Wednesday, April 2, 2014

Transforming G2P into reality!

I recently came across an article entitled “Pakistan: G2P Laboratory” published in CGAP (Consultative Group to Assist the Poor) that described the efforts of government of Pakistan for digitizing a lion's share of its cash flows to its citizens through digital Government-to-Person (G2P) payment services. These services cover distribution of salaries of government employees, pension schemes and social cash transfers monitored by central government agencies and government of Pakistan.


The Benazir Income Support Program (BISP) initiated in 2008 is an epitome illustration of the largest digital social cash transfer program operational in the country. However by 2010 it began employing smart cards (Benazir Smart Card) and mobile phones. Later in February 2012, BISP shifted to a new payment mechanism using magstripe debit cards known as the Benazir Debit Card. The Benazir Debit Cards are issued by six well renowned banks of Pakistan (five commercial banks and one microfinance bank) and can be operated conveniently throughout the country’s financial system.

Furthermore, the government of Pakistan utilized the digital G2P services to transfer cash aid to the flood-affected families across four provinces and 70 affected districts of Pakistan, in a rapid and transparent manner thus facilitating up to 1.6 million displaced families. It made use of plastic debit "Watan" cards that were generated in a colossal number of 30,000 cards per day. The cards were manufactured in China, Dubai, and Thailand and later shipped to Dubai for personalization. Finally they were packed in envelopes along with the PIN mailers in Pakistan. 

Within a small span of six to eight week the government of Pakistan successfully distributed between 20,000 and 40,000 Watan cards per day with the help of which the beneficiaries could withdraw their cash (around 20,000 Rupees or USD 232) right away. 

 I believe that the role of State Bank of Pakistan to collaborate with provincial governments to make the dream of digital G2P a reality is very significant. Moreover the digital G2P services offer local banks a great opportunity to grow their branchless banking business. But it is also challenging for the local banks to strike a balance between their role as a payment service provider and as a banker for beneficiaries. In my point of view the digital G2P services have a wide scope in future provided the human and financial resources operating under this program are increased manifold to cater the huge demand for withdrawals whenever the government announces welfare and disaster relief aid programs for its citizens.




1 comment:

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