DECEMBER 2020

AUTHOR Loretta Michaels Rapid Response for Social Payments During COVID-19 Introduction 3

1. Rapid Identification of Eligible Recipients 4

2. Simplified Due Diligence for Rapid Account Opening 7

3. Use of Alternative Channels — Fintech, Postal Networks, and NBFIs — for Delivering Payments 13

The Path Forward 18

Notes 21

Acknowledgments The aim of this policy note is to examine steps CFI conducted this work as part of our taken by policymakers to rapidly distribute partnerships with the Mastercard Center for social payments to millions of people whose Inclusive Growth and Deutsche Gesellschaft livelihoods were impacted by COVID-19. This für Internationale Zusammenarbeit (GIZ) is the second in a series of policy notes that GmbH. The author would like to thank the will analyze data collected on policy responses following for their valuable input on and by international bodies and engage in direct suggestions for this brief: Ivo Jenik and consultation with in-country stakeholders to Mehmet Kerse of CGAP, and Denise Dias, assess the impact of policies, both in the short- an independent financial regulatory and term and long-term, on low-income customers supervisory consultant. and the financial providers that serve them. Introduction

As countries around the world grapple with the While the wholesale digitization of government devastating economic impact of the COVID- payments, government IDs, and government 19 pandemic, governments have turned to registries (social protection, salaries, pensions, supplemental cash transfers as a key policy tax, etc.) is a large undertaking over many instrument to offset the loss of income. These years, and is beyond the scope of this brief, the measures include a range of approaches, from COVID-19 crisis has forced policymakers to wage subsidies to extended unemployment find innovative ways to deliver rapid support support and a variety of social welfare payments. payments to those most in need.5 A critical aspect There’s also been a push to extend payments 1 of getting this emergency aid out is the ability to outside the usual social protection mechanisms, quickly identify and onboard eligible recipients to ensure that all eligible low-income people and who don’t already have transaction accounts, and small businesses are reached. Given ongoing distribute the payments as soon as possible. concerns about fraud and theft, not to mention cash handling during this health crisis, most The Center for Financial Inclusion (CFI), as part efforts have focused on digital payments. of its partnership with the Mastercard Center According to World estimates, 340 cash for Inclusive Growth and Deutsche Gesellschaft transfer measures — digital and non-digital — were für Internationale Zusammenarbeit (GIZ) taken across 156 countries by mid-September,2 GmbH, explored what governments are doing and government-led social assistance payments to enable rapid payments to those without in response to COVID-19 have globally benefited existing accounts. This paper reviews three of 1.8 billion people, including 1.1 billion new social the measures being taken to speed up payment assistance payments recipients.3 distribution,6 specifically: quick identification of eligible recipients, simplification of customer Those countries with well-developed social due diligence (CDD) rules for rapid account protection systems, payments infrastructure, and opening, and greater use of alternative wide access to digital financial services have fared channels such as mobile apps, post offices, much better in getting these payments out quickly, and nonbank financial institutions (NBFIs) but even they have struggled to rapidly open like microfinance institutions (MFIs) and accounts for their more vulnerable populations. cooperatives to distribute payments, directly Policy actions to encourage use of digital accounts or in conjunction with payment service such as e-money have included raising transaction providers (PSPs). Note that this analysis is and balance limits along with reducing or based on a snapshot in time and just a selection removing transaction fees. Some countries have of examples undertaken due to COVID-19, and also declared cash-in/cash-out (CICO) points that governments and industry stakeholders essential services, but it’s unclear whether are constantly evolving in how they handle the “essential services” extends to account opening or ongoing challenges of the COVID-19 crisis. A how many of these points even conduct account common theme throughout, though, is the ability opening in addition to CICO. These measures are and willingness of policymakers to be nimble all helpful in promoting digital account usage, and innovative as they design solutions for these but largely only impact current digital account challenging times. holders, leaving those without accounts of any kind at risk of being overlooked.4

CENTER FOR FINANCIAL INCLUSION 3 Rapid Identification 1 of Eligible Recipients

Countries with well-established social protection Being able to provide comprehensive social schemes have existing databases to work from welfare payments for a nationwide crisis situation when determining eligible beneficiaries for like COVID-19 requires the ability to incorporate social payments under COVID-19. However, all these lists, verify eligibility in a timely fashion many database rolls can be limited in scope, out and check for duplicates, as well as compare of date, or present other impediments to use, against lists of recently deceased. This work is far such as being based in different government more complicated than it sounds, even for the ministries with varying rules around access. most sophisticated of governments. What’s more, the COVID-19 crisis has impacted many people beyond those on social welfare rolls, Integrating multiple government databases is especially small and medium enterprises (SMEs) not a trivial undertaking, and often includes and informal workers, as well as many previously further challenges around privacy and data employed workers, all of whom suddenly find protection. In many cases, authorities choose to themselves without income. start with those beneficiary rolls most relevant to low-income social welfare support and work In order to quickly determine who’s eligible for out from there using a variety of tools to help COVID-19 support payments, governments have existing beneficiaries more easily receive the had to be innovative in tapping into all available new payments or help non-beneficiaries sign existing information, whether publicly or up. The State Bank of Pakistan, for example, privately owned. Primary efforts include starting transformed the eligibility review process for with current beneficiary and employer rolls, the government’s social relief program, Ehsaas then moving onto recent voter registration lists, Emergency Cash, from an in-person process and mobile cellular customer records, including to a remote process, allowing residents to send location data. an SMS to Ehsaas to confirm available social benefit funds. Individuals could then collect cash Current Beneficiary from biometrically-enabled branchless banking and Employment Rolls operations and biometrically-enabled ATMs.7 The obvious starting point for most governments is the existing social protection lists they use for In Jordan, after the government announced a variety of welfare benefits. While these lists a cash transfer program for informal workers ostensibly provide up-to-date information, one impacted by the COVID-19 crisis, the Central challenge with using them is that they are usually Bank of Jordan (CBJ) relaxed its regulations to based only on the requirements of the ministry allow for online account opening with simplified or municipality that collects the information. know-your-customer (KYC) requirements.8 For example, the department that focuses on Workers apply through a webpage and are maternal and child health will only have lists of required to provide information including: recent mothers and families of young children. prior participation as beneficiary in the Bread Another department list may focus only on Subsidy Compensation program, national ID old-age pensioners in a particular jurisdiction. number, national ID card number, and mobile

CENTER FOR FINANCIAL INCLUSION 4 phone number. (Refugees are able to use their health emergency. (The program was recently UNHCR IDs for account opening.) The applicant extended beyond the emergency lockdown information is verified via the new National period but amended to focus on certain regions.) Unified Registry (NUR), and the payment Because Togo does not have a strong national arrangement is based on the delivery of cash ID system, they took advantage of a recent voter transfers through e-wallets, which can be opened registration campaign to verify the identity of with any of the seven licensed PSPs, all of which eligible recipients. interoperate through the CBJ’s JoMoPay switch. Beneficiaries without e-wallets are contacted To sign up, beneficiaries had to dial *855# on their through an interactive SMS and are requested to mobile phone, respond to the prompts filling in choose among the listed PSPs to open an e-wallet. their information including voter registration Upon selection, the government sends each PSP number, and submit their application. The a list of the beneficiaries that have selected them, government chose this USSD channel to ensure and PSPs must assist beneficiaries in the process that recipients who lacked internet access could to open their e-wallet. By mid-May, more than still apply for the funds. By the end of August, 470K households had opened e-wallets,9 with the program had 1.4 million Togolese citizens more than 70 percent active.10 registered, about 38 percent of the voting population, with 581,000 approved beneficiaries, In Bangladesh, the government announced of which 65 percent were women.12 Notably, disbursement programs for the poor and wage women beneficiaries received about 15 percent protection for garment workers in late March more funds than men, on the basis that the funds and early April, with no clear way to send funds were more likely to support entire households.13 to individuals. allowed government disbursement program information Timor-Leste was also able to take advantage of to be used to open permanent accounts on behalf its voter registration system, which had high of customers, mostly through mobile money sign-up rates after a recent election. While operator bKash, postal transfer operator Nagad, direct authentication with the voter database, as bank payment system Rocket, or direct bank happened in Togo, was not possible, checks for transfer.11 The central bank also permitted the duplicates and erroneous number structures creation of accounts for ready-made garment helped reduce potential errors and fraud. (RMG) workers based on their employment Combined with demographic data that had record, given the low rates of digital IDs or other been collected at the village level and digitized, means to confirm their identity among the this provided a reasonable starting point for the predominantly female group. government teams to go out using software on tablets with prepopulated data and issue cash Voter Rolls payments (with social distancing). While not Some countries took advantage of recent ideal, the digitization of the processes at each voter registration campaigns to verify recipients step, including grievance redressal, increased for support payments. In April, the Government transparency and appears to have limited fraud. of Togo established the Novissi cash transfer Out of 310,000 households, complaints were filed scheme, “to support eligible Togolese citizens by about 12,000 or 4 percent.14 (The payments in the informal sector whose daily income has themselves were made in cash by the government been disrupted by the Coronavirus crisis.” teams, so while the information used to identify Novissi provides monthly financial aid via mobile beneficiaries was not used for onboarding for a money to the most vulnerable individuals and transaction account, it certainly could have been families throughout the duration of the state of had there been a PSP with suitable agent coverage.)

