Improving Payment Mechanisms in Cash-Based Safety Net Programs
Cash transfers have proliferated in the past decade as key policy instruments to tackle vulnerability and inequality. Payment mechanisms (PMs), the backbone of cash transfers, are the channels through which cash travels from the funding source to t...
| Main Authors: | , , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/08/18821509/improving-payment-mechanisms-cash-based-safety-net-programs http://hdl.handle.net/10986/17618 |
| Summary: | Cash transfers have proliferated in the
past decade as key policy instruments to tackle
vulnerability and inequality. Payment mechanisms (PMs), the
backbone of cash transfers, are the channels through which
cash travels from the funding source to the hands of
beneficiaries. In theory, the harmonization of payment flows
in PMs with other program processes is critical to
delivering the right benefit to the right people at the
right time while minimizing costs. In reality, however, PMs
tend to remain disconnected, rendering payments inefficient
and plagued by error, fraud and corruption. In recent years,
program operators, financial institutions, and technology
innovators have developed strategies for streamlining
payment flows. These innovations, if properly integrated
into program management through a Management Information
System (MIS) and supported by rigorous outreach, can not
only promote efficiency and transparency but also ensure
effectiveness. This paper provides a framework for
integrating PMs within program management. It walks the
reader through seven basic steps to process payments. It
does so by articulating the flow of beneficiary information
and funds from the point of beneficiary enrollment to
payment reconciliation and grievance redress. It also looks
at the framework through the lenses of different cash
transfer interventions and the cases of Kenya, Rwanda, and
Mexico. The paper concludes that to execute successful PMs
it is key to: (i) integrate payments within an MIS; (ii)
adopt a cost-effective mix of traditional and technology
instruments suitable to the country's context in the
short and long run; (iii) decentralize the control and
accountability of service provision across government
levels; (iv) understand the capacity and incentives of
stakeholders; (v) provide manuals, training and information
to key players; and (vi) enforce payment parameters and
penalize their violation. |
|---|