Buoyed by success in person-to-person (P2P) transfers in branchless banking, the private sector is all set to enter the area of government-to-persons (G2P) payment. The G2P payments territory, however, looks more challenging than P2P transfers.
Deconstructing the term G2P correctly is important. A service provider will have to be cognisant of the two distinct types of clients. At the beginning of the G2P payment chain lies the first type of clients - the government bodies concerned with official payrolls, pensions and welfare payments.
The second type of clients constitute the recipients of government payments, which includes active public servants, pensioners and the poorest among the poor. Ideally, the government bodies would want public welfare flows and payroll payments to be cost efficient and hassle-free for the real beneficiaries.
Within these two disparate ends of the G2P payments spectrum lie various public and private stakeholders such as regulatory bodies acting as enablers, private sector players (especially banks and telcos) as service providers, and third-party networks as indirect touch-points for their clients.
However, dillydallying by the government may drag the launch of the G2P payments service altogether. The Project to Improve Financial Reporting and Auditing (PIFRA) - a World Bank-funded project aimed at improving the public financial system across the Ministry of Finance, Auditor General of Pakistan Revenues (AGPR) office, provincial accountants general and provincial finance departments - is a good example. The project has merely been implemented in AGPR so far.
Openness and cooperation across federal, provincial and district levels is critical for the success of such a project, or else, the project runs the risk of going in a state of limbo. The G2P programmes being run in South Africa, India, Mexico and Brazil offer valuable insights on dealing with such issues.
However, all is not dismal at the governments end. The Benazir Income Support Programmes (BISP) management has, in the recent past, collaborated with UBL for G2P payments and also has an arrangement with Easy Paisa for Khyber Pakhtunkhwa. The fact that its beneficiaries already have around 160,000 active debit cards goes to show the projects success. NADRAs expertise in database management makes its role very crucial for G2Ps success and its coordination with BISP, UBL and the World Food Program in welfare-related G2P transfers as well as with banks and telcos in the P2P branchless banking speaks volumes about the organisations capability.
It is also imperative for service providers to know the unique needs of the G2P payments recipients. Pensioners may have different appetite for technological solutions than the poor, given their differing demographics and interests.
Therefore, the choice of the G2P payment medium is bound to be wide-ranging and not restricted to only one or two delivery channels for these beneficiaries.
Apart from cautious segmentation, extensive social research is important to bring to light what could possibly work for the beneficiaries and what would not, as is client awareness about G2P payments, especially in the areas of usability and fraud prevention.
Besides the government and the beneficiaries, service providers will also have to deal with technology providers and third-party agent networks in their G2P payments ecosystem. But the ultimate game changer lies in shaping orientations of both the payment maker and the beneficiaries.