Efficient payment mechanisms for social safety nets

Taimoor Ali and Murium Hadi

THE Benazir Income Support Programme (BISP), launched in 2008, with an annual budget of $1.15 Billion, is the largest and most systematic social protection initiative ever implemented in Pakistan. Targeted exclusively towards 5.6 million poor women, the success of the programme lies more in its adoption and adaption to ever changing payment disbursement mechanisms in as efficient and transparent a manner as possible.
Within a span of ten years, BISP has managed to try out four payment mechanisms, with the intention to ensure that the social protection programme results in the desired impacts, i.e., enhancing the financial capacity of the poor, including the financial independence of women, reduce poverty and ensure equitable distribution of wealth, ensuring basic level of sustenance to the poorest to enable them to consume the minimum caloric intake per day. For purposes of efficient delivery of the programme, BISP has employed several payment mechanisms, incorporating learning from one to the next. Starting with postal delivery of cash, dabbling in disbursements through mobile wallets, withdrawal from ATMs through a Beneficiary Disbursement Card (BDC) to the latest, Biometric Verification Systems (BVS) based withdrawal at branchless banking agent touch points, in each instance, the focus has been to ensure that the entire cash grant reaches the intended – the beneficiary, or the poorest woman herself.
Currently only two systems are at play in the field, BDC and BVS. A recent study commissioned by Karandaaz Pakistan to study the BVS cash withdrawal mechanism has unveiled insightful learning from the perspective of the beneficiary.
The study points to the beneficiaries’ clear preference for BVS based cash withdrawal process as opposed to BDC. The most important reason cited for the same was the receipt of cash by the women themselves, since biometric verification is predicated on the physical presence of the woman to affix her thumb impression. Interestingly enough, the women were also highly appreciative of the ‘social’ aspect involved in BVS payment mechanism; women travel together in groups to get to agent shops. For them it is a social occasion which affords them the opportunity to exchange news, conduct other activities such as mobile uploads, buy groceries, and generally have a little time to themselves away from their daily routines.
It can be discerned that BVS payment mechanism has managed to certainly and definitively, break through the cultural barrier of access for, and by women, given the mandatory requirement of physical presence of the beneficiary. It not only ensures proof of life but confirms to a high degree of certainty that the hand receiving the cash grant is identified to be that of the ‘right’ woman, thereby contributing to her agency. This has also done away with quite a few card related issues such as lost/stolen cards, forgotten passwords and informal middle men to assist in the withdrawal of funds. The proof lies in the reduced number of complaints being received from the field by BISP staff with regards to the BVS.
Having said the above, increasing a BISP beneficiary’s agency may not quite constitute her ‘independence’. Given that she is still heavily reliant on the middle man, or the Agent, as is the case with BVS, it is rather baffling to note her continued obliviousness, of something as basic as the exact amount to which she is entitled. Is it that her lack of literacy forbids learning and remembering the exact amount, or does the challenge lie in the design of the payment mechanism itself which excludes action and interaction by on part of the beneficiaries?
The Study commissioned by Karandaaz conducted a few experiments for a deeper dive to understand the matter. An interesting finding that surfaced was that while most beneficiaries can read simple numbers individually, (or seek help from those who can), their comprehension skills are rather weak for compound or complete numbers. This does not imply that beneficiaries cannot count cash. They recognize currency notes, and can count them when presented with actual currency, or their photos. In another experiment conducted, BISP beneficiaries responded quite well to audio queues. Considering that a sizeable number of beneficiaries have access to a feature phone, simple instructions in a ‘local’ language were understood quite well and accurately. It does pose opportunities for redesign of the existing technology interface to include visual and audio aides.
With the BISP cash grant, the challenge may lie in the rather odd amount of PKR 4,834/- as well. Most of the time the change of PKR 34/- is not on hand by the agents, resulting in handing over of the round figure of PKR 4,800/- which is recognized easily by the beneficiaries. The study notes that the women are unaware of the fact that the agents assisting in the cash-out do receive a commission. However, when asked about the missing PKR 34, they considered it a fair price to pay for the ‘free’ service. This inadvertent contribution to an unfair practice is more an issue of inconvenient payout, rather than evidence of ignorance. Hence even if informed of the exact amount to be received, chances are that it shall not be enquired after or pursued if not received.
If the BISP beneficiary is not truly ignorant, nor truly illiterate, how do we account for her lack of interest in the payout amount? The answer might be a lot simpler than we think. These women learn of BISP disbursements without being formally contacted, place their thumbs on screens without being prompted, and adapt to new payment mechanisms as and when required. We may not agree with their methods of employing or relying on formal or informal middle men, but one has to appreciate their rather enterprising nature of adopting and devising new ways which suit their way of life, in its convenience and efficiency.
—The writers are associated with Karandaaz Pakitan Digital Financial Services Team.

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