According to The Cash Learning Partnership (CaLP), development agencies are finding that an important benefit of electronic payments is the reduced opportunity for fraud and diversion of funds.1 Speed is also a critical factor, with electronic payments dramatically reducing the long wait for much-needed relief. Electronic aid payments can also have a greater chance to produce lasting benefits for people—including dignity for the recipients, financial inclusion and local economic growth.
Development Community Transition Success Stories
- Following the earthquake in 2010, the Chilean Red Cross launched its Tarjeta RED debit card program, which was designed to assist 8,400 families rebuild their homes by allowing them to purchase construction materials. The debit cards had a value of $180,000 CLP (≈US$376), a limited validity period and purchases could be only be made at a network of pre-designated stores. In a survey of recipients following the distribution of cards, 90 percent had no problems using the cards and 99 percent spent the entire amount in one trip. Due to the success of the program, the American Red Cross supported the initiative with $1.5 million.2
- In January 2011, Save the Children partnered with TN Bank to implement a first-ever electronic payments delivery system in their humanitarian response in Zimbabwe. TN Cash Cards were linked to new bank accounts and provided 1,000 participants with the ability to purchase goods using point-of-sale devices in local shops. The cards were especially helpful to transact in fractions of dollars as coins are generally unavailable in Zimbabwe.3
- A Mercy Corps study comparing the use of mobile money and physical cash distribution during the 2010 Haiti earthquake found that incidents of theft of cash transfers fell by more than 50 percent, due to the use of mobile money.4
- In 2006 CGAP and Ford Foundation launched the CGAP-Ford Foundation Graduation Program. The program is helping to implement 10 pilots in eight countries including in Ethiopia, in partnership with local organizations.5 The program, which requires mandatory savings through a bank account, has shown remarkable results. By March 2012, participants in Ethiopia had saved over US$170, or 95 percent of the target amount for the elapsed period.6
Though electronic payment programs have demonstrated strong results, shifting from in-kind or cash payments to electronic requires the kind of policy, technical and financial assistance that the Better Than Cash Alliance offers its members.
1 CaLP 2011