Many low-income country governments have begun to digitize government-to-person (G2P) payments by making electronic transfers directly into the accounts of individual customers. While digitization has helped to fill the gaps in delivery, further advances are needed. Building modern payments systems can: Improve the customer experience by allowing customers to choose which providers and accounts they use to receive funds; they have a wider array of service points from which to withdraw cash; and they can switch providers. Lower delivery costs for governments and reduce leakage. Introduce incentives to provide good service for financial service providers who must compete for customer business. This Focus Note explores the core idea behind future-ready G2P payments, lays out its advantages and challenges, and describes how governments can create modern G2P payments systems. It draws heavily from ongoing efforts in Bangladesh, India, Kenya, Tanzania and Zambia.
CGAP Focus note