Paying attention to detail: How to transfer cash in cash transfers

How to transfer cash to people has received relatively little attention in evaluations of cash transfer programmes and most programmes are still experimenting with a range of approaches. The choice of payment system affects the costs and barriers faced by those receiving cash and the costs and risks of successful programme implementation. This paper presents qualitative and quantitative evidence on three different payment systems being used in cash transfer programmes in Kenya:

• payment to recipients' mobile phones that can be redeemed at various phone agents
• payment through ‘Smartcards' that can be redeemed at various banking agents using fingerprint technology for identification
• payment through post offices that recipients visit to collect their cash.

The article compares challenges in implementing these systems, difficulties recipients face in using them, and the effects these systems have on the impact of cash transfer programmes. It concludes that the type of payment system used can have a large effect on recipients' experience of the programme. In addition, some of the more innovative systems can have secondary benefits (such as increasing coverage and technological literacy). If their problems can be overcome, mobile transfers have a great potential, since they are at the forefront of a banking change in Kenya and the region more generally, and because recipients' reports of such transfers were very positive. Another issue discussed is the importance of awareness creation and communication. Often recipients' understanding of the cash transfer scheme is limited, and this can result in positive aspects of the programme being neutralised. Payment systems can have an important role to play here, as the payment process is a natural point of contact with the recipient. Above all, it is important that a flexible approach to the payment system is adapted in the early stages of design of cash transfer programmes.