Rapid Response for Social Payments During COVID-19

As countries around the world grapple with the devastating economic impact of the COVID19 pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income. These measures include a range of approaches, from wage subsidies to extended unemployment support and a variety of social welfare payments. There’s also been a push to extend payments outside the usual social protection mechanisms, to ensure that all eligible low-income people and small businesses are reached. Given ongoing concerns about fraud and theft, not to mention cash handling during this health crisis, most efforts have focused on digital payments.

This paper by the Center for Financial Inclusion reviews three of the measures being taken to speed up payment distribution,6 specifically: quick identification of eligible recipients, simplification of customer due diligence (CDD) rules for rapid account opening, and greater use of alternative channels such as mobile apps, post offices, and nonbank financial institutions (NBFIs) like microfinance institutions (MFIs) and cooperatives to distribute payments, directly or in conjunction with payment service providers (PSPs).