Humanitarian aid has increasingly moved from cash to digital over the last decade, but the vast majority of assistance still remains in-kind or commodity transfers, rather than unconditional cash. The reasons behind this are vast, but primarily stem from the challenges of delivering to the last mile. Coming from a payments perspective, the fundamentals of resolving the challenges of delivering cash-based assistance are both external and internal. Systems have been built but are inadequate and not interoperable; markets have partners who may not, cannot or will not reach recipients; regulators actively complicate access; and donor requirements further complicate decision making. Having worked in designing payment systems and schemes around the world, including leading WFP’s ScopeCard program, Jeffrey discusses the challenges to delivering digital humanitarian assistance, what is being done to overcome these challenges, and how new technology and collaboration approaches may lead to a more digital future.
Jeffrey made six recommendations for humanitarian organisations when using digital payments, a summary of those are:
- Focus on the beneficiaries – understand them and their needs. Digital payments can be a less optimal payment solution. List the payment preferences and tools from both the organisation and beneficiary perspective and choose the one that gives the best balance.
- Move away from the family assistance model – aid traditionally is calculated on a family basis which works for food but raises challenges of KYC when using digital payments as this is done on an individual basis.
- Work with financial services regulators – you need a good relationship with Central Banks due to their oversight role. Any payment initiatives need to be compliant and work within the Central Bank’s objectives.
- Collaborate to gain scale – humanitarian payments can bring their programmes together to simplify for the end user (one registration process and one card – not multiple) and the costs of infrastructure (which are significant) can be shared.
- Run digital aid as a business – humanitarian organisations don’t focus on the business model and costs involved, and money could be better spent in other ways. Ask whether the costs and technology involved make sense in the context of how PSPs operate in the country.
- Work with FSPs instead of competing against them – there is value in working with the market and value in what they can bring. It is cheaper to work with an FSP and install ATMs or increase their agent network rather than run your own programme. It is also less risky working with a regulated entity.
Jeffrey Bower is Founder of Bower & Partners. Jeffrey is a digital financial services and payments expert, determined to accelerate the use of innovative digital financial services around the world. Jeffrey has authored national strategies, developed country payment schemes, launched new payments businesses, & influenced national policy & regulations. Jeffrey served as Payment Services Lead for the UN’ World Food Programme, driving the design of ScopeCard, the organization’s in-house payment service, guiding payment instruments selection for national programs, & setting the organization’s fintech partnership strategy to bring payments to millions of the world’s poorest. Jeffrey founded Bower & Partners, a digital payment consulting practice that has delivered work for World Bank, International Finance Corporation, Alliance for Financial Inclusion, UN’s Better Than Cash Alliance, a number of national payment switches, for regulators and central banks, as well as major international banking institutions & fintech platforms.