CENTER FOR FINANCIAL INCLUSION 5 Mobile SIM Data the World Bank, several countries, including Several countries tapped into mobile cellular Bangladesh, Nigeria, and the Democratic registration data, both SIM data alone as well Republic of Congo are currently considering as mobile money registration, for identifying a similar approach of using mobile network- eligible beneficiaries.Zimbabwe took advantage based geographical tracking in the context of of its 90 percent mobile money penetration 15 to the COVID-19 pandemic.16 For example, Nigeria make payments directly to the e-wallets of all partnered with mobile network operators to phone numbers mapped to areas targeted for identify vulnerable informal workers in urban support payments. This approach gave them areas through airtime purchase patterns.17 While the additional advantage of tracking payment the combination of mobile ID and location data behaviors in real time so that the impact of the allows for innovative mapping and monitoring, it transfer was easier to monitor. According to also opens up interesting privacy questions.

Key Takeaways:

The first step in getting support out to populations public crises, it is prudent that governments put in need is identifying those populations, along in place mechanisms to expedite and secure with ascertaining eligibility. In emergency such data sharing, especially under emergency situations like COVID-19, where virtually everyone situations. This should also include collaboration is affected, it’s arguably more important to err on with humanitarian organizations, especially the side of over-inclusion rather than exclusion. those focused on refugees. The use of technology Some of the key takeaways here are the following: such as distributed ledgers on blockchain could support those efforts. Access to beneficiary rolls is an important step in the onboarding process, and governments Partnering with the private sector, especially have been innovative in how they use available employers and mobile network operators, is rolls, while still addressing privacy concerns. critical to identifying those populations who There are many restrictions on accessing various find themselves in need but don’t normally government beneficiary databases outside of appear in government beneficiary rolls. In the relevant ministry for good reasons, such most emerging markets, a substantial portion as privacy and security concerns. In some of workers are employed in just a handful cases, restrictions on accessing the information of industries that have experienced sudden reflects the desire to recover costs incurred in shutdowns, such as garment factories or tourism. the collection of the data; e.g., voter registration The uncertainty around how long the crisis campaigns, where those departments insist would last, and the fact that many of these on getting paid for sharing the information. workers don’t typically participate in social Whatever the reasons, the examples noted in welfare systems and may not even know how to this paper highlight how governments have apply for them, meant that these groups risked been able to overcome impediments and put being ignored in the early days of the pandemic. in place policies around sharing government Governments need to think about putting database records for legitimate purposes. Given standard outreach systems in place in important the likelihood of recurring and more frequent employment sectors.

CENTER FOR FINANCIAL INCLUSION 6 Simplified Due Diligence 2 for Rapid Account Opening

The challenges associated with opening Many jurisdictions have used the flexibility transaction accounts for low-income customers allowed by their CDD regulations to speed up are well known, ranging from low literacy levels COVID-19 support payments, often via use of and distrust of to poor infrastructure and mobile phone SIM registration and remote uneven availability of identification documents. onboarding. According to mobile industry There is also detailed research into the unique association GSMA, at least seven countries 24 challenges facing specific populations, such as instituted additional flexible KYC rules for women,18 youth,19 and migrants.20 A key factor mobile money, while the World Bank notes that has faced scrutiny in this discussion is ten new countries that have implemented the requirement for stringent customer due flexible KYC and remote account opening as diligence (CDD), including know-your-customer of August 2020.25 In some of the cases noted by (KYC), anti-money laundering (AML), and other the World Bank, the authorities have allowed verification protocols, in order to open accounts. eKYC procedures, including digital submission of documents with subsequent follow-up, The Financial Action Task Force 21 (FATF), the sometimes called deferred KYC. Regulators global watchdog for this issue, has acknowledged in many countries were also able to use SDD the challenges these requirements can pose to measures to open accounts specifically for financial inclusion,22 and in recent years has COVID-19 payments by using data provided by clarified their rules to corroborate the concept of the government agency responsible for social a risk-based approach (RBA) to CDD procedures, assistance,26 voter roll data, and employment such as tiered and/or simplified CDD (SDD). They records. In many cases, countries used a reiterated this guidance as it relates to government combination of all these measures. It is unclear assistance during the COVID-19 pandemic.23 if, or for how long, regulators will allow the use of Beyond FATF, however, it’s important that national SDD account opening procedures post-COVID-19, regulators clearly articulate the adequacy of SDD but there is potential to make them permanent in measures, to assure FSPs in their jurisdictions certain low-risk situations. what the expectations are for rapid onboarding for emergency transfers, and remove any uncertainty around the compliance requirements for CDD.

CENTER FOR FINANCIAL INCLUSION 7 BOX 1

What is Simplified (Customer) Due Diligence (SDD)?

When opening an account with a new customer, Simplified Due Diligence (SDD) can be applied financial institutions are expected to first to customers who are determined to pose lower establish and verify that customer’s identity risk for money laundering or terrorist financing. to evaluate any potential money laundering SDD is based on FATF’s “risk-based approach or terrorist financing risks. This expectation (RBA),” which allows FSPs to base their CDD is prescribed in the financial regulations assessment on the level of risk of each customer. and is a condition of a financial institution’s It enables them to focus their resources and licensing requirements, which cover, amongst take enhanced measures in situations where other things, having appropriate CDD the risks are higher, apply simplified measures rules and processes as covered under FATF where the risks are lower, and exempt low-risk Recommendation 10, including ongoing due activities. The RBA has been further developed diligence and monitoring. A standard CDD and elaborated in recent years, in recognition process would include the following steps: of the importance of financial inclusion goals and the negative impacts of derisking behavior 1. Data Collection: Full name; residential (where banks, mostly in developed markets, address; contact information; date and choose to close accounts to avoid, rather than place of birth; nationality; gender; marital manage, risk; derisking has had a particularly status; occupation and source of income; devastating impact on maintaining the flow of government-issued ID number; specimen global remittances.) signature; parental consent form (where the individual is a minor). In recognition of the fact that many people, especially in emerging markets, lack the 2. Verification: Verify the information collected standard government-issued ID or residential from the customer to ensure accuracy and address documents, governments are legitimacy, usually via government-issued increasingly allowing the use of other identity documents. Examples include: Government- information for opening low-value accounts. issued photo identification card; government- Examples of such proxy IDs include SIM issued passport; tax/utility bill to prove registration, voter registration, government residential address; pay stubs; business profile databases, and employment IDs. SDD also allows issued by a government regulator for business for delayed or deferred identification, reduced entities; certificate of incorporation from a frequency of identification updates, and limited country’s official company register, articles of monitoring and data collection. Many markets association, or memorandum of association. have established “tiered KYC” levels, whereby customers can open basic, low-value accounts 3. Name screening: Check to determine if a with minimal ID, but if they wish to conduct customer is known to be of heightened risk higher value transactions, they are required to and thereby posing a risk to the financial provide higher levels of CDD information. institution. Typically, this includes customers that are considered: Politically Exposed Sources: International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation: Persons (PEPs), criminals, terrorist-sanctioned The FATF Recommendations.” FATF. https://www.fatf-gafi. individuals, etc. org/media/fatf/documents/recommendations/pdfs/FATF%20 Recommendations%202012.pdf “Risk-Based Approach.” FATF. https://www.fatf-gafi.org/ 4. Determine risk level, open account, documents/riskbasedapproach/?hf=10&b=0&s=desc(fatf_ and conduct ongoing monitoring and releasedate) recordkeeping. “Rapid Account Opening in a Pandemic.” CGAP. July 2020. https://www.cgap.org/research/covid-19-briefing/rapid- account-opening-pandemic.

