Financial Inclusion-Friendly government-to-person payment programs (G2P): Recommendations for Stakeholders - 27/10/2022
CGAP
Technical Community and Civil Society | International
The recent COVID-19 pandemic saw an unprecedented response to the expansion of government-to-person payment programs (G2P) as countries adopted new ways to quickly transfer funds to their citizens. The World Bank estimates that roughly 760 million people have received G2P payments digitally since the beginning of the COVID-19 pandemic and that digital payment programs on average paid more quickly than those that relied on cash. G2P programs generally target the poor and marginalized – the same groups that are often also financially excluded. In Brazil, for example, over 70 million people opened digital savings accounts to receive social protection payments during the pandemic through the Auxilio Emergencial program. It is estimated that 40% of these beneficiaries, around 28 million Brazilians, did not have an account before the pandemic. While these gains are significant, it is less clear that improved access has led to the potential increases in benefits that come with consistent long-term usage. For many in the financial inclusion community, one of the major motivations for investing in digitizing government cash transfers was the prospect of G2P as an onramp to consistent usage for millions of financially excluded individuals, as well as a use case that could spur greater provision of financial services in rural areas and low-income populations more generally. In many contexts, these new accounts remain dormant except for the occasional cash out following a transfer. In the Philippines, for example, only 6% of surveyed COVID-19 emergency subsidy recipients used their accounts beyond cashing out, and only 16% were even aware that a financial account had been created for them. In Brazil, on the other hand, 75% of the value received was used digitally and only 25% was cashed out in the Auxilio Emergencial program. There were explicit efforts from this program to increase the use of funds digitally, including limiting cash outs immediately after payments by introducing a period during which funds could only be used for digital transfers and payments.

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