Accelerating digital payments through whole-of-government approach

In India, a government workfare programme has tapped into digital payments to reach over 100 million people.

Notably, research has found that directly paying benefits into women’s own bank account – not through the male household head – increases their financial control and incentivises them to find employment compared to those paid in cash.

For the Better Than Cash Alliance, it is not enough to just work with digital or financial stakeholders, including the finance ministry, digital ministry or central banks, to ensure digital payments are inclusive.

The needs of those excluded from digital payments and disadvantaged groups in society, such as women, often overlap.

For example, the gender gap in access to digital technology and financial literacy may result in women not having access to digital payments.

The challenges are multifaceted across both technical and social domains – making it hard for digital payments fall on one agency to address all the problems.

These can range from issues surrounding digital infrastructure and internet connectivity to mixed consumer perceptions regarding payment modes and user-friendliness of the platforms.

This is why advocacy groups like the Alliance contributes to public policy by “connecting the dots in the ecosystem,” said its Asia-Pacific Head, Prerna Saxena.

Based within the United Nations (UN), the Alliance is a global partnership of 80 governments, private companies and international organisations that aims to accelerate the transition from cash to digital payments and achieve sustainable development goals.

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Interagency collaborations to address intersectional needs

Saxena shared an example of the Alliance’s engagement with both India’s Ministry of Finance and the Ministry of Women and Child (Ministry of WCD) during last year’s India G20 presidency to advance inclusive digital public infrastructure.

Previously, the Alliance focused on technical discussions with only with the Ministry of Finance regarding the technical aspects of digital payments infrastructure.

The Alliance later recognised the need to also engage with the Ministry of Women and Child Development to address the unique financial challenges faced by women.

Saxena shared that the Alliance has played an active role in advocating for the Indian government to support women in securing jobs, participating in the formal economy, and building up childcare facilities to expand opportunities for women’s employment.

Not coincidentally, this year’s Indian national budget saw an almost 40 per cent increase in the budget allocated towards women from the previous year – the highest increase in the last decade, Hindustan Times previously reported.

“This cannot be done by engaging solely with one stakeholder. It has to be a whole ecosystem approach,” she added.

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Identifying areas for intervention

With a small team of approximately 30 people, the Alliance works in a targeted manner to identify specific areas for intervention through action research, as well as pilots designed to test the potential to scale.

Upon the requests of governments, the Alliance also runs country diagnostics on digital payments landscape, having worked with countries like the Philippines, Ghana, Bangladesh and more.

Once the idea proves to be scalable, the Alliance works with the government and private sector stakeholders to proceed with large-scale implementation.

To monitor progress over time, the Alliance relies on the outreach numbers and outcomes shared by the stakeholders.

Digital public infrastructure requires an integrated approach

The Alliance is now focusing on the digital public infrastructure (DPI) space.

“Most people have now realised that interventions in silos are not helping to make enough progress [in digital payments],” she said, adding that the three pillars of DPI – digital identity, digital payments and data exchange – go hand-in-hand.

“[The pillars] are leveraged in a way that they not only enhance financial inclusion, but also achieve sustainable development goals (SDGs) like access to education, healthcare and promote agricultural productivity,” she explained.

Saxena shared that the Alliance is partnering with India’s Ministry of Electronics and Information Technology to explore why digital payments were not taking off in Northeast India, despite its surge in the rest of the country.

Through the partnership, they have been able to introduce the Payments Infrastructure Development Fund (PIDF) to encourage more service providers to adopt digital payment modes, and to provide incentives for the private sector to build more facilities to enable digital payments in Northeast India.

The Unified Payments Interface (UPI) has been a game changer in India to boost digital payments, she added.

GovInsider previously published a Special Report on DPI exploring how DPI is driving digital development in different countries.

Cyber risks and frauds emerging threats

Saxena shared that increased cybersecurity incidents, including frauds and data leakages, are posing a threat to trust in digital payment systems.

The Alliance recently led a closed-door discussion among its members to explore how artificial intelligence (AI) and machine learning could be leveraged to mitigate fraud risks and enhance users' awareness about the risks.

“This allows for real-time learning rather than broadcasting to a larger audience, and the Alliance facilitates such exchanges among its members to support these sensitive discussions,” she explained.

In contrast, Saxena shared that the Alliance hosts open-door sessions on topics like DPI, where the Alliance aims to disseminate knowledge and raise awareness around new developments.