Making Digital Payments More Accessible
Governments are working to make digital payments highly accessible, a trend that could reduce costs and complications for both senders and recipients. Several countries, including Latvia and Paraguay, are leading the trend.
Key Takeaways
- Some governments are distributing money to people in need via digital payments
- Experts believe digital payments can reduce transaction costs and improve convenience
- However, some experts have called for more accessible digital payments and believe that recipients should always have the option of traditional payment options
- Latvia, Paraguay, and other countries have pioneered new digital payment methods
What Are Accessible Digital Payments?
Governments frequently give money to people in need in the form of income assistance, welfare payments, pension payments, humanitarian aid, and other distributions.
Some governments are now turning to digital payments, which may include transferring funds through mobile apps, online transfers, prepaid cards and virtual cards, and other technologies. Often, recipients can also withdraw funds they receive at ATMs and bank branches.
The World Bank explains that digitized government-to-person payments have numerous benefits. Critically, digital payments reduce the time and expenses involved in receiving and redeeming funds. Recipients do not need to pay transportation costs, take time off work, travel in harsh weather conditions, or wait in line to collect their funds.
Digital payments stand in contrast to traditional methods, such as cheques and vouchers, which are comparatively costly and time-consuming to distribute and redeem.
Improving Accessible Digital Payments
Amidst the growth of digital government payments, experts have commented on how the process can be streamlined and optimized. In July, the Global Government Forum recounted several statements that industry and government members made during an earlier webinar.
Mark Palmer, Visa’s VP Government Solutions for Europe, said traditional payments introduce uncertainties, delays, and inconveniences for recipients and carry administrative costs.
He said that digital disbursements can help governments make better use of resources, improve efficiency and policy alignment, and reduce fraud and error.
Palmer said payment programs should use certain approaches. Specifically, governments should use digital IDs to check recipient eligibility, provide mobile information to increase participation and awareness and use scalable payment infrastructure to maximize coverage.
Even as governments adopt accessible digital payments, they should ensure that vulnerable groups continue to have access to traditional payment methods, he said.
Cathal Long, Senior Research Fellow at the Overseas Development Institute, said that COVID-19 demonstrated how governments can quickly respond to a crisis with digital payments. He said the response also demonstrated the need for better targeting.
Long warned against excluding groups without internet access, digital devices, and tech skills. He noted that vulnerable members of society may not be listed in digital ID databases or social registries, highlighting the importance of a variety of payment options.
Uruguay Engaged in Digital Payments
Some webinar attendees described developments in specific countries.
Antonio Manzi, National Director of Transfers and Data Analysis at Uruguay's Ministry of Social Development, described how Uruguay adapted its approach during the COVID-19 pandemic so that recipients could receive monthly links to download an app and obtain payment.
Uruguay’s program reached 320,000 people at peak operation, amounting to 10% of the population, and transferred more than 