Page 36 - State-of-the-Industry-2013

State OF the induStry 2013

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g2P PaYments & mobile moneY: oPPortunitY or reD herring?*

Social protection schemes, in particular government-to-person (G2P) payments and other social transfers, can be an attractive busi-
ness opportunity for mobile money providers in developing markets.[1] They often represent signifcant payments volumes, pro-
spective new customers, and an additional source of revenue. For the social protection community, mobile money has the potential
to lower delivery costs, yield operational efciencies, and enhance development impact. G2P payment delivery via mobile money
appears to be a win-win scenario. Yet the reality is that this line of business is incredibly challenging and requires fully committed
partnerships to make it work.

Three pioneers from diverse geographies have shared insights with MMU on their experiences thus far with G2P payment delivery:
United Bank Limited (UBL) in Pakistan, Banco Davivienda in Colombia, and Airtel in Malawi. UBL has been delivering a large portion
of the Benazir Income Support Program (BISP) through its Omni platform since 2011, reaching nearly 1.3 million families. UBL is also
partnered with the government and a range of NGOs for food relief subsidies and cash for work programs. Davivienda began de-
livering social transfers, including Más Familias en Acción, through its DaviPlata mobile money service for close to 1 million families
this year. While on a smaller scale, Airtel in Malawi is currently distributing subsidies through Airtel Money for Save the Children and
the World Food Programme (WFP), reaching 23,000 families.

• Customer Registration & Account Issuance: Two pioneers have found that intended social payment benefciaries, primarily low-
income women in rural areas, often don’t own a basic mobile handset. Providers have taken various approaches to overcome
this challenge. Airtel Money in Malawi worked with donors to acquire handsets for the 23,000 recipients. UBL started down that
path, but decided it was more cost-efective in their case to issue smart cards during account registration instead. Davivienda
has not encountered this challenge to the same extent in the Colombian context, though it did invest considerable resources
in account registration drives, as did UBL and Airtel. Each scheme relies on their government and NGO partners to identify and
convene benefciaries for the registration process. Davivienda, for instance, registered 70,000 benefciaries in one day in a mass
registration drive, and a total of 920,000 benefciaries over a two-month period.

The pioneers have found that tiered KYC requirements and fexibility in terms of identity documentation have helped to ease the
customer registration procedure. The regulator in Pakistan allows for simplifed KYC processes for BISP benefciaries. Similarly,
Colombian regulation enables remote, paperless account opening for low-value accounts. In Malawi, an NGO-issued ID card specifc
to program benefciaries is accepted for KYC purposes.
• Distribution & Liquidity Management: G2P payments are inherently lumpy and infrequent, usually distributed on a monthly or
bi-monthly basis. This exacerbates the liquidity management burden on agents as it results in sizeable spikes of demand for
cash, often in rural areas. As banks, UBL and Davivienda have alleviated the liquidity burden on agents by tapping into their ATM
network for payment distribution. In fact, a large proportion of BISP payments delivered by UBL’s Omni platform are cashed-out
at an ATM. However, UBL reports their agent network is adequately incentivised to handle the demands for cash for BISP and
does so efectively when informed of the payment calendar. Larger food relief payments, on the other hand, are best handled
by UBL’s ATM network. Davivienda reports that bill payment activity and deposits at agents have helped to lessen the withdraw-
al liquidity pressure. Moreover, Davivienda employs a system whereby families are assigned to a distribution outlet and date in
order to smooth liquidity needs. The recipient is informed by Davivienda via SMS.

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