAN) convened by Mercy Corps and Mastercard. ELAN is setting out to build a catalogue to help humanitarian field staff navigate the technologies that are available to support key steps of cash and voucher programming.
On 12 November 2015 the Bond Technology for Development Group is meeting to help define criteria for selecting and categorising available tools for inclusion in the catalogue. It will be an opportunity to harness the group’s technical expertise, share experiences of the different tools, and, ultimately, feed into a useful resource for the sector.
For anyone that wants to get up to speed there is a CaLP e-Learning on E-Transfers and Operationalizing Beneficiary Data Protection.