Robert Meloche and Shelley Spencer

Five Digital Payment Innovations with the Potential to Transform Development: Visa and NetHope grant recipients illustrate the power of digital payments

Development organizations have begun to embrace digital payments not only in emergency relief but also in the areas of health, education, food security, poverty alleviation and as a means to promote financial inclusion. Many of these efforts hold great promise – and can serve as a springboard for new programs still in development.

To help expand the impact of organizations working in these areas, the Visa Innovation Grants program is supporting the incubation and adoption of programs that utilize electronic transfers and/or payments. In 2013, Visa and NetHope provided five leading nonprofit humanitarian and development organizations with USD $100,000 grants, and over the course of the past 15 months each has demonstrated the diverse and powerful ways in which digital payments can enhance development and relief efforts. Whether by fostering financial inclusion, empowering communities or improving organizations’ abilities to realize their respective missions, digital payments are improving lives around the world. Read on to learn how.

1. Improving the health of mothers and children through more secure and reliable payment to frontline health workers

With Pathfinder International’s mHMtaani project (Swahili for “mobile health for my community”), community health workers in Kenya’s coastal region use a mobile phone application to register clients, provide health services and upload data to the cloud so program managers can monitor and analyze patient care and outcomes. mHMtaani mobile phones also provide a secure and efficient way to pay their field team, including a “pay for performance” (P4P) bonus program for salaried employees who meet or exceed service goals. Along with improving the transparency and quality of health services, the program is improving health outcomes – including more births aided by skilled attendants. Since June 2014, the community of mothers supported by the program has grown by 26 percent and the number of orphans and vulnerable children receiving care has increased by 18 percent. While the program is still in its pilot stage, Pathfinder is prepared to expand the P4P model to other mobile health projects, locally and beyond.

2. Expanding access to health services with a socially-responsible health credit card

Ecuador has a large unmet need for financing out-of-pocket health costs. That’s why Freedom from Hunger is working with a local microfinance institution, health provider network and payment settlement company to design and pilot a health credit card account. The health credit card will help microfinance clients access savings and loans to meet medical costs not currently covered by an existing pre-paid health program (for example, specialists, surgeries and inpatient hospital expenses). The credit card, which clients will be able to use at point-of-service devices within the health provider network’s medical facilities, will provide current and revolving credit lines, deferred payments with interest up to 23 months, and an average credit limit of USD $300. Most importantly, the card will allow clients to more easily manage their health and financial assets simultaneously, thereby promoting increased use of health care services.

3. Providing faster, safer, more transparent and more efficient emergency aid with electronic cash transfers

For families displaced by a natural disaster or conflict, cash transfers are often more useful than “in kind” assistance like food or blankets. With their inherent flexibility and respect of individual recipient needs, electronic cash payments for immediate aid are increasingly popular among both providers and recipients. Each year, the IFRC responds to an average of 17 disasters throughout the Americas, and cash transfer programs are increasingly helping beneficiaries to meet their basic needs and replace essential assets while also supporting the recovery of local markets. To increase the cost-efficiency, speed and impact of this assistance in the region, the IFRC Americas Zone Office is developing a quickly-deployable, pre-paid electronic card for cash transfers. This system has the potential to be replicated on a global scale, bringing a new level of impact to humanitarian aid.

4. Bringing formal financial services to smallholder rice farmers in Ghana through branchless banking

With rice consumption steadily on the rise in Ghana, local production has become increasingly important. In collaboration with Global Agri-Development Company Ltd. (GADCO), a major rice producer, miller and provider of extension services, Agribusiness Systems International (ASI) is introducing a more efficient, secure payment system for over 700 rice farmers in Ghana. Using Ghanaian mobile money product Tigo Cash, these farmers can instantly send and receive secure payments. Thanks to this cheaper, traceable and transparent payment method, and financial literacy training, farmers can more confidently and efficiently track their purchases, payments and savings. The mobile payment platform was designed as a sustainable endeavor that would continue to grow after project activities concluded. With Tigo Cash now recognizing smallholder farmers as a viable customer base, we have every belief that the pilot is just the beginning.

5. Increasing smallholder farmers’ income and productivity with mobile lending and payment products

In Bali Province, Indonesia, Mercy Corps’ AgriPay program is working with five farmer cooperatives to provide access to digital payments and financial services products (including loans) via microfinance institutions (MFIs). Over the last year, Mercy Corps has worked with 10 MFI partners directly serving farmers with AgriPay products. Agri-payments are already helping to increase overall farm production, serving more than 6,000 farmers, 47 percent of whom are women. Over 19,000 transactions have been made in less than three months. Mercy Corps plans to scale the program nationwide, and within five years expects to reach an estimated 1.2 million indirect beneficiaries.

Visa and NetHope will continue to encourage and support the innovative use of electronic payments by development and nonprofit organizations. Last week, the Visa Innovations Grant program awarded USD $250,000 grants from Visa to two more development organizations pushing the boundaries around the innovative use of digital payments in emerging markets. We are pleased to announce that this year’s grants have been awarded to Naya Jeevan and World Vision for projects in Mexico and Tanzania – countries not touched by the first round of Innovation Grants. Our hope is that their work will add to the progress outlined above, illuminating valuable information for others interested in expanding the use of e-payments and advancing the broader digital financial services sector.

Robert Meloche is Director of Global Financial Inclusion at Visa. Shelley Spencer leads NetHope’s Payment Innovations consulting team.

Agriculture, Health Care
digital payments, financial inclusion, microfinance, smallholder farmers