IDEAS home Printed from https://ideas.repec.org/a/oup/wbrobs/v32y2017i2p211-226..html
   My bibliography  Save this article

The Opportunities and Challenges of Digitizing Government-to-Person Payments

Author

Listed:
  • Leora Klapper
  • Dorothe Singer

Abstract

This paper reviews evidence on the benefits and challenges faced by governments migrating from cash to digital (electronic) government-to-person (G2P) payments. When supported by an appropriate consumer financial protection framework, digital payments enable confidential and convenient financial services, which can be especially important for women. By shifting government wages and social transfers into accounts, governments can lead by example. Digitizing G2P payments has the potential to dramatically reduce costs, increase efficiency and transparency, and help recipients build familiarity with digital payments. Digital wage and social transfer payments can also provide the on-ramp to financial inclusion and in many cases the first account that the recipient has in her own name and under her control. However, digitizing G2P payments is not without its challenges. Most importantly, digitization may require significant up-front investments in building an adequate physical payment infrastructure that is able to process such payments, as well as a financial identification system and a consumer protection and education framework to ensure that recipients have safe, reliable, and affordable access to the digital payment system.

Suggested Citation

  • Leora Klapper & Dorothe Singer, 2017. "The Opportunities and Challenges of Digitizing Government-to-Person Payments," The World Bank Research Observer, World Bank, vol. 32(2), pages 211-226.
    • Handle: RePEc:oup:wbrobs:v:32:y:2017:i:2:p:211-226.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/wbro/lkx003
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Catia Batista & Pedro C. Vicente, 2013. "Introducing Mobile Money in Rural Mozambique: Evidence from a Field Experiment," Nova SBE Working Paper Series novafrica:wp1301, Universidade Nova de Lisboa, Nova School of Business and Economics.
    2. Richard Wright & Erdal Tekin & Volkan Topalli & Chandler McClellan & Timothy Dickinson & Richard Rosenfeld, 2017. "Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program," Journal of Law and Economics, University of Chicago Press, vol. 60(2), pages 361-383.
    3. Catia Batista & Pedro C. Vicente, 2013. "Introducing mobile money in rural Mozambique: Evidence from a field experiment," NOVAFRICA Working Paper Series wp1301, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    4. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe & Van Oudheusden,Peter, 2015. "The Global Findex Database 2014 : measuring financial inclusion around the world," Policy Research Working Paper Series 7255, The World Bank.
    5. Dani Rodrik & Mark Rosenzweig (ed.), 2010. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 5, number 6.
    6. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe, 2017. "Financial inclusion and inclusive growth : a review of recent empirical evidence," Policy Research Working Paper Series 8040, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. World Bank [WB], 2018. "The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution," Working Papers id:12735, eSocialSciences.
    2. Josep Maria Raya & Claudia Vargas, 2022. "How to become a cashless economy and what are the determinants of eliminating cash," Journal of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 543-562, December.
    3. Jenny Aker & David A Carroll, 2022. "The State of Digital Financial Services in Francophone West Africa," Working Papers hal-03642499, HAL.
    4. Rajas Saroy & Sakshi Awasthy & Naveen K. Singh & Sonali M. Adki & Sarat Dhal, 2022. "The Impact Of Covid-19 On Digital Payment Habits Of Indian Households," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(Special I), pages 19-42, March.
    5. Asli Demirguc-Kunt & Leora Klapper & Dorothe Singer & Saniya Ansar & Jake Hess, 2018. "Global Findex Database 2017 [La base de datos Global Findex 2017]," World Bank Publications - Books, The World Bank Group, number 29510.
    6. Omika Bhalla Saluja & Priyanka Singh & Harit Kumar, 2023. "Barriers and interventions on the way to empower women through financial inclusion: a 2 decades systematic review (2000–2020)," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    7. Favourate Y. Mpofu, 2024. "Industry 4.0 in Finance, Digital Financial Services and Digital Financial Inclusion in Developing Countries: Opportunities, Challenges, and Possible Policy Responses," International Journal of Economics and Financial Issues, Econjournals, vol. 14(2), pages 120-135, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Asif Islam & Silvia Muzi & Jorge Luis Rodriguez Meza, 2018. "Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania," Small Business Economics, Springer, vol. 51(3), pages 687-708, October.
