During the last 16 years, over 3.5 billion people worldwide were affected by natural disasters and humanitarian crises forcing them to abandon their homes. The number is rising, putting pressure on the humanitarian sector and governments to find efficient and sustainable ways of meeting the needs of these people. However, with the progression of digital payment innovations that make financial services more accessible to remote and those less fortunate, governments and humanitarian agencies are recognising the significant benefits of digital cash-based assistance. In this blog, we explain why aid organisations are replacing cash disbursements with mobile money and how you, as an operator, can unlock the NGO opportunity, opening the door to a wide range of enterprise mobile money customers.
Greater reach, efficiency and convenience
Mobile money can provide humanitarian organisations with significant scope in a more efficient way when they are delivering monetary aid. Less staff are needed to carry out the aid distribution because it is all digital and recipients do not have to travel far and stand in long queues to collect their funds. Ugandan mobile network operators MTN and Airtel saw the opportunity to assist NGOs including DanChurchAid, Mercy Corps and the International Rescue Committee with the delivery of digital cash aid to refugees in the world’s largest refugee settlement, Bidi Bidi. There are cost savings to be made in made in postage, theft and transportation in emerging markets where there is a significant rural population. Improving convenience by not making citizens travels hours to the nearest government office to only wait in hours more in line to receive their welfare payments, saves not only the recipient money and time but also the government.
Safer, cheaper and streamlined payments
As well as transferring cash to beneficiaries, NGOs frequently use bulk payments for travel and expenses, permanent and temporary staff wages, and paying suppliers. These bulk payments and deposits can cost NGOs a fortune in bank fees. With digital payments, these additional costs are avoided. In addition, regular payments can be set up so that recipients are paid on time, thereby streamlining the process. The personal security of NGO staff and aid recipients is also greatly improved when they are not forced to carry cash. Of course, leakage of funds is always a threat for NGOs but mobile money can reduce this significantly as transactions will be more transparent.
Closing the financial inclusion gap
The Global Findex 2014 highlights the opportunity of linking up to 160 million unbanked adults to formal financial services such as savings and loans by transferring government payments and wages directly into mobile money accounts. In fact, CGAP shows that by 2014, the majority of cash transfer recipients globally—62%-were already receiving their benefits into an account or a mobile wallet. However, this trend is not as prevalent in low-income countries and among the most impoverished populations where cash disbursements are still dominating so the potential is there. There is no doubt that mobile money offers greater convenience for both consumers and institutions but for it to be a success, there needs to be a high level of customer service and education, as well as an array of products that offer relevancy, as well as reliability and efficiency. NGOs have been early adopters of mobile money for bulk payments – and a new report by NetHope, “Mobile Money Bulk Payment Products: Capturing the Market Opportunity for Global Development Organisations”, suggests that, given the inconvenience and cost of cash-based solutions, they are willing to pay for the right solution.