Shifting from Cash to Electronic Payments: Nuts and Bolts 27 March 2014, Nairobi

Transcription

1 PAYMENT INNOVATIONS Shifting from Cash to Electronic Payments: Nuts and Bolts 27 March 2014, Nairobi

2 Welcome! Steve Olive, PhD. Deputy Mission Director, USAID/ Haiti and Steering Committee Member for the Haiti Mobile Money Initiative. Incoming DMD East Africa Hamilton McNutt, Program manager for NetHope payments innovation team Marcella Willis, Senior program manager for NetHope payments innovation team

3 Introduction: Cash to Electronic Payments

4 USAID s Commitment to Electronic Payments Dr. Rajiv Shah, USAID Administrator Sept. 2013

5 Defining Electronic Payments Card Based Payments Payment Type Yes No Mobile Payments Bank Transfers (EFT/ACH) Physical Cash Checks

6 Defining E-Payments: Bulk Payments Source: CaLP E-Transfers in Emergencies: Implementation Support Guidelines

7 Defining the types of payments Operational Payments: Payments that involve non-beneficiaries: i.e. staff salaries, vendor costs, staff travel expenses, consultant costs, fringe payments Programmatic Payments: Payments that involve beneficiaries of your project or organization: i.e. cash transfers, loans (MFI), training participant per diems, small holder farmer payments, clinic payments, school fees, etc

8 Why e-payments Matter 1 Foster cost savings and improve aid efficiency Increase transparency and reduce leakage & waste Reduce security risks to program staff Improve access to financial services for poor & unbanked 5 Catalyze new and innova9ve financial products for the poor and unbanked

9 How is USAID supporting e-payments? Direct funding to technical assistance programs that foster the development and use of e- payments Support to regulators and suppliers of e- payments that leads to a more robust payments infrastructure Encourage a transition to e- payments by USAID Implementing Partners Tools and training that provides guidance on how to make a transition to e- payments Incorporating e- payments into program design and procurements

10 Examples of USAID s Support to e-payments USAID/Afghanistan: Reduced Regulatory Barriers to Mobile Money USAID/Bangladesh: Small Grant Funds USAID/Philippines: SIMM II project, Procurement language adjustments USAID/Haiti: Cash for work vouchers, payroll payments, Govt vouchers for school fees, future Govt vouchers for safety net & ag inputs USAID/Malawi: National Payments Working Group support, piloting e-payments USAID/Indonesia: e-mitra project, Regulatory support

11 Implementation Success and Process Key Benefit Numbers Key Lessons in Process Saved US$ 4.40/voucher Went from 3 staff to no staff needed on site (Haiti) Reduced financial staff time Reduced costs by 90% per training (Kenya) 2 times faster payment delivery Long term savings of US $ 1.10/voucher (Haiti) Average travel distance reduced from 4 km to.9 km Long term savings of 31%/ transaction (Niger) Senior leadership is key to drive change Consult internal and external auditors during SOP design Ensure thorough training of both staff and recipients SOP should not differ from existing procedures Begin by piloting internally first Do your due diligence when in negotiating with service providers

12 The Journey from Cash to Electronic Introduction Step 1 Internal & External Analysis Steps 2-5 Implementation Steps Steps from cash to electronic payments

13 Toolkit: Journey from Cash to Electronic What s inside? Tools Case Examples C2E Toolkit Knowledge Resources Online Media

14 Introduction Step 1 Discovery of Electronic Payments

15 Internal & External Analysis Steps 2-5 How to make an informed decision Scope cash payment streams Analyze costs of payments (cash vs. electronic) Assess market ecosystem Evaluate service provider products & services

16 Implementation Steps 6-10

17 Implementation Steps ) Process Integration: adjust standard operating procedures and refine processes to scale use 7) Staff Endorsement, Training, and Internal Trial 8) Recipient Training and Promotion and Trial/Pilot 9) Grand Plan & Roll Out: final preparations and plans to be prepared for roll-out and monitoring 10) Scale Up and Out: extend the use of electronic payments more broadly across different projects or regions or sectors

