G2P payments: We can do this!

After the private sectors overwhelming success in Person to Person (P2P) transfers in the last two years, it is about time the government payments of billions of rupees in salaries, pensions and welfare payments - characterised by delays, leakages, high administrative overheads and transaction costs - be serviced under the branchless banking (BB) umbrella too.
To aid government to persons (G2P) payments in Pakistan, the State Bank of Pakistan, in association with UK Aid and World Banks Consultative Group to Assist the Poor (CGAP), organised a two-day branchless banking conference on G2P payments this week.
The hallmark of the conference was the launch of a GBP10 million Financial Innovation Challenge Fund (FICF), an effort towards SBPs implementation of the UKaid sponsored Financial Inclusion Programme. FICF is aimed at helping the financial sector reach the excluded with use of innovations. G2P payments are included in the first challenge round of the fund.
Apart from the FICF, this conference was remarkable in that the stakeholders, across the G2P payments value chain were able to develop a consensus on issues that need to be addressed before a nationwide rollout of G2P payments through the branchless banking platform.
It was agreed that educating the clients (a term used for person in G2P) on benefits and methodology of the G2P payment systems and making them security-conscious is in the interest of all the stakeholders.
Coordination among enablers and service providers is of paramount importance for the success of local G2P payments. It was felt that the choice of alternate delivery channels such as mobiles phones, internet, ATMs, POS terminals, telcos franchises and third-party agent outlets, should be left to the clients preferences.
It was also recognised that uniform G2P standards and regulations would have to be devised in the areas of financial reporting and reconciliation, selection criteria, client identification and authentication, performance monitoring and control of the agent network, inter-connectivity and inter-operability.
The participants advocated SBP to assume the roles of coordinator of action research on G2P payments, convener of working groups and consultative workshops, and a matchmaker between government needs & demands and private sectors capacity to fulfil the same.
G2P payments service is a huge business opportunity. There are, currently, 3 million Benazir Income Support Programme (BISP) beneficiaries (expected to reach 6 million in June 2011), over 2 million government servants and a federal pension payroll of 250,000 retirees.
The G2P payments platform has been kept open to all the banks and telecom players. Nadra made it clear during the conference that it would keep its 6,000 strong agent network open to use for all service providers. However, it is the existing P2P branchless banking players who will have a clear head start, leveraging their expertise and existing agent networks.
United Bank Limiteds (UBL) experiences with BISP, World Food Program and IDP-related assistance are eminent. In last eight months, UBL has disbursed over Rs30 billion in flood related G2P assistance to 2.8 million flood affected people through Watan cards, according to Abrar Mir, Head of UBL branchless banking. Omni, UBLs flagship BB product, has its own extensive agent network which could be employed in any G2P service.
Similarly, Easy Paisa will capitalise on its network of over 11,000 agents in 500 cities and towns across Pakistan, through which it has transferred Rs25 billion in some 16 million P2P transfers, mostly remittances since the products launch. Easy Paisa and BISP are collaborating in KP where 16,000 BISP eligible households will be covered by Easy Paisa starting in June 2011.
Mobilink e-Sahulat (for utility bills payment), MCB Mobile, KASB Mobile and HBL-Ufone are also providing branchless banking services. Askari Bank is also eyeing to service the salaries and pension payments to the armed forces via its branchless banking platform.
The G2P payments represent a huge pie with opportunities for everyone.