Brick, mortar banks not dispensable — WB
Many people still hesitate to use e-wallets due to several reasons: distrust in and low literacy on modern technologies and lack of tools or establishments for cashing out e-money
Public access must be ensured to both e-wallets and physical banks for faster acquisition of cash aid under government-to-person payment or G2P scheme for its poverty amelioration programs, the World Bank said.
“While having a better experience with digital payments (as opposed to cash payments) has been documented among many digital government-to-payment recipients, it is not a guarantee,” the World Bank said in its blog published Friday.
The insight was part of the World Bank’s G2P study conducted in Morocco, Bolivia, Rwanda, Mali and the Central African Republic.
The application of the outcome of the study, however, covers most developing nations shifting to digital banks that offer huge promises of financial inclusivity.
The global institution said many people still hesitate to use e-wallets due to several reasons: distrust in and low literacy on modern technologies and lack of tools or establishments for cashing out e-money.
Waiting time differs
“For instance, in the Philippines, recipients had very different experiences with waiting time for the cash depending on the access point used,” the World Bank said.
Based on data from the second round of the Covid-19 Social Amelioration Program, the World Bank, however, said beneficiaries waited 40 percent shorter for their cash aid using digital payments.
Still, the World Bank said the waiting time could be worse for communities in areas with “scarce” ATMs or financial agents.
Consequently, benefits from cash aid are offset by travel costs to the nearest ATM or bank.
It added certain communities need to first experience services from traditional banks or tools so they can shift to e-wallets more easily.
“There could also be a range of recipient-specific challenges, such as their digital and financial literacy. Indeed, practitioners need to carefully design the rollout of digital G2P payments, focusing on the specific needs of users,” the World Bank said.
It shared that in Bolivia, for example, some communities there do not use QR-code or mobile payments, and banks and ATMs are far from the affected residents.
On the other hand, recipients in Mali are familiar with e-money accounts and the country has widespread banks and ATMs.
The Department of Social Welfare and Development recently started transferring the delivery of cash aid to e-wallets of Pantawid Pamilyang Pilipino Program or 4Ps beneficiaries.
This provides cash subsidies for food, education and health of poor families.
DSWD Assistant Secretary for Strategic Communications Romel Lopez said the country already has numerous merchants accepting e-wallet payments.
He added that 4Ps officers have been conducting the Digital Financial Literacy Program in five regions namely, Northern Mindanao, Eastern Visayas, Bicol, Western Visayas and Caraga.
The Bangko Sentral ng Pilipinas said it will soon release a report on the use of digital retail payments.
BSP Deputy Governor Mamerto Tangonan reported digital payments accounted for 42.1 percent of all retail payments in 2022 from one percent in 2013. “I believe we reached our 50 percent target by the end of 2023,” he said.