woman with pink scarf wearing mask looking at mobile phone

Putting Digital Payments to Work in the Time of COVID-19

by Ruth Goodwin-Groen, March 31, 2020

As the tragic human costs of COVID-19 mount, the need for practical, scalable, quick and effective solutions is urgent. Now more than ever, it’s time to put digital payments to work.

Here we highlight some of the salient lessons from our work which we are already implementing. It is no exaggeration to say that putting these lessons into action can help save lives and livelihoods in large numbers.

Many of our members are turning to digitization in their battles against COVID-19, building on their existing efforts and knowledge about the benefits of digital payments.

The job now is to dramatically ramp up these efforts in areas where digitization can have most impact in this crisis. We are currently working with government members from Colombia to Ghana to Bangladesh, to do just that. We are also working closely with our corporate members who want to make a difference in this pandemic.

An absolutely vital role for digital payments is in making sure health workforces get paid on time and in full. Every day, health workers are putting themselves directly in harm’s way, especially in the many places facing chronic shortages of personal protection equipment. Given these major risks – among them potential loss of life – slow, unreliable or incorrect cash payments can be a huge disincentive for health workers to come to work each day. Our study of the steps taken in Sierra Leone to digitize wage payments to health workers during the Ebola crisis is apposite. To their great credit, authorities were able to digitize payments to around 30,000 workers in just two weeks.

Our study calculated that this prevented the loss of 800 working days at the height of the Ebola crisis in Sierra Leone. Given most governments are desperately trying to ‘flatten the curve’ of infections so that health systems and workforces can cope at peak demand, the lesson here could not be more on point. This is especially the case in countries which still pay health workers in cash, and also where governments are racing to expand their health workforce to cope with the pandemic – in other words, almost everywhere!

We are hosting an open webinar on Thursday 2 April with frontline leaders from the digitization effort in Sierra Leone discussing how to overcome the toughest challenges of paying health workers in the face of a contagious virus. We warmly invite you to join by registering here.

Another vital role of digital payments is in rapidly delivering the income support payments that many governments have announced for households. A top priority is to ensure these payments quickly reach those countless millions whose livelihoods have been decimated. Clearly digital channels deliver vast benefits in terms of speed, accuracy, efficiency, and are best when delivered responsibly. Given the unprecedented scale of these payments, these benefits cannot be overstated.

Digital transfers also have a huge role to play in person-to-business payments, particularly given the far-reaching steps many governments are taking to reduce physical contact and close proximity between people. So it’s important that people not only receive income support payments digitally, but can also spend these funds digitally, to the greatest extent possible. This is a vital lesson: the more that can be done to broaden digital ecosystems, and reduce the use of cash, the better for all. This might include providing incentives to pay for goods or services digitally, though mobile money or e-wallets, or by many other means that make sense in local contexts. For example, the Central Bank of Kenya has moved quickly to cut mobile money fees in response to the pandemic.

Similarly, some governments have announced support to businesses whose cash-flow has fallen off a cliff, but who still have overheads flowing in, including rents, wage payments and debt servicing. One key lesson from the global financial crisis is that the speed of these payments is critical. A matter of days can mean the difference between insolvency and survival for many businesses, or between keeping staff in jobs and the many hardships of unemployment. Clearly the speed that digital payments offer – particularly compared to cash – can be a game-changer here, with major benefits both for individual businesses and for broader economies facing gale-force headwinds.

Every single person has an important role in battling this pandemic. We are so grateful to all the health workers on the front lines and to those helping the vulnerable. Our Alliance is doing our part to get digital payments to those who need them. We also strongly support the call by the UN Secretary General and Ethiopian Prime Minister for massive help for countries who cannot fight this common enemy alone – we are in this battle together.

Ruth Goodwin-Groen, MD, Better Than Cash Alliance, speaks about the social promise of digital money.

About the Author

Ruth Goodwin-Groen

Managing Director, Better Than Cash Alliance

Ruth Goodwin-Groen is Managing Director of The Better Than Cash Alliance, a UN-hosted partnership of governments, companies, and international organisations that accelerates the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.

Prior to joining the Better Than Cash Alliance, Ruth was the Australian Co-Chair of the G20’s Global Partnership for Financial Inclusion and the Financial Services for the Poor Adviser at the Australian Agency for International Development.

Learn more about Ruth Goodwin-Groen
Ruth Goodwin-Groen, MD, Better Than Cash Alliance, speaks about the social promise of digital money.

Ruth Goodwin-Groen

Managing Director, Better Than Cash Alliance