CENTER FOR FINANCIAL INCLUSION 8 Mobile SIM as ID Remote and/or Deferred CDD Given the prevalence of mobile phones, most Many countries opted for remote onboarding countries have included mobile SIM information and deferred KYC procedures for COVID-19 in their onboarding efforts, including the use payments, allowing people to immediately of SIM registration data alone for opening open accounts and giving them a period of an account. For example, the Bank of Ghana time in which to follow up with the necessary expanded its tiered KYC to allow mobile phone documentation. In the case of Pakistan noted subscribers to reuse their SIM card registration to earlier, the Ehsaas Emergency Cash transfers open the lowest tier of e-money accounts, called are usually made after biometric verification of Minimum KYC accounts.27 Like many countries, each beneficiary through the National Database the Bank also eliminated fees on e-money and Registration Authority of Pakistan (NADRA). transactions up to USD$17, not including cash- However, in recognition that some beneficiaries out, while transaction and maximum account experience problems with the biometric system, balance limits have been raised across the board, and that NADRA offices are closed during the with both limits for Minimum KYC accounts pandemic, the government suspended the need increased by 50 percent. for biometric confirmation, opening a web portal for residents to handle applications and resolve In Egypt, the central bank had already any issues.31 established an eKYC program in January 2020, just prior to the pandemic. The system allows In West Africa, the Central Bank of West African customers to open bank accounts electronically, States (BCEAO) created remote onboarding for without having to visit a bank branch or speak to a basic (Tier 1) mobile money account (via USSD an agent.28 A customer submits their national ID text messaging or voice) or a standard e-money number along with their mobile phone number account (via voice or smartphone). In this case, to the telecommunications authority, which then BCEAO has enabled a deferred KYC requirement confirms to the bank the information match for for Tier 1 and Tier 2 accounts, creating a three- the mobile SIM registration. It’s interesting to month window for in-person due diligence note that in this case, it’s the telecommunications verification after the end of the COVID-19 crisis. authority who is conducting the verification, Overall, 8 million new accounts were opened rather than the FSP. during the COVID-19 crisis. Senegal, Cote d’Ivoire and Mali were the largest contributors Employment Records to the growth, with 4.7 million new accounts. In Bangladesh, Bangladesh Bank allowed The majority of the new accounts were opened government disbursement program information remotely, as most agent locations had been to be used to open permanent accounts on behalf shuttered. The BCEAO aims to keep these new of customers.29 The central bank also permitted accounts active after the current crisis has lapsed. the creation of accounts for ready-made garment If customers are not able or willing to provide (RMG) workers based on their employment an in-person identification, their Tier 2 accounts record, given the low rates of digital IDs or other will be downgraded to Tier 1. As for the new Tier means to confirm their identity among the 1 accounts, the BCEAO aims to maintain those as predominantly female group. By using private is, though providers may encourage customers data sources in combination with, or in lieu of, to further formalize the accounts. The BCEAO is verification from government databases to verify evaluating which of the crisis-based temporary an identity, Bangladesh created an instance of provisions they will make permanent, and are collaborative CDD, albeit temporary. The RMG considering a permanent addition of an eKYC accounts will still need verification at a later date, after the pandemic.32 though this has yet to be formalized.30

CENTER FOR FINANCIAL INCLUSION 9 The Central Bank of the Philippines (BSP) much like India does. For the past few years, also allowed temporary relaxation of CDD the Thai government has had a policy that all requirements to facilitate delivery of welfare G2P payments (e.g., all welfare and tax returns) funds.33 Specifically, they eased the requirement must go through PromptPay, which provides for the presentation of a valid ID document for free instant transfers. Payments are directed to customer onboarding and transactions during the bank account or e-wallet that is linked to the the quarantine period. The measure was adopted national ID number. For people who do not have to facilitate the delivery of welfare funds to a bank account, some banks are making it easier identified beneficiaries who have no valid ID to open bank accounts through ATMs, using the documentation or transactional account with national ID. (While the PromptPay system also any FSP. The BSP relaxed the CDD requirements links to mobile numbers, allowing for personal because the accounts involved are considered transfers via mobile number alone, government low-risk, but also imposed some restrictions to social transfer programs require use of the minimize AML risks.34 national ID number.) For verification purposes, authorities use a code on the back of recipients’ Morocco’s Central Bank, Bank Al-Maghrib, national ID card in a similar way to how online temporarily simplified account opening credit card transactions use the code on the procedures during the pandemic, allowing signature panel to authenticate the holder. The anyone to open a basic payment account, capped applicants are then notified as to whether they at USD$555, without going to the branch. Based were accepted or rejected.36 on a client’s mobile phone number and digitized national ID card, the new rules deferred KYC Finally, some countries recognized the need procedures for such basic accounts. Al Barid to allow for sharing a single SIM number Bank, a subsidiary of Morocco Post, and its amongst several people, given the realities of payment institution subsidiary Barid Cash low mobile penetration in some populations. In took advantage of this opportunity to open Namibia, authorities implemented a very flexible up new accounts for recipients of emergency onboarding process for issuing Emergency support funds aimed at low-income people. Income Grants of USD$45 to those in need Grants ranging from USD$90 to USD$130 during the pandemic. Applicants needed a per month were disbursed in April and May, mobile number and a national ID number and and beneficiaries could collect their funds at applied by texting “EIG” to a specific number to any financial service provider (FSP) within start the registration process. After the approval the country. As G2P recipients visited Barid of the application by the ministry, applicants Cash outlets to collect their grants, the bank received a token from the bank they selected incentivized them to open in the application process. Recognizing that accounts and thus shift from cash to account- some individuals, or even families, might not based government transfers.35 have their own mobile phones, the government permitted up to ten applications to be submitted Most countries used combinations of national through a single SIM, with each application ID, government registry, and national distinguished by its unique ID number.37 It’s not payments systems infrastructure to enable clear whether the beneficiaries now have basic rapid onboarding. In Thailand, the government transaction accounts or were merely given one- uses its interoperable payments system, time-use tokens, but it could be an interesting PromptPay, which allows pandemic funds to approach to quickly opening basic transaction be sent to a recipient’s ID-linked bank account, accounts for emergency G2P payments.

CENTER FOR FINANCIAL INCLUSION 10 TABLE 1 EXAMPLES OF SIMPLIFIED DUE DILIGENCE FOR COVID-19 PAYMENTS

TIERED KYC ALTERNATIVE REMOTE DEFERRED CDD VIA SIM BENEFICIARY ONBOARDING REGISTRATION ROLLS OR AND/OR EKYC DATA AND/OR EMPLOYMENT NATIONAL ID RECORDS

DESCRIPTION Ability to use Usage of government No in-person Allowance for mobile SIM ministry databases requirement for full CDD to be information alone to identify and account opening. conducted at a for low-value/low- onboard users. Typically involves later date. Often risk account opening, Examples include an app, website, combined with with or without voter registration phone or text/ Remote Onboarding. National ID data. lists and social USSD, utilizing protection registries. some combination of ID, biometric and SIM data.

