Ideas & Updates

Saving $15.5 million by replacing cash with cards for Colombian coffee farmers

Two case studies from the Better Than Cash Alliance present innovations from Colombia’s digital payments ecosystem

Replacing Cash with Cards

Over seven years, the Federación Nacional de Cafeteros de Colombia (Colombian Coffee Growers Federation) saved approximately $15.5 million by shifting their payments to coffee growers from cash to payment cards. That is a saving of approximately 80 percent of the cost of making those payments in cash.The program also resulted in an opportunity to expand financial inclusion in rural areas which is often particularly challenging.

In 2007, the membership organization that represents Colombia’s coffee growers began using payment cards to pay coffee growers throughout the country instead of cash. While Cédula Cafetera Inteligente, or the Smart Coffee ID card, was originally intended just to pay farmers for their coffee harvests, the card expanded into an efficient, transparent channel for the distribution of government subsidies and credits. Since its inception, the electronic payments program has made 5.4 million payments worth over US$736 million.

Thanks to the Smart Coffee ID Card, the coffee growers in rural Colombia are now able to receive a wide range of payments – from salaries, payments to government subsidies, credit and savings. These are the findings of a special Better Than Cash Alliance case study, which is the first to examine a shift to electronic payments in a large-scale rural business-to- business context. The Smart Coffee ID Card dates back to the time when making cash payments for coffee beans was both difficult and dangerous, given the security situation and the terrain. In addition, a spate of rural bank branches closed following a local financial crisis in the late 1990s.


To pay farmers for their harvest, the Coffee Growers’ Federation partnered with Banco de Bogotá to transform the federation’s membership card (Cédula) into a personalized prepaid payment card. Coffee growers could then use the card at ATMs or special point-of-sale (POS) devices deployed by the Bank at coffee purchase points and with rural merchants. The adoption of the new card however remained relatively low due to high levels of financial exclusion among coffee growers. That changed in 2009 when the Government of Colombia began using it to disburse a variety of subsidies and credits available to coffee growers.

Over the next three years, adoption grew at a massive rate. By 2013, 82 percent of all coffee growers had a card and deposits onto the cards represented just 1 percent of the number of transactions and 4 percent of the value. In 2014 the Cédula was re-launched, offering coffee growers a full savings account at Banco de Bogotá, along with a franchised debit card with access to all ATM and POS devices in the country.

Colombia’s Online E-Payments Platform

The second case study from Colombia is about the Colombia Pagos Seguros en Línea (Secure Online Payments, or PSE) that authorizes electronic payments directly from bank accounts to government agencies or businesses in Colombia. By March 2014, there were 2 million transactions per month over Colombia’s Online E-Payments Platform – remarkable in a country with only 80 million monthly total electronic payments. Between 2008 and 2012, the number of payments on PSE increased more than tenfold to almost 1 million a month.


Columbian woman scanning mans credit card in store market

Consumers can pay directly from their bank account online using the interoperable national online electronic payments platform. The platform has ushered in significant cost reductions compared to cash payments, especially for financial service providers.

The reason for this success is due to the Government of Colombia’s ambitious “connectivity agenda” initiative to increase the availability of government services online and improve the acceptance of electronic payments. With insufficient credit cards and low levels of trust in using debit cards online, the Government of Colombia sought this alternative method to promote online payment and service delivery. Spurred by this government policy, Colombian banks came together to create an efficient and cost-saving means of making online e-payments through bank transfers.

Whereas many governments may attempt to create their own solution, the Colombia Pagos Seguros en Línea (Secure Online Payments, or PSE for its acronym in Spanish) showcases an alternative approach where a government’s vision can incentivize the private sector to collaborate and innovate.

These case studies have two common messages: First that strong policy decisions by the Government can reduce the cost of payments and create opportunities for greater financial inclusion even those residing in rural areas; Second that private and public sector partnerships are great catalysts in the shift away from cash to digital payments.