Ideas & Updates

LEARNING SERIES >> Responsible G2P: User-centricity to drive usage of digital payments

Government-to-person (G2P) payments can do more than facilitate immediate crisis response; they can promote long-term economic empowerment, especially of women, through financial inclusion.

In India, the scale of G2P payments can be discerned from the fact that US$75 billion (₹5.53 lakh crore) was transferred digitally across 319 government schemes spread over 54 ministries during 2020-21 as part of COVID-19 relief efforts.1

Colombia reached 3 million families in just one month of the lockdown using a new social protection program - Ingreso Solidario (‘solidarity income’). Most of the 3 million beneficiaries were informal sector workers who were not covered by other programs. Nearly 60 percent of these were women and a third were first-time users of mobile money accounts.

“In a record time of two months, approximately 1 million vulnerable households were financially included: 60 percent headed by women. They will be able to start building transactions and payment histories with the financial system, which will later allow them to access formal credit.”
Juan Pablo Zárate, Technical Vice-Minister of the Ministry of Finance and Public Credit, Colombia

Lesson 1: Build trust to drive usage of digital financial services

In 2020, Colombia developed low value payments infrastructure and utilized faster payments via an automated clearing house. This regulatory improvement, combined with a strong last-mile agent network, enabled Ingreso Solidario to make digital transfers through bank accounts and mobile wallets.2 Direct transfers were made to 1.2 million beneficiaries who were already using a financial product. To reach the 1.8 million beneficiaries who were outside the financial fold, the program implemented a special strategy, which we discuss later.

“Before Ingreso Solidario, I had to physically go to a bank agent. Now, I don’t have to leave my house. It is very useful – at any time of day, the subsidy arrives instantly. When I don’t know something, I contact the bank and they always help me.”
Ingrid, 23-year-old, beneficiary from Bucaramanga, Colombia.

Data generated through Ingreso Solidario program showed that 22 percent of those beneficiaries who received the transfer via mobile wallets practiced saving and 10 percent cashed out less as compared to those who received the transfer through traditional bank accounts.

In line with the UN Principles, Reserve Bank of India’s Payment System Vision-2021 highlights that customer-friendly and transparent dispute redressal systems build trust in the system, which can be supported by offering the terms and conditions in local languages and through voice-based technologies.

Lesson 2: G2P payments could increase usage of digital payments and deepen financial inclusion

In 2017, the World Bank’s Global Findex reported that moving cash payments to digital channels could help 100 million unbanked adults open their first account.3 Our experience of working with the Colombian government on Ingreso Solidario tells us that first time users of mobile wallets took advantage of the offerings and made a series of transactions that suited their needs. Opening accounts was the first step to understanding their financial transactions, through which financial service providers tailored their technology applications and sharpened their financial offerings to meet the needs of vulnerable segments.

Lesson 3: Prioritizing women in G2P payments can deepen financial inclusion, which is gender-intentional

Digitizing payments of government social benefits can increase financial inclusion for women. This was one of the actions in our 10-point action plan to help governments reach financial equality. It is exemplified through this example from India. Almost 16.4 million PMJDY accounts were opened during April to June 2020, compared to 2.5 million in the previous three-month period.4

200 million cash transfers were sent to India’s poorest women within 10 days of the nationwide lockdown

India benefited from pre-existing sex-disaggregated data from its PMJDY program (the government of India’s financial inclusion program titled Prime Minister’s Jan Dhan Yojana), coupled with existing payments infrastructure and ID technology to rapidly scale up to send cash transfers to 200 million of the country’s poorest women within 10 days of the nationwide lockdown.5

In 2020, the Alliance led the COVID-19 Exclusion Working Group on Gender, supported by the Gates Foundation, to help ensure that social assistance programs work better for women. It recommended targeting the most vulnerable – including women-headed households, single mothers, and widows – and seeking to identify and reach women and girls among newly vulnerable groups, including informal-sector workers and the self-employed.6

In the global call to action on reaching financial equality for women, we advocate for digitizing government payments to boost financial inclusion and strengthen women’s household decision-making power. Sex-disaggregated data is also essential to establish targets and monitor progress.

“Digital technology and the energies of the internet have been a force multiplier. A program to provide cash transfers to 400 million was streamlined by digitally enabled technology. Financial inclusion has been accelerated and digital transactions have been stepped up, bringing over 200 million Indian women into the mainstream financial system and thereby ushering in economic empowerment.”
Sneha Dubey, India’s First Secretary at the 76th General Assembly of the United Nations

Building trust among underserved users is critical and these lessons illustrate that when fairness is systematically embedded (Responsible Principle 1), women are prioritized (Responsible Principle 3), financial products are designed keeping the needs of underserved users in mind(Responsible Principle 5), the payments system is interoperable (Responsible Principle 7), and offers an efficient recourse mechanism (Responsible Principle 8), new and excluded users may find the value proposition of digital payments to be better than cash.


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.