SAMPLE Ghana Togo Pakistan West Africa COUNTRIES Zimbabwe Timor-Leste Egypt Philippines Namibia Jordan Pakistan Bangladesh Morocco Russia

CENTER FOR FINANCIAL INCLUSION 11 Key Takeaways:

Onboarding of underserved clients is a challenge Where a country lacks the necessary digital to governments, large employers, humanitarian infrastructure, working with the private sector organizations, and FSPs alike. The traditional to take advantage of existing capabilities costs to conduct onboarding are often too high has been the most expedient way forward. for FSPs to justify for low-income intermittent This has been especially relevant to overcome users, especially those lacking standard ID shortcomings in digital ID infrastructure. The documentation. While governments are use of SIM registration data is a prime example certainly aware of the benefits of digital financial of collaboration between social protection, infrastructure and are embarking on their own financial, and telecommunication authorities long-term programs, especially around ID and that has been critical in this pandemic. interoperable payments systems, the unique It’s also been important that financial regulators challenges of the COVID-19 pandemic have provide regulatory clarity and certainty for crystalized the urgency of being able to rapidly FSPs regarding compliance of rapid onboarding reach all members of society by some means of processes with CDD rules. digital financial services, for the benefit of both recipients and for governments to manage future Opening new transaction accounts for crises. Waiting for the long-term infrastructure emergency social transfers should not come programs to be completed is no longer sufficient at a cost to recipients. For many low-income to meet today’s challenges. A few of the key and unbanked people, issues of trust and cost takeaways we’ve seen so far in this current crisis are big impediments to opening and using are the following: accounts, particularly when they perceive the use of cash to be free. In emergency situations While flexible policy has been at the heart of where policymakers have chosen to use remote and rapid onboarding, collaboration digital financial transfers to achieve social and and dialogue have been a critical part of the economic goals, governments should opt to pay success. Interactive decision-making between any fees associated with opening those accounts government authorities, regulators, FSPs, and and using them to withdraw the funds. For how PSPs has been critical for timely adoption of rapid long the government assumes responsibility onboarding programs to ensure that financial for those costs is a more complex issue, but for support reaches those in need as fast as possible. purposes of achieving immediate goals, it is essential that the emergency digital transfer comes at no cost to beneficiaries.

CENTER FOR FINANCIAL INCLUSION 12 Use of Alternative Channels — 3 Fintech, Postal Networks, and NBFIs — for Delivering Payments

In addition to relaxed SDD procedures, several BOX 2 jurisdictions have looked to new channels to The Post Office as Financial Services Provider quickly onboard beneficiaries and distribute social transfers, from mobile apps and websites to postal networks and non-bank financial Worldwide, post offices (POs) have long been involved institutions (NBFIs). The phenomenal growth in the provision of financial services, from bill payments of fintech, especially mobile banking apps, and money transfers to savings accounts. According along with near-universal mobile penetration to a Universal Postal Union (UPU) study, postal operators in many areas, has given governments and now provide some 1.5 billion people worldwide with FSPs the tools they need to rapidly create new access to basic financial services across 663,000 physical digital onboarding mechanisms. Meanwhile, contact points. The fact that postal networks have for many unbanked users, especially those in branches in virtually all jurisdictions, especially rural rural areas, the proximity and familiarity of the areas, has made them particularly attractive for reaching post office and retail agents are more convenient low-income and rural populations who aren’t otherwise and less intimidating environments for served by banks. As the issue of financial inclusion, opening transaction accounts for the first time. especially digital financial inclusion, gained prominence Governments and FSPs have long explored using amongst global policymakers in recent years, the role of the broad reach of post offices for facilitating the post office in facilitating access to financial services digital financial services, but progress in this has taken on even greater significance. regard has generally been slow for a variety of legal, bureaucratic, and cost reasons (see Box 2). Progress in utilizing the post office for digital financial However, the COVID-19 crisis has spurred action inclusion has been slower than anticipated, however, on this front which will hopefully continue. for a variety of reasons: the need for massive investments in digital infrastructure; the sometimes conflicting Another critical avenue for reaching the budgetary pressures facing POs (e.g., the fees the PO unbanked in rural areas is via NBFIs, especially receives for delivering cash to pensioners can make MFIs, such as cooperatives and credit unions. up a significant portion of annual revenue); and possible In most emerging markets, clients of these legal and regulatory limitations (as most POs fall under type of FSPs don’t usually have commercial the Ministries of Posts & Telecommunications, not bank accounts, and their accounts may not be financial regulators, they are prohibited from offering supervised by the same regulators as the banking some financial services, such as credit). In the meantime, system. They may fall under the oversight of there have been many initiatives to utilize the PO a separate regulator whose specific remit is network to perform CICO and agent services for other NBFIs. Crucially, these NBFI accounts are rarely FSPs, with mixed results. connected to the greater national payment system, which makes difficult their inclusion in G2P payment mechanisms. But the NBFI’s Source: “Financial Services.” Universal Postal Union. https://www.upu.int/ presence in rural areas and amongst the neediest en/Universal-Postal-Union/Activities/Financial-Services. segments of society makes them critical partners for government in emergency situations.

CENTER FOR FINANCIAL INCLUSION 13 In some countries, governments turned to NBFIs have to do anything to receive the payments. All to help identify recipients and quickly distribute others had to apply through the Caixa Auxilio badly needed support payments, while many Emergencial mobile app, with all mobile network NBFIs themselves developed digital channels to operators making use of the application available safely interact with their clients and enable them at no cost to recipients, with or without mobile to conduct more remote transactions. Some NBFIs data plans. As of June 2020, Caixa had opened 40 opted to collaborate with PSPs (bank and non- million new accounts, 50 percent of which were bank) to facilitate opening transaction accounts for previously unbanked people. In addition to for their clients, but this wasn’t the norm with the Caixa program, the state of Sao Paulo created most of the digitization programs reviewed. its own program for food aid for students by According to a recent CGAP analysis, about 29 utilizing a payment service provider, PicPay. percent of the MFIs they surveyed opened up new Students self-onboard with the PicPay app by digital channels to their customers, although it’s providing their name, national ID (CPF), and date unclear whether those new channels allow for of birth. A photo of the new user’s ID card is then transfers outside the MFI.38 validated against a real-time photo selfie.41 PicPay had opened 3 million new accounts in April There have also been concerted efforts to expand overall, six times higher than their normal rate CICO networks for MFIs to make it easier for of onboarding, reaching 20 million accounts by recipients to obtain their funds without having early May.42 to travel. However, it is still apparent that MFIs and other NBFIs are not being utilized as Post Offices broadly as they can be for emergency outreach In Madagascar, the government put in place and payments, nor are they putting as much a COVID-19-related cash transfer program effort as they could into helping onboard their called Tosika Fomena, aimed at vulnerable clients to transaction accounts that can be used households. Potential households register outside the NBFI. According to a recent survey themselves, and final beneficiaries are approved by WOCCU, while many of their member and verified by their respective municipalities. credit unions are embarking upon digitization The payments, worth USD$25, are made via the programs, including shared platforms between Madagascar postal system’s (Paositra Malagasy) the members, only a handful so far — Australia, cash transfer service called Paositra Money, and Brazil, Estonia, Kenya and Malawi — are linked can be retrieved at any PO upon presentation to their national payments system, while the of a national ID.43 The national ID and a mobile Philippines (NATCCO and PFCCO) is negotiating number is sufficient to open the Paositra Money linkage of their shared payments platform to the e-wallet, which can then be used to send and national payments system.39 receive money as well as pay some types of bills.

