Increasingly, governments and donors are looking to move their social cash transfer payments from cash to electronic and, in some cases, incorporate financial inclusion objectives into these payment schemes. This momentum toward electronic payments (e-payments) rests on the promise of improving transparency, decreasing costs, and reducing leakage on the one hand, and facilitating value-added services through financial access on the other. In 2012, the CGAP Focus Note “Social Cash Transfers and Financial Inclusion: Evidence from Four Countries” (Bold, Porteous, and Rotman) considered the case for financially inclusive social cash transfers by analyzing evidence from government-led cash transfer programs in four middle-income countries (MICs), in which the programs and the e-payments systems on which they relied were relatively mature and robust.
The Focus Note, which investigated the large social cash transfer programs in Brazil, Mexico, Colombia, and South Africa, looked at the value of e-payments for the different stakeholders involved: the affordability of financially inclusive services in social cash transfer programs for the government; the profitability of offering such services for the payment service provider (PSP); and the likelihood of recipients using the services for more than just receiving the transfer. The research found that, in the case of the cash transfers in these MICs, building inclusive financial services can be affordable to the government and profitable to the PSP if the government pays adequate fees, but recipients were not quick to adopt the services and use them for personal needs beyond receiving the transfers.