The Business Consultation on cash transfers coordination was organized by the Private Sector Section of the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) on 5 and 6 May 2015 in Geneva. The consultation was held in the margins of a 2-day Learning Event on Cash Coordination, co-hosted by OCHA, the Cash Learning Partnership (CaLP) and the Swiss Development Corporation that brought together over 80 participants from donors, UN agencies, NGOs and the private sector.
The objective of this consultation was to identify issues and recommendations on the future role of the private sector in the coordination of humanitarian cash transfers, and to build and solidify multi-sector networks for improved emergency preparedness and response in cash transfer programming. The outcomes of the consultation are being submitted to the World Humanitarian Summit (WHS).
This consultation was attended by selected participants from the private sector, including Paul Musser, Vice-President from Mastercard, Wolfgang A. Maschek, Vice President from Western Union, Chris Williamson, Senior Manager for Mobile Money from GSMA, Adam Smith, Chief Executive Officer of Squidcard, and Satwik Seshasai, Vice-President from Segovia.
The following key themes and issues emerged from the discussion:
The main issue for greater cooperation is the lack of understanding between the humanitarian community and the financial service providers, particularly the use of appropriate terminology, such as cash transfers or digital payments.
The humanitarian community lacks understanding of the mobile money business model. Mobile money is not only about the technology and handsets, but also about creating the agents’ network that will deliver positive customer experience and meet system-wide liquidity demands. Building agents’ networks is at present the biggest challenge for mobile network operators and requires significant investment.
Moreover, it usually takes 3 to 5 years for mobile money service providers to become profitable.
An increasing number of cash transfer programmes creates a large and valuable volume of datasets, thus increasing the necessity for secure processes and the storage of such data. The data accumulated should be further analysed to better understand the outcomes of cash transfer programmes, in particular the consumption patterns of beneficiaries.
The technical aspect of conducting the payments is relatively simple. Complexities lie in the regulatory environment for financial payments, which is country specific and set by the national central bank.
Before deciding on cash transfer assistance deeper understanding of the needs, the context and the market is needed.
The private sector panel suggested that the humanitarian system must be better prepared for cash disbursement in emergencies. For example, by establishing standard procedures for multi-purpose coordination before the emergency. The system should be led by objectives and have clear leadership. Private sector participants also recognized that one of main obstacles in establishing more effective external partnerships are the “territorial” issues over cash transfers within the aid community.
Participants from the humanitarian community raised the issue of costs in providing cash disbursement service by companies. Private sector participants highlighted that the business model needs to be sustainable and could not be offered as a long-term pro-bono service. The representative of Mastercard gave an estimation of between 10 and 20 years to establish a fully functional payments system that provides a full return on the initial investment. Companies need to earn enough to reinvest in the quality of the system to always enhance its capacity and efficiency.
The private sector emphasized the need to more clearly define the timeframe of the operational framework for cash transfer programs. The systems required by humanitarians can have significantly different timeframes. For example, service requirements for long-term protracted crisis differ significantly from those for sudden on-set emergencies. Humanitarians, therefore, need to better communicate the overall service requirements of cash transfer programs, especially their time horizon.
Finally, private sector participants highlighted the problem of general financial and technology illiteracy among the humanitarian community and the affected population.
- UN Office for the Coordination of Humanitarian Affairs
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