Apps and Websites There are also multiple examples of countries One of the more ambitious examples of using post offices to facilitate access to existing rapidly bringing on new beneficiaries by using accounts or access social welfare payments, alternative channels is the “coronavoucher,” including COVID-19 support. While not Brazil’s social assistance program aimed at explicitly involving onboarding of new clients, informal workers, consisting of three payments the enhanced use of the postal network during of USD$109 deposited into a Caixa Econômica this pandemic has demonstrated the value it can Federal digital bank account, accessible only provide in future emergencies, especially when through an app the bank created specifically combined with fintech solutions. For example, for this purpose (those without a mobile phone in India, the post office has enabled people to could apply via the associated website).40 Those get their funds delivered to their homes during already registered in Brazil’s Cadastro Unico the COVID-19 crisis, whether they have a postal (a database for social payment schemes) didn’t bank account or not. By downloading the India

CENTER FOR FINANCIAL INCLUSION 14 Post Payment Bank app, the user is able to and loan repayment. This trend went beyond withdraw funds from any bank account and have BRAC, as well — in the months of April and May it delivered via the PO, either at the post office alone, over 7 million mobile wallets were opened branch itself or having the postman deliver it in Bangladesh, as the government transferred to their home,44 as well as pay bills. Postmen are its support payments to this digital channel and equipped with AePS (Aadhar-enabled payment many factories chose to pay salaries via the bKash system) handheld devices and can verify the mobile wallet.46 account holder’s biometric immediately. This service has been particularly valuable to people In Ecuador, the government implemented a social in rural and underserved areas, saving users the transfer program aimed at vulnerable households need to travel to distant bank branches or ATMs. not covered by existing social protection programs, utilizing cooperatives as well as banks Similarly, the South African Post Office(SAPO) to distribute the funds. Unlike cooperatives in rolled out 10,000 cashless ATMs in rural shops to most countries, many of Ecuador’s cooperatives allow users to access their social security (SASSA) are connected to the national interbank payments, including COVID-19-related grants, payment system. For regular G2P transfers, the without having to travel to urban centers. In government uses this system to make a direct addition to accessing social grants, customers deposit into the beneficiary account. However, for are able to use cashless ATMs to purchase pre- the COVID-19 pandemic, they decided to use over- paid electricity and pre-paid airtime, and pay the-counter (OTC) disbursements for those not municipality bills as well as other bills. Other included in existing social protection schemes. transactions that can be performed on the ATMs Once the ministry identifies the beneficiaries, include insurance activations and payments, they transfer their data (name, ID number, and money transfers, ticketing, transport solutions amount to be paid) to a transactional platform, and balance inquiries. Users insert their SASSA created specifically to facilitate these transfers, card and PIN into the ATM and specify an called “switch concentrador.” In this case, amount to be debited, at which point the ATM cooperatives are connected to “concentradores” will print out two slips, one each for the customer which can be a big cooperative (second tier) and the merchant, confirming the debit. The or a payment infrastructure that already customer then hands the slip to the merchant in provides them services. They act as the point exchange for cash or goods.45 of disbursement for money orders made by the government, channeled and dispersed through NBFIs the “concentradores.” In Bangladesh, BRAC started out providing food aid, then cash, to its neediest clients during the Seven institutions are connected to this COVID-19 crisis, but quickly realized that they platform and each of them has a network of needed to switch to digital cash transfers, for a financial institutions (211 in total) delivering host of social distancing and privacy reasons. the emergency payment. The payment process They therefore turned to the use of the country’s starts with the person calling or accessing the most prominent mobile money wallet, bKash, ministry website to verify their eligibility. To ease as a means of delivering aid to their clients. the process, beneficiaries are assigned a place They opened mobile wallet accounts for all the and day of payment according to their address clients who had their own mobile numbers and, and the last number of their ID. This information for those who didn’t, especially women, they is provided via text message or via a dedicated allowed the use of a trusted family member’s phone . The last number of the beneficiary wallet. Despite some initial glitches, the use of ID defines a range of days when they can claim the mobile wallets for the transfers was a success, the payment. For example, if their ID finishes in and BRAC soon added other services onto the 1, they could claim the transfer on the 1st, 11th, or wallets, including savings refunds, insurance, 21st day of the month.47

CENTER FOR FINANCIAL INCLUSION 15 As part of this effort, the regulator for financial In parallel with these efforts, the United cooperatives also relaxed the requirements for Nations Capital Development Fund (UNCDF) is operating agent networks and onboarding agents conducting a pilot project to integrate MFIs into to allow CICO networks to expand. The financial their own interoperable real-time payments sector regulators also enabled non-FSPs, such as network, which may then be linked into the pharmacies and grocery stores, to become cash- National Payment Switch.51 Being part of an out agents for the government’s COVID-19 social interoperable payments system will allow MFI assistance payments.48 While the government clients to not only transact more easily with each has been innovative in its use of the cooperatives other, but to also be immediately included in any in distributing these payments, it’s a bit puzzling future government support programs. that they didn’t take it one step further and open transaction accounts for the recipients when they In some markets, the government has had the chance. unfortunately appeared to let domestic political concerns affect their support payment In Myanmar, the government has been supporting strategies. In Brazil, state-owned Caixa vulnerable households under the government’s Economica Federal has traditionally been the COVID-19 Economic Relief Plan via local digital conduit for all government payments. When platforms such as Wave Money and OnePay. Digital the COVID-19 pandemic hit, Banco Central transfer options were also extended to social do Brasil allowed fintechs, like digital banks security payments, loans for farmers, emergency Nubank and Banco Inter, to also distribute funds for garment workers, and financial relief COVID-19 support payments, which they started for street vendors. In its effort to expand digital doing early in the pandemic. Then in early May, financial services capabilities as a part of the the Brazilian president vetoed the allowance newly-launched Myanmar National Payments of fintechs to distribute government support Strateg y,49 in April 2020, the Central Bank of payments.52 Since then, Caixa has rapidly Myanmar launched a tender for the creation of a developed its own digital banking capabilities, national real-time retail payments system, as well and as of October had announced plans for an as a QR-code generation and repository system. IPO of its new digital bank.53 There are also ongoing efforts to tighten legislation governing the sector to improve regulation of the cashless payment system.50

Key Takeaways:

The importance of the retail payments system Taking advantage of all existing FSPs, both banks has been increasingly recognized over the last and non-banks, to support social transfers is decade as part of global financial inclusion critical to a rapid emergency response, as is efforts. The COVID-19 pandemic has further an openness to utilizing appropriate fintech amplified the need to be able to reach all people solutions. This is especially important in rural in times of extreme need. Countries around the areas and for reaching otherwise vulnerable world are embarking on broad payment system populations. Non-bank PSPs — especially mobile expansion and interoperability programs, which money operators and, in some cases, retail will take time. But in the meantime, it is obvious outlets — typically have broad rural networks that banks alone cannot reach all those in need of agents serving the community. MFIs and using existing bank branches. NBFIs like credit unions and cooperatives also

