Understanding How Consumer Risks in Digital Social Payments Can Erode Their Financial Inclusion Potential

Low-income recipients of cash transfers - whether government to person (G2P) or donor to person (D2P), and whether conditional or unconditional - increasingly receive their payments digitally. This digitization trend is expected to continue. The value of electronic transfers that are delivered into store-of-value accounts and accessible via debit cards or mobile money wallets, referred to here as “digital social payments,” is estimated to more than triple between 2010 and 2017 to over USD 194 billion (Riecke 2014).

This Brief focuses on the particular experiences of low-income and vulnerable recipients. It reviews existing evidence from DSP programs in 12 emerging markets to identify the most common and consequential consumer risks and challenges experienced in their design and deployment.

These consumer risks include:

• Inability to transact due to network or service unreliability; 
• Insufficient agent or automatic teller machine (ATM) liquidity; 
• Complex user interfaces and payment processes; 
• Poor or no recourse mechanism; 
• Fraud that targets the recipient. 

Drawing on promising practices by governments, development agencies, and providers, it then recommends that DSP programs and their payment service providers should consider three critical basics - reliability, communication, and monitoring - to better mitigate these risks. While these three elements of “doing digital finance right” are basics that apply to any DFS offering, getting them right in a DSPs context will provide a solid foundation for ensuring that these programs achieve both their social protection goals and their financial inclusion potential.