Electronic transfers in humanitarian response: Good news, bad news and how-to
Guest post by Jamie M. Zimmerman, January 29, 2015
Digitizing the delivery of humanitarian aid has so much appeal. By taking cash out of the equation, electronic transfers (often called e-transfers or e-payments) promise a faster, more secure and more transparent (so less corruptible) means of getting help to those who need it, even in the most hard to reach places.
And there is an added benefit: delivering electronic transfers through a financial institution or mobile money provider can open up opportunities for financial inclusion of vulnerable population while simultaneously boosting local markets through transacting at agents, spending at merchants, and so on. In the end, everyone wins.
At least that is the theory. In reality, shifting to electronic means of cash transfer delivery can be challenging, particularly for humanitarian assistance in developing countries. Payments infrastructure may be too weak; suitable (or affordable) payment service provider partners may be hard to find; systems and products confusing or not compatible with the needs or capabilities of the affected population. To begin to address these problems the Better Than Cash Alliance, with input from many partners, started developing toolkits for different sets of stakeholders – including development partners making humanitarian payments – on understanding and strategizing the shift from cash to electronic payments.
On November 20th, Mercy Corps hosted an event in Washington DC to take stock of what the NGO and donor community has learned recently about the opportunities of and challenges to using e-transfers in humanitarian operations. Convening NetHope, USAID, the International Rescue Committee (IRC) and the Better than Cash Alliance to discuss their latest work (along with that of Mercy Corps), the event aimed to explore what else the field could (or should) be doing collectively to capitalize on new opportunities and solve the most pressing challenges. In essence: what will it take to get us closer that theory of change?
Both Mercy Corps and the IRC share insights from their latest e-transfer deployments. The IRC’s ATM card-based payments experiment with refugees in Lebanon offered positive news: recipients preferred the e-payments over in-kind payments. The study showed that the payments had a positive impact on education, household relationships and the local economy compared to their control group. Mercy Corps, on the other hand, shared a more cautionary tale. In their experiment comparing cash, electronic vouchers and mobile money payments to the poor in the DRC, they were surprised to find that electronic methods did not offer the efficiencies they had expected:
When measured by cost per transfer, electronic vouchers proved the most expensive way to deliver aid, mobile money was the next most expensive, and cash was the least expensive. In terms of expediency, mobile money [was the] slowest method to get cash into people’s hands.
Even with potential roadblocks and course corrections, electronic transfers are currently so appealing that donors and development partners continue to eagerly search for ways to incorporate them effectively into programs and operations. Indeed, USAID, for example, has begun to require this for its implementing partners. Yet, clearly “how to get this right” is a big, and as of yet, unanswered question.
Fortunately, new tools may offer sorely needed guidance that could put development partners eager to shift from cash to electronic payments on the right path. At the November 20th event, Nethope presented its E-Payments Toolkit (created with USAID), which offers a superb quick guide to critical steps for assessing why and how to use e-payments.
Finally, I had the opportunity to publicly share, for the first time, the beta-version of the Better Than Cash Alliance electronic payments toolkit for development partners. The beta-toolkit is the initial stage of an upcoming, interactive online tool that aims to help development partners 1) understand the bigger picture of digitizing their payment streams, 2) prioritize where to start the digitization process in your organization and 3) work through recommended payment options that suit their context, needs, and priorities. The toolkit, along with similar versions tailored to businesses and governments, will be previewed in a series of webinars hosted by the Alliance during the week of February 23rd (stay tuned to the Better Than Cash Alliance blog for details).
To be sure, we are still in the early days of leveraging electronic payments for humanitarian response there is still much we need to try, do and learn in order to “get this right.” As Lily Frey of Mercy Corps commented, “my main takeaway is that there are good new tools available and forthcoming for the if and the why of e-transfers, but there’s additional need to discuss the how.”
Hopefully, by providing tailored guidance and relevant insights, the new Better Than Cash Alliance development partner toolkit, along with the inspiring (whether encouraging or humbling) work of others, will contribute to pointing NGOs and donors in the right direction.
About the Author
Jamie M. Zimmerman
Senior Associate at Bankable Frontier Associates
Jamie M. Zimmerman is a Senior Associate at Bankable Frontier Associates and lead developer of the Better Than Cash Alliance beta Development Partner Toolkit. If you are interested in learning more about the toolkit or becoming a toolkit reviewers or tester, you can reach Jamie at email@example.com. You can also follow her #epayments, #financialinclusion and #digitalfinance tweets on twitter at: @JamieMZimmerman