CENTER FOR FINANCIAL INCLUSION 16 have extensive reach into these hard-to-reach Postal systems worldwide play a key role in communities, and yet are too often overlooked reaching out to rural, underserved populations, as conduits for government programs. This but are often overlooked when digital financial may partly be due to the fact that they often fall infrastructure investment decisions are made. under different regulatory regimes, they rarely There are many varied and valid reasons for that, connect into national payment infrastructures but governments should recognize the role that and, as smaller players, they face their own post offices can play in emergency situations and challenges around governance, liquidity, and establish an official G2P financial services role digitization. Nonetheless, the potential value for post offices. How this is achieved will vary they bring by virtue of their extensive links into depending on jurisdiction and market situation, underserved communities should be seized upon but examples can include: the ability to open a by governments as they cope with not just this free or low-cost basic account at any post office; current pandemic, but as part of planning for any the requirement that all banks and mobile money future emergencies. Some immediate takeaways operators must be able to transfer funds to such include the following: accounts through full interoperability or enable the post office to act as an agent for their own Policymakers and regulators should look to accounts; and that there be some form of cash-in/ utilize all available channels to reach people, cash-out (CICO) capability at each post office. and they must be innovative in how they do so. Examples of alternative channels include MFIs and NBFIs can play a critical role in mobile and web-based apps, postal networks, onboarding low-income users for social and prominent retail chains. Providing timely transfers. As they also face their own challenges support where beneficiaries live, rather than just in digitization of their operations and creating where bank branches exist, is imperative during digital channels to their clients, it likely makes emergency situations, especially in lockdown sense for them to work together with established situations where public health is a concern. PSPs, both bank and non-bank, to create basic transaction accounts for their clients, as BRAC Partnering with the private sector, especially app did with bKash in Bangladesh. Policymakers developers and mobile network operators, to and regulators should actively encourage and enable rapid app development and distribution expand such partnerships between NBFIs and is an important and highly influential means of PSPs such as mobile money operators. quickly reaching citizens. Rather than treat each situation as a one-off event, government should The COVID-19 crisis has reiterated the need institute ongoing cooperation agreements with for NBFIs to speed up their own digitization key fintech app developers and MNOs to react programs, and these efforts should not occur quickly to events as necessary. These agreements in a vacuum. The fact that most NBFIs are not should also include provisions for blocking fake linked into the national payment system has apps that appear to mimic emergency aid apps, as limited their abilities to support their clients occurred in Brazil.54 in conjunction with government efforts. Policymakers and regulators should ensure that NBFI accounts are interoperable with the rest of the country’s national payment system.

CENTER FOR FINANCIAL INCLUSION 17 The Path Forward

Experience has shown that cash transfers, regulators alike need to closely monitor the fraud preferably digital, are usually the most efficient and KYC/AML implications of the SDD measures means of helping those in need. Identifying instituted during the pandemic. But so far, the eligible recipients and onboarding them is available evidence has shown little to worry about both a straightforward as well as complex in terms of widespread problems, and several undertaking, made much more difficult when jurisdictions are considering making the SDD trying to reach rural, underserved populations measures permanent for low-risk accounts. Any in a short period of time. While countries have usage beyond government payments should made impressive progress over the last decade be subject to the usual risk-based CDD, but the in expanding financial inclusion and broadening opening of a basic, low-risk transaction account the reach of digital financial services, the can and should be as easy as possible. As to who COVID-19 pandemic has magnified the would incur the cost of opening these accounts remaining gaps and weaknesses in reaching and who would cover the cost of maintenance, those most in need. Global support programs this is a topic that requires the attention of exist to support national initiatives, like the World policymakers. It may be more cost effective for Bank’s ID4D,55 G2PX 56 and Social Protection 57 governments to ensure that every person under programs, as well as groups like the UN’s their jurisdiction has a transaction account than Better Than Cash Alliance.58 These programs to incur the cost of rapidly onboarding people will take time, though, and in the meantime during a crisis. there are issues and initiatives that national governments should consider as they plan for Some governments have already opened such future — inevitable — emergency situations. accounts, such as India’s PMJDY 59 accounts, while others are beginning to move in this direction. This pandemic has demonstrated the potential Indonesia’s Ministry of Social Affairs (MoSA) value of universal access to basic accounts started opening Basic Savings Accounts (BSAs) in that can be opened under SDD measures 2017 for all beneficiaries of their PKH social welfare and at no initial cost to the customer. An program, as well as Bantuan Pangan Non-Tunai important question to consider for future (BPNT), the non-cash food assistance program.60 emergency situations: Should all members of Adding new beneficiaries to the country’s COVID- society as a matter of course be able to open 19 support program was made that much easier accounts immediately and remotely for receipt because many people were already a part of these of government emergency payments? FSPs and two programs and held BSAs.

CENTER FOR FINANCIAL INCLUSION 18 The pandemic has also flagged the importance Given the likelihood of recurring and more of clear, consistent government communication frequent public crises, it is prudent that and policy responses. Like many aspects of governments begin the longer term dialogue the COVID-19 crisis, communications have and investment needed to address governance been a critical aspect of program success or of data sharing. This would include rules, failure. In some countries, for example, unclear regulations, and security procedures, especially messaging on how to apply for or access funds under emergency situations. has led to overcrowding at government offices or state banks, forcing those offices to close What are the mechanisms that governments and leading to public turmoil or even rioting. can use to expedite infrastructure partnerships In other situations, poor communications have with the private sector? The cases highlighted in contributed to confusion about whether funds this paper show that when digital infrastructure have been deposited into accounts or whether is in place, especially around digital payments, those accounts are even active.61 ID, mobile communications, and government databases, governments are able to quickly Clear, ongoing dialogue and interactive and more adequately respond to crises. Where decision-making between government government doesn’t yet have the necessary ministries, regulators, and FSPs — especially infrastructure, partnerships with industry PSPs — have proven vital to ensuring quick allow them to leverage existing capabilities and action on rapid onboarding programs. information sharing. Governments already have established emergency protocols with telecommunications The use of mobile SIM registration is a and power companies. How can governments prime example of collaboration to address put in place formal emergency mechanisms to shortcomings in existing ID infrastructure. engage all relevant ministries and private sector It’s especially important that regulators be actors, especially payment service providers, for involved in these discussions, as well, to allow for any future crisis situations? regulatory clarity and certainty for FSPs, whether bank or non-bank. Partnering with industry, While many countries used creative ways to especially app developers and mobile network address the identification and verification of operators, to enable rapid app development and beneficiaries, how can countries put in place distribution has proven to be a highly influential mechanisms to lessen this administrative means of quickly reaching citizens. hurdle for future crises? One approach is to loosen impediments to the sharing of various Rather than treating each situation as a one-off government beneficiary databases, but there event, one approach is for governments to is much to understand around data privacy institute ongoing cooperation agreements with and security, and it is unclear whether this MNOs and other private/public sector actors approach is the answer. Government ministries to react quickly to events as necessary. One have invested time and money in creating example of this type of cooperation is the raising various databases around their departments of transaction and balance limits, along with and beneficiaries, and governments worldwide waiving of fees, for mobile money accounts to are investing in digital ID infrastructure, which encourage greater usage of these digital accounts. will take time to fully implement. The examples This does raise issues around competition, noted in this paper highlight how governments especially when paying a company to quickly have been able to overcome data sharing create something, say an app, on behalf of the restrictions and put in place policies around government. How can governments enable sharing government database records collaboration in a way that does not provide an for legitimate purposes across government. unfair competitive advantage to one provider?

CENTER FOR FINANCIAL INCLUSION 19 Governments must consider how they reach The COVID-19 crisis has demonstrated the beneficiaries who are not digitally connected importance of dialogue, innovation, and and may never be. The cases in this paper flexibility on the part of governments and highlighted usage of alternative distribution private sector players alike. At the same time, channels through institutions such as post it’s important to acknowledge that distributing offices and NBFIs. These players already serve funds during an emergency situation can be low-income people, often via some combination fraught with risk if not well organized. These of cash and digital means. Those beneficiaries risks are not just institutional, they also extend to who only want to deal in cash must continue to beneficiaries: Consumer protection in financial be accommodated, but that doesn’t mean that services is a broad topic that is becoming even the institutions they use must also deal only in more complicated with the rapid growth of cash. The further that government can push digitization and increasingly sophisticated means out the digitization of payments, especially to of data use, fraud, and discrimination. While the “last mile,” the more efficient and expedient it’s early days to be assessing the consumer the delivery system can be made before it’s protection repercussions around COVID-19 transferred back to cash for final delivery. support payments and rapid onboarding, this issue must be assessed for evaluation of the More work will be needed to ensure that these how the systems worked, or didn’t, and what players are included in the national payment needs to be adjusted for future crises. Some system so that service delivery is seamlessly hypotheses we’ll be looking at in a future note integrated into government payment mechanisms. include: improper use of ID and other personal This will require investments in infrastructure data, forcing digital accounts on people who don’t and regulations, both issues that take time to want them and not giving them an easy option address. How can governments incentivize these to cancel those accounts, and making sure that providers to invest in their own digitization to there are clear communications around account prepare for the next crisis? What regulatory information, customer recourse channels, and reforms are needed to enable interoperability fraud reporting. between NBFIs, post offices and the national payment system? These and many other questions should be addressed prior to the next crisis.