18 First Steps to Being a Electronic Payments Champion Watch for the soon-to-be released Toolkit: A Journey from Cash to Electronic and learn more about the benefits of electronic payments at: Contact the Payment Innovations team directly at Paymentinnovations@nethope.org to discuss concrete ways the PI team can support your organization to transition from cash to electronic. Learn how to speak CFO and internal auditor! Learn about perceived and real risks, and ways to mitigate these risks at: Then seek internal buy in with your CEO, finance staff, audit team, program managers.

19 Thank You! PAYMENT INNOVATIONS

20 Next up. 1. Cash disbursement simulation 2. Electronic bulk payment demonstration

21 Annex: Key Tools for Reference only

22 Internal & External Analysis Key Tools Steps 2-5 Key Tool: Cash and Electronic Payments Scoping Survey Where is cash being used in programs and operations, and is it a problem? _MappingPaymentStreams_SurveyTool.pdf

23 Scoping Cash Within Your Organiza9on Opera:onal Defini:on: Funds that go to non- beneficiaries i.e. employees, consultants, vendors. Programma:c Defini:on: Funds that go to par9cipants of your project i.e CCT, loan, or training recipients, subsidies, etc.

24 Internal & External Analysis Steps 2-5 Key Tool: Costing Utility Tool Analyze and compare financial and non-financial costs associated with cash management and e-payments Payment_Innovations_Costing_Utility_Analysis_Tool.zip

25 Assess and Quantify Costs Associated with Cash Transparency Security Staff morale Potential for fraud Non-Financial Costs Financial Costs Baseline Cost of Cash Costs associated with a transition to electronic payments Costs associated with the long term use of electronic payments Comparing before and after results for both Non-Financial & Financial Costs Establishing Break even point for before and after costs Summary

26 Internal & External Analysis Steps 2-5 Key Tool: Market Assessment

27 Internal & External Analysis Steps 2-5 Key Tool: Provider Capability Due Diligence Assess provider capabilities and get a better understanding of products offered. Service provider due diligence; Internal controls/access points/product requirements

28 Service Provider Considerations Component Areas of Consideration Information Sources Mobile and Agent Networks Bulk Payment Product Review/Internal Controls 1. Geographic Coverage 2. Liquidity 3. Training 4. Qualification Criteria 5. Power sources 1. Online interface 2. How off net transactions are processed 3. Maker/Checker capabilities 4. Reporting/Documentation 5. Customer Identification/ Registration (KYC) 6. Transaction limits Customer Service 1. Cooperate account vs. regular client account 2. Dedicated account manager 3. All troubleshooting in one place End User Considerations when engaging service providers 1. Literacy rates 2. Service provider preference 3. Training opportunities 4. Phone Ownership 1. Mobile Network Operators (MNO) 2. Program Participant/ employees in the field 3. Agent visits 1. MNO 2. Third Party Providers 3. Financial Documentation reference tool 1. Other clients 2. MNO 3. Third party providers 1. Program staff 2. MNO 3. Third Party Providers 4. Program participants

29 Implementation Steps 6-11 Key Resource: Standard Operating Procedures Guidance Look at the process flow - electronic payments are not that different when it comes to SOPs.

30 Standard Operating Procedure Example Verify names and numbers against database and with recipients Alert field program officers of date and 9ming of payments YES Request for payment ini9ated by program or administra9ve team NO Collect names and numbers at event (e.g. workshop/training) Verify with par9cipants Send to Pathfinder Head Office via internet Process payment Convert to CSV file Upload to mpesa Prepare payment voucher and entry into accoun9ng system Alert program officer on site that payment ini9ated Remind program officer to collect signatures and confirm payments (via phone), Verify forms received Send file to payment authorizer for final authoriza9on