Can Electronic Transfers Help the Poor? Evidence from a Field Experiment

Categories : Customer and Users of Digital Payments, Humanitarian and digital social payments


Author: Cleo Turner

Conditional and unconditional cash transfers have become an increasingly important component of social protection policies in both developed and developing countries. While such programs are often implemented electronically in developed countries, in many developing countries, cash transfers are distributed manually, resulting in significant costs. The introduction of mobile money transfer systems in many developing countries offers new opportunities for a more cost-effective means of implementing cash transfers, with potential additional benefits for poor rural households, especially those without access to formal financial services. Using data from a field experiment in Niger, this paper shows that distributing cash transfers via mobile transfer systems reduces variable costs to both the implementing agency and program recipients, without affecting leakage. It also finds that households receiving cash electronically bought a more diverse set of goods and had higher diet diversity without a reduction in other assets. It explores several mechanisms and find that the results are consistent with a change in intra-household decision-making with respect to the uses of the transfer. These results suggest that providing cash transfers via mobile money systems may have great scope to reduce the costs of implementing such programs while providing additional benefits for rural households.