CENTER FOR FINANCIAL INCLUSION 20 Notes

1 “Social Protection and Jobs Responses to COVID-19: A 9 “COVID-19 G2P Cash-Transfer Payments. Country Real-Time Review of Country Measures.” World Bank. Brief: Jordan.” World Bank. http://pubdocs.worldbank.org/ September 18, 2020. https://documents1.worldbank.org/ en/229771593464525513/World-Bank-G2Px-COVID19- curated/en/295321600473897712/pdf/Social-Protection- Jordan-Brief.pdf. and-Jobs-Responses-to-COVID-19-A-Real-Time-Review-of- Country-Measures-September-18-2020.pdf. 10 “Responsible Digital Payments during COVID-19: Insights from Jordan, Peru and Ghana.” YouTube. May 13, 2 Ibid 2020. https://www.youtube.com/watch?v=2wY4cVD9kh4. 3 “Social Assistance Payments in Response to COVID-19: 11 Ortega, Daniela. “Massive Shift to Digital Wage The Role of Donors.” CGAP. September 2020. https:// Payments in the RMG Sector in Bangladesh : Garment www.cgap.org/research/publication/social-assistance- Worker Diaries.” Garment Worker Diaries. May 2020. payments-response-covid-19-role-donors. https://workerdiaries.org/massive-shift-to-digital- wages-payments-in-the-rmg-sector-and-other-updates- 4 There are other physical and digitally-based — but from-bangladesh/. non-account-based — methods being used to make payments, such as prepaid cards and vouchers, 12 “Distribution of Beneficiaries by Gender.” Novissi. e-vouchers, QR codes, and one-time password ATM codes. August 3, 2020. https://novissi.gouv.tg/en/home-new-en/. While these are all important tools that provide a quick solution, not to mention a low-risk way for familiarizing 13 Comments by Ms. Cina Lawson, Minister of Posts, people with digital payment instruments, they are not Digital Economy and Technical Innovation, Republic the focus of this note. of Togo. “Scaling Up Social Assistance Payments as Part of the 5 The Center for Global Development has published a 14 report on the use of digital technology along what they COVID-19 Pandemic Response.” World Bank. 2020. https:// call the “social assistance value chain” as part of COVID pubdocs.worldbank.org/en/655201595885830480/WB- relief efforts. https://www.cgdev.org/sites/default/files/ G2Px-Scaling-up-Social-Assistance-Payments-as-Part-of- digital-technology-social-assistance-transfers-covid-19- the-Covid-19-Pandemic-Response.pdf. relief-lessons-selected-cases.pdf. 15 Kwaramba, Marcia. “Zimbabwe’s Restrictions on Mobile Money Transfers Are a Blow to Financial Inclusion.” The 6 It’s important to acknowledge that some populations face significant challenges in using any digital financial Conversation. October 14, 2020. https://theconversation. services, particularly those who lack mobile phones and/or com/zimbabwes-restrictions-on-mobile-money-transfers- live in areas without reliable telecommunications services, are-a-blow-to-financial-inclusion-147109. particularly mobile-enabled services. We do not address 16 Ibid these specific issues in this note. 17 Davidovic, Sonja, Delphine Prady, and Herve Tourpe. 7 “Ehsaas Emergency Cash.” Poverty Alleviation “You’ve Got Money: Mobile Payments Help People During and Social Safety Division, Government of Pakistan. the Pandemic.” IMF Blog. June 22, 2020. https://blogs.imf. https://www.pass.gov.pk/Detailf90ce1f7-083a-4d85- org/2020/06/22/youve-got-money-mobile-payments-help- b3e8-60f75ba0d788. people-during-the-pandemic/.

8 “Social Assistance Payments in Response to COVID-19: 18 Better Than Cash Alliance, Women’s World Banking, The Role of Donors.” CGAP. September 2020. https:// and the World Bank Group. “Advancing Women’s Digital www.cgap.org/research/publication/social-assistance- Financial Inclusion.” GPFI. July 2020. https://www.gpfi. payments-response-covid-19-role-donors. org/sites/gpfi/files/sites/default/files/saudig20_women.pdf.

CENTER FOR FINANCIAL INCLUSION 21 19 “Advancing the Digital Financial Inclusion of Youth.” 30 Kazzaz, Zachary. “Emergency Disbursements OECD. 2020. http://www.oecd.org/daf/fin/advancing-the- During COVID-19: Regulatory Rules for Rapid Account digital-financial-inclusion-of-youth.htm. Opening and Oversight.” Glenbrook Partners. July 2020. https://www.findevgateway.org/sites/default/ 20 “Refugees and Migrants.” Center for Financial files/publications/submissions/72016/Emergency%20 Inclusion. https://www.centerforfinancialinclusion.org/ Disbursements%20during%20COVID-19_20200718.pdf. topics/refugees-and-migrants. 31 “Ehsaas Emergency Cash.” Poverty Alleviation 21 Financial Action Task Force (FATF). https://www.fatf- and Social Safety Division, Government of Pakistan. gafi.org/. https://www.pass.gov.pk/Detailf90ce1f7-083a-4d85- 22 “FATF Guidance on AML/CFT measures and financial b3e8-60f75ba0d788. inclusion, with a supplement on customer due diligence.” 32 Kazzaz, Zachary. “Emergency Disbursements Financial Action Task Force (FATF). November 3, 2017. During COVID-19: Regulatory Rules for Rapid Account https://www.fatf-gafi.org/publications/fatfgeneral/ Opening and Oversight.” Glenbrook Partners. July 2020. documents/financial-inclusion-cdd-2017.html. https://www.findevgateway.org/sites/default/files/ 23 “Statement by the FATF President: COVID-19 publications/submissions/72016/Emergency%20 and measures to combat illicit financing.” Financial Disbursements%20during%20COVID-19_20200718.pdf. Action Task Force (FATF). April 1, 2020. https://www. 33 Diokno, Benjamin E. “The Philippines - Becoming fatf-gafi.org/publications/fatfgeneral/documents/ an Economic Champion in the Post-COVID World.” statement-covid-19.html. Bank for International Settlements. August 24, 2020. 24 Ghana, BCEAO, Egypt, Pakistan, Philippines, https://www.bis.org/review/r200825a.htm. Sri Lanka, and Guinea. https://www.gsma.com/ 34 BSP MEMORANDUM NO. M- 2020-015, “Subject : mobilefordevelopment/region/sub-saharan-africa- Relief Measure on Customer Identification to Manage region/tracking-mobile-money-regulatory-responses- the Corona Virus Disease 2019 (COVID 19) Situation.” to-covid-19-part-2/. https://s3.amazonaws.com/law-media/uploads/1010/ 25 Albania, Bahamas, BCEAO, Egypt, Ghana, India, 94071/original/BSP%20Memorandum%20No.%20M-2020- Mexico, Pakistan, Philippines, Sri Lanka. http://pubdocs. 015.pdf?1585621556. worldbank.org/en/914541592327985320/Annex-II- 35 Angelow, Weselina, and Celine Stevens. “Turning Crisis Compendium-of-responses-for-the-provision-of- Into Opportunity: Advancing Digital Financial Inclusion payment-services-during-the-COVID-19-crisis.pdf. in Morocco.” FinDev Gateway. September 14, 2020. 26 CGAP has recently issued a report outlining how https://www.findevgateway.org/blog/2020/09/turning- G2P payments, by involving a trusted entity as one part crisis-opportunity-advancing-digital-financial- of the payment, can reduce risk and enable the use of inclusion-morocco. simplified CDD.https://www.cgap.org/sites/default/files/ 36 “Scaling Up Social Assistance Payments as Part of publications/2020_07_COVID_Briefing_Rapid_Account_ the COVID-19 Pandemic Response.” World Bank. 2020. Opening.pdf. https://pubdocs.worldbank.org/en/655201595885830480/ 27 “Bank of Ghana Monetary Policy Committee Press WB-G2Px-Scaling-up-Social-Assistance-Payments-as-Part- Release.” Bank of Ghana — Central Bank. March 18, 2020. of-the-Covid-19-Pandemic-Response.pdf. https://www.bog.gov.gh/wp-content/uploads/2020/03/ 37 Petrova, Gery. “Namibia — UBI Success and Institutional MPC-Press-Release-March-2020-3.pdf. Failure.” BIEN — Basic Income Earth Network. July 14, 2020. 28 Hamilton, Alex. “Central Bank of Egypt Pilots https://basicincome.org/news/2020/07/namibia-ubi- EKYC Solution for Financial Inclusion.” FinTech success-and-institutional-failure/. Futures. January 29, 2020. https://www.fintechfutures. 38 Zetterli, Peter. “Four Ways Microfinance Institutions com/2020/01/central-bank-of-egypt-pilots-ekyc- Are Responding to COVID-19.” CGAP. August 13, 2020. solution-for-financial-inclusion/. https://www.cgap.org/blog/four-ways-microfinance- 29 Ortega, Daniela. “Massive Shift to Digital Wage institutions-are-responding-covid-19. Payments in the RMG Sector in Bangladesh : Garment 39 “Challenge 2025: Where Are We?” World Council of Worker Diaries.” Garment Worker Diaries. May 2020. Credit Unions. November 4, 2020. https://www.woccu.org/ https://workerdiaries.org/massive-shift-to-digital- challenge_2025?post_id=2068#2068. wages-payments-in-the-rmg-sector-and-other-updates- from-bangladesh/.