    2. Ongo Nkoa, Bruno Emmanuel & Song, Jacques Simon, 2020. "Does institutional quality affect financial inclusion in Africa? A panel data analysis," Economic Systems, Elsevier, vol. 44(4).
    3. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    4. Leora Klapper & Dorothe Singer, 2018. "The role of demand-side data - measuring financial inclusion from the perspective of users of financial services," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
    5. Karthik Balasubramanian & David F. Drake, 2015. "Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa," Harvard Business School Working Papers 15-059, Harvard Business School, revised Oct 2015.
    6. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 111, pages 84-96.
    7. Giorgio Nuzzo & Stefano Piermattei, 2019. "Measuring financial inclusion in the main euro area countries: the role of electronic cards," Questioni di Economia e Finanza (Occasional Papers) 504, Bank of Italy, Economic Research and International Relations Area.
    8. Tram, Thi Xuan Huong & Lai, Tien Dinh & Nguyen, Thi Truc Huong, 2023. "Constructing a composite financial inclusion index for developing economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 257-265.
    9. Catia Batista & Gaia Narciso, 2018. "Migrant Remittances and Information Flows: Evidence from a Field Experiment," The World Bank Economic Review, World Bank, vol. 32(1), pages 203-219.
    10. Kennedy Waweru, 2017. "Mobile Money, the Symbolism of Physical Money and Emerging Dynamics in Social Relationships among Low-Income Earners in Kenya," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(4), pages 178-178, March.
    11. Manuela NGABA, 2021. "How does mobile money affect the use of informal remittance channels in Sub-Saharan Africa?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 123-146.
    12. Menyelim M. Chima & Abiola Ayopo Babajide & Alex Adegboye & Segun Kehinde & Oluwatobi Fasheyitan, 2021. "The Relevance of Financial Inclusion on Sustainable Economic Growth in Sub-Saharan African Nations," Sustainability, MDPI, vol. 13(10), pages 1-20, May.
    13. Lashitew, Addisu A. & van Tulder, Rob & Liasse, Yann, 2019. "Mobile phones for financial inclusion: What explains the diffusion of mobile money innovations?," Research Policy, Elsevier, vol. 48(5), pages 1201-1215.
    14. repec:ags:aaea22:335719 is not listed on IDEAS
    15. Cátia Batista & Marcel Fafchamps & Pedro C Vicente, 2022. "Keep It Simple: A Field Experiment on Information Sharing among Strangers [Changing Saving and Investment Behavior: The Impact of Financial Literacy Training and Reminders on Micro-Businesses]," The World Bank Economic Review, World Bank, vol. 36(4), pages 857-888.
    16. Steinert, Janina I. & Zenker, Juliane & Filipiak, Ute & Movsisyan, Ani & Cluver, Lucie D. & Shenderovich, Yulia, 2018. "Do saving promotion interventions increase household savings, consumption, and investments in Sub-Saharan Africa? A systematic review and meta-analysis," World Development, Elsevier, vol. 104(C), pages 238-256.
    17. Wang, Rui & Luo, Hang (Robin), 2022. "How does financial inclusion affect bank stability in emerging economies?," Emerging Markets Review, Elsevier, vol. 51(PA).
    18. Emmanuel Kwablah Apiors & Aya Suzuki, 2018. "Mobile Money, Individuals’ Payments, Remittances, and Investments: Evidence from the Ashanti Region, Ghana," Sustainability, MDPI, vol. 10(5), pages 1-26, May.
    19. Anastasia Cozarenco & Ariane Szafarz, 2023. "Financial inclusion in high-income countries: gender gap or poverty trap?," Chapters, in: Valentina Hartarska & Robert J. Cull (ed.), Handbook of Microfinance, Financial Inclusion and Development, chapter 15, pages 272-296, Edward Elgar Publishing.
    20. World Bank Group, 2016. "Enhancing Financial Capability and Inclusion in Azerbaijan," World Bank Publications - Reports 24955, The World Bank Group.
    21. Orazio Attanasio & Matthew Bird & Lina Cardona-Sosa & Pablo Lavado, 2019. "Freeing Financial Education via Tablets: Experimental Evidence from Colombia," NBER Working Papers 25929, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:wbrobs:v:32:y:2017:i:2:p:211-226.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/wrldbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.