Ideas & Updates

LEARNING SERIES >> Collaboration to design and implement responsible G2P payments

© ©Better Than Cash Alliance

Building digital public infrastructure is essential but not enough.

Public and private sectors must work together to overcome challenges of access and usage. This is where organizations such as the Alliance can play the role of a convener, leveraging its neutrality to engage diverse stakeholders in building digital ecosystems, and helping members to deliver on their priorities.

Lesson 1: Public and private sector collaboration can increase inclusion

To implement a large-scale program in little time, the Colombian government rapidly formed alliances with public and private entities. These allowed the government to identify the neediest households from the National Identification System of Potential Beneficiaries, to obtain contact information, and to collaborate with providers to deliver G2P transfers.1

To identify the households that could benefit, within a matter of days the National Department of Planning in coordination with other branches of government and private sector entities, leveraged the Sisbén Database - a unified vulnerability assessment and identification system for social assistance, which has been continually upgraded and modernized over two decades. The National Department Planning then consolidated the registry, while the Ministry of Finance designed the payments strategy with support from the Alliance.

A list of unbanked people was sent to mobile operators who identified whether they were their customers. With this information, the National Department of Planning divided potential beneficiaries between different providers. Mobile operators sent an SMS to beneficiaries informing them of their eligibility with a link to creating a financial account for receiving the deposit. Almost 1 million people were included, 85 percent remotely linked to digital wallets and 15 percent in person, with 9 percent in remote locations receiving the subsidy through a traditional cash transfer.

21.9 million G2P transactions were facilitated by the Indian government’s Public Financial Management System just 5 days into India´s first lockdown

In India, a combination of multi-stakeholder initiatives delivered greater efficiency in G2P social transfers – India Stack, Aadhaar, Aadhaar Enabled Payment System, Prime Minister’s Jan Dhan Yojana, Digital India. Indian government’s Public Financial Management System facilitated G2P payments, and on March 30, 2020, just five days into India´s first lockdown, it recorded 21.9 million transactions – the highest number in a single day.10 As on date, India has about 420 million account holders under the universal financial inclusion program – PMJDY - with more than 55 per cent account holders being women and 67% accounts in rural and semi-urban areas.11

To expand the reach of the digital payments ecosystem, the Reserve Bank of India launched a public-private initiative in 2021 - Payment Infrastructure Development Fund (PIDF) - with financial institutions and card networks to develop payment acceptance infrastructure in tier-3 to tier-6 areas and northeastern states.

Lesson 2: Service providers have a strong business case to participate in G2P payments

Innovative digital platforms built as public goods by the Indian government have created a powerful ‘stack’ of applications that address challenges related to identity, payments, data, etc. Such digital infrastructure has created incentives for providers to invest resources and innovate to create a seamless user experience, leveraging the interoperability of the system.

The financial sector now in India has access to a customer segment that was previously unreachable. This has led to innovations in services and product design and delivery in micro-credit, regular deposits, micro-insurance, micro-pensions, local language-based payment solutions, etc., that are being made available at affordable rates through easily accessible channels. Traditional banks and fintech are collaborating to access unbanked customers in smaller towns and villages, while enhancing their market share and investing more in developing segment-specific offerings. Sex-disaggregated data can further deepen their knowledge of a new market segment, which can help them design better functionalities in their products and solve the challenges that are brought up through grievance redressal.

This has not happened to the same extent in Colombia, but the Alliance is working with the government to help it design clearer service level agreements with banks and other financial service providers, and to introduce customer choice for beneficiaries of G2P programs.

Colombia and India have long-standing commitments to financial inclusion, flourishing fintech ecosystems, and strong leadership that prioritizes digital infrastructure. Building resilient and inclusive digital payment schemes brings long-term benefits and the private sector can play an important role in enabling digital financial inclusion.


The views expressed in the United Nations-based Better Than Cash Alliance blogs are those of the author(s) and may not necessarily reflect the official position of the organization.