CENTER FOR FINANCIAL INCLUSION 22 40 Marchesan, Ricardo. “Registration for aid of R $ 600 50 “Covid-19 and Fintech: Myanmar’s Chance to cannot be made at the agency, says Caixa.” UOL Economia: Expand Financial Inclusion?” Oxford Business Group. Encontre Orientações E Notícias Sobre Economia. September 23, 2020. https://oxfordbusinessgroup.com/ April 24, 2020. https://economia.uol.com.br/noticias/ news/covid-19-and-fintech-myanmars-chance-expand- redacao/2020/04/24/cadastro-auxilio-emergencial-r-600- financial-inclusion. coronavoucher-agencias-caixa.htm. 51 Johnson, Drew. “A Case Study in Interoperable 41 Paiva, Fernando. “São Paulo Usará PicPay Para Payments in Myanmar’s Microfinance Industry Part 2: Pagar Auxílio Merenda a 732 Mil Estudantes.” Mobile Standardizing Digital Loan Repayments.” ModusBox. Time. April 9, 2020. https://www.mobiletime.com.br/ September 9, 2020. https://modusbox.com/a-case-study- noticias/08/04/2020/sao-paulo-usara-picpay-para-pagar- in-interoperable-payments-in-myanmars-microfinance- auxilio-merenda-a-732-mil-estudantes/. industry-part-2-standardizing-digital-loan-repayments/.

42 Reuters. “Brazilian PicPay Reaches 52 Feliba, David. “In Pandemic, Brazil’s Nubank Ramps 20 Million Customers.” U.S. News. May 12, 2020. Up Expansion Strategy.” S&P Global. May 18, 2020. https://www.usnews.com/news/technology/ https://www.spglobal.com/marketintelligence/en/news- articles/2020-05-12/brazilian-digital-wallet-picpay- insights/latest-news-headlines/in-pandemic-brazil-s- reaches-20-million-customers. nubank-ramps-up-expansion-strategy-58565385.

43 “Paositra Money: Lancement Du Tosika Fameno 53 Faridi, Omar. “Brazil Is Reportedly Planning to Pour Antananarivo.” MPDTN.gov. April 26, 2020. Conduct IPO for Caixa Econômica Federal, Which https://www.mptdn.gov.mg/?p=1974. and “Madagascar: Has Built a Digital Banking Platform During COVID-19 Paositra Money — Gratuité Du Retrait Et Du Transfert.” Crisis.” Crowdfund Insider. October 21, 2020. AllAfrica.fr. May 26, 2020. https://fr.allafrica.com/ https://www.crowdfundinsider.com/2020/10/168214- stories/202005261023.html. brazil-is-reportedly-planning-to-conduct-ipo-for- caixa-economica-federal-which-has-built-a-digital- 44 Thakur, Pradeep. “India Post Delivers Rs 412 Cr banking-platform-during-covid-19-crisis/. Cash in Doorstep Banking Revolution.” The Economic Times. April 25, 2020. https://economictimes.indiatimes. 54 “Caixa Auxílio Emergencial: Aplicativos Falsos Imitam com/industry/banking/finance/banking/india-post- Programa Original.” Gazeta Do Povo. August 4, 2020. delivers-rs-412-cr-cash-in-doorstep-banking-revolution/ https://www.gazetadopovo.com.br/republica/breves/ articleshow/75369897.cms. aplicativo-caixa-auxilio-emergencial-programas-falsos/.

45 “South Africa Post Office Unveils Cashless ATM 55 https://id4d.worldbank.org for Sassa Social Grants.” TechFinancials. May 4, 2020. https://www.techfinancials.co.za/2020/05/04/south-africa- 56 https://www.worldbank.org/en/programs/g2px post-office-unveils-cashless-atm-for-sassa-social-grants/. 57 https://www.worldbank.org/en/topic/socialprotection 46 Azad, Shams. “Cash Transfers to Support Families 58 https://www.betterthancash.org During the COVID-19 Pandemic.” BRAC. September 1, 2020. https://blog.brac.net/cash-transfers-to-support- 59 https://pmjdy.gov.in/ families-during-the-covid-19-pandemic/. 60 Theis, Sophie, Victoria Johnson, Rahmi Yunaningsih, 47 “COVID-19 G2P Cash-Transfer Payments. Country and Elwyn Panggabean. “Indonesia’s Largest Cash Brief: Ecuador.” World Bank. http://pubdocs.worldbank. Transfer Program Pivoted Quickly in Response to Covid-19. org/en/129771593464547099/World-Bank-G2Px-COVID19- Can Beneficiaries Keep Up?” Women’s World Banking. Ecuador-Brief.pdf. October 7, 2020. https://www.womensworldbanking.org/ insights-and-impact/indonesias-largest-cash-transfer- 48 “Social Assistance Payments in Response to COVID-19: program-pivoted-quickly-in-response-to-covid-19/. The Role of Donors.” CGAP. September 2020. https:// www.cgap.org/research/publication/social-assistance- 61 Kapil, Shagun. “COVID-19 Relief Didn’t Reach Jan payments-response-covid-19-role-donors. Dhan A/cs of Many Women: Survey.” Down To Earth. July 3, 2020. https://www.downtoearth.org.in/news/ 49 “Myanmar National Payments System Strategy governance/covid-19-relief-didn-t-reach-jan-dhan- 2020–2025.” Central Bank of Myanmar. May 2020. https:// a-cs-of-many-women-survey-72113. www.cbm.gov.mm/sites/default/files/nps_final1.pdf.

CENTER FOR FINANCIAL INCLUSION 23 The Center for Financial Inclusion (CFI) works to advance inclusive financial services for the billions of people who currently lack the financial tools needed to improve their lives and prosper. We leverage partnerships to conduct rigorous research and test promising solutions, and then advocate for evidence- based change. CFI was founded by Accion in 2008 to serve as an independent think tank on inclusive finance. www.centerforfinancialinclusion.org @CFI_Accion