We believe that cash transfers in humanitarian response can be leveraged to prioritize emergencies first and, at the same time, build a bridge towards sustainable development goals including economic, social, and financial inclusion.
When cash is transferred through digital payment mechanisms one of many options available for delivery of cash in humanitarian assistance, this potentially provides an opportunity to offer recipients a basic transaction account that can be leveraged in the future for more robust financial inclusion. At the same time, a principled approach is required in order to ensure effective, fair, and durable use of digital payments as a transfer mechanism.
Let’s look at the principles which are suppose to be followed when it comes to payments in humanitarian Aid;
(i) Collect data that is relevant and proportional
- Proportionate know your customer (KYC) requirements are defined by context and risk assessment.
- Digital identification is leveraged where possible and appropriate in order to anonymize and protect digital data and link to longer-term services.
- Data collected is leveraged to test, monitor, learn and iterate for continuous improvement of the digital payment delivery system.
- Collaboration with other organizations during the data collection process is attempted, when possible
(ii) Select payment mechanisms for recipient empowerment
- Products and services put people in need of assistance first, and aim to maximize recipient value and choice.
- Agency understands recipient needs, preferences, and livelihoods, and knowing and mitigating the various recipient risks in using digital payments.
- Training and information provided to recipients focuses on clarity and relevance based on their needs and capacities, and are focused on building recipient protection, confidence, and trust (in the device, service, and system).
(iii) Safeguard the right to data privacy and protection
- Data sharing recognizes and adheres to good practices in data security and protection.
- Anonymized, aggregated data is prioritized.
- Clarity is established on how to use, share and store data within MOUs and contracts with service providers.
(iv) Facilitates pathways to financial inclusion when possible and appropriate
- Digital payments offer recipients access to and ability to use at least one formal transaction account that can perform most, if not all, payment needs safety store value and serve as a gateway to other financial services. They can be delivered via mobile phone or card linked accounts, and accessible at agents, ATMs, and bank branches.
- If digital payments are not possible at the onset, agencies plan for future inclusive payments by considering options that could most easily provide a link to financial services later.
(v) Invest in organizational preparedness to quickly leverage digital payments, when appropriate.
- Agencies prioritize, and donors invest in, organizational preparedness to deploy digital payments.
- Organizational policies provide training and guidance for staff around designing and implementing a digital payment delivery mechanism.
- Organizational standards are created covering monitoring, reporting and data management for digital payment delivery mechanisms.
(vi) Coordinate the use of multipurpose and shared payment systems.
- Preference is given to interoperable payment systems that enable transfers to be made across multiple payment platforms, and provide distribution and access to services in a nonexclusive manner.
- When possible, agencies engage in local consortiums or working groups, to ensure proper coordination and optimization of resources around the use of digital payment systems for cash transfer programming.
In conclusion, these principles are not meant to advocate the use of cash over other forms of aid distribution, such as in-kind transfers of food or non-food items, which may be appropriate in certain situations. It is up to humanitarian agencies to choose whether digital payments are the most appropriate transfer mechanism for their objectives and in their contexts.
The principles are, however, meant to guide institutions that are using digital payment systems in a given context toward more effective and sustainable use of these systems.
By Carolyne Rabut