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How We Built a Global Action Agenda to Enable Digital Payments in Humanitarian Response

Authors: Sophie Tholstrup, Valerie Bemo, David Lubinski, Jamie M. Zimmerman, Chrissy Martin

8 August, 2017

In recent years, digital payments have emerged as an essential, high-impact tool for humanitarian response. They can enable humanitarian responders to quickly reach people with assistance, and in ways that provide both short- and long-term benefits to those in need, such as access to safe and portable financial and identity services. In practice, however, digitizing aid in humanitarian response has been riddled with challenges, such as difficulties complying with local and international Know Your Customer (KYC) regulations, data privacy and protection issues, the lack of telecommunications infrastructure in many areas, and the proliferation of products and solutions that may or may not work together towards a cohesive payments infrastructure.

Today, we face record numbers of global crises and displaced populations. This need, and the commitments made regarding the increased use of cash through the Grand Bargain at the World Humanitarian Summit, spur us to better understand how we can use digital channels to reach those in crisis. In the spirit of innovation and improved policies, practices and systems, the humanitarian, private sector, and development communities have come together to improve the use of digital payments. Here is our story of how 18 months of multi-stakeholder dialogue and collaboration has resulted in a Global Action Agenda for Digital Payments in Humanitarian Response.

 

Starting with a common vision

In February 2016, USAID convened 25 humanitarian and financial inclusion experts in Barcelona, Spain to answer the question: how can digital payments be leveraged to prioritize emergency needs first and, at the same time, build a bridge towards long-term economic, social, and financial inclusion? The group defined eight principles (referred to as The Barcelona Principles for Digital Payments in Humanitarian Response), which set out what humanitarian actors should seek to achieve as they design and implement digital payments programs.

In complement to this, at the World Humanitarian Summit, the World Economic Forum committed to convene representatives from 18 humanitarian and private sector entities to understand how to best engage private sector actors in jointly delivering digital payments for the most vulnerable. The resulting Principles for Public-Private Cooperation in Humanitarian Payments, launched at Davos, Switzerland in January 2017, seek to put in place standards to guide more strategic and productive partnership between private sector providers and humanitarian actors before and during crises in order to design effective digital payments programs.

Understanding the barriers to this vision

Together, these two set of principles represent a unified and clear vision from the humanitarian, financial inclusion, and private sector communities. However, humanitarian agencies still struggle at times to operationalize this vision. In response, there are a number of sector-wide efforts underway to better understand the barriers to digital payments in humanitarian crisis contexts. For example, CaLP’s Digital Payments Working Group and the Mercy Corps-hosted Electronic Payments Learning and Action Network (ELAN) seek to convene partners who use digital payments to gather best practice and identify and address common challenges. In the context of the German G20 Presidency, the Alliance for Financial Inclusion and the Global Partnership for Financial Inclusion (GPFI) are promoting access to adequate financial services for forcibly displaced persons through identification of common challenges. In addition, recent reports from the IRC, CGAP, GSMA, and UNCDF showcase the many efforts from a variety of different stakeholders to analyze the challenges and opportunities in this space.

In 2016, The Bill & Melinda Gates Foundation partnered with Ericsson to explore whether a standards-based, off-the-shelf digital payment system can meet the needs for humanitarians to send digital payments to their recipients. Ericsson analyzed the resulting functional requirements for sending digital payments to  recipients in a several crisis scenarios against their existing mobile wallet system and created a prototype. Through consultations with WFP, UNHCR, Mercy Corps, Save the Children, and IRC, the prototype revealed that to a large extent a commercial, off-the-shelf mobile wallet system could meet the technical requirements from the humanitarian community.  However, a set of 16 common barriers, both operational and regulatory in nature, were identified that slow or prevent  the implementation of digital payments in alignment with the vision and were summarized in the recent Gates foundation report.

Another concrete initiative that resulted directly from the development of the Barcelona Principles is USAID’s ongoing work with NetHope, Mercy Corps, and Catholic Relief Services (CRS) in Mali, the Democratic Republic of the Congo (DRC), and Somalia to address one of the eight principles: the need for digital cash preparedness.  Organizations need time to analyze available payment services, establish private sector partnerships, and conduct tabletop exercises that simulate the recipients’ experience (to name a few examples) in advance of a crisis situation in order to deliver cash aid into digital financial accounts. This preparedness and testing is critical to ensuring that digital payments can deliver aid quickly while still acting as a bridge to financial inclusion and resilience in the most fragile environments.

 

Defining the path forward

With this collective vision and understanding of the barriers, DFID, USAID, BMZ, and the Gates Foundation convened 36 humanitarian organizations, donor institutions, commercial financial service providers, and financial inclusion experts in June 2017 in London to define a path forward.  The group set out in pursuit of the following problem statement: What strategies would enable the use of digital payments in humanitarian response contexts such that they improve humanitarian response outcomes, and create linkages to long-term resilience and financial inclusion? The resulting draft 2017 Action Agenda for Digital Payments in Humanitarian Response contains the agreed upon highest priority barriers and actionable solutions to achieve the vision espoused in the Barcelona and WEF Principles.

This is a rapidly-evolving area: in order to keep pace and achieve our collective vision, the broader stakeholder community needs to join us on this journey. To that end, we welcome feedback and comment from on the Action Agenda, which will inform a final version. We especially welcome your thoughts on how your organization can take action to push forward this vision. The final version of the action agenda, as well as the Barcelona and WEF Principles, will be hosted in an external entity to take this work forward and catalyze progress against the action agenda. To provide feedback, please click here to complete the survey before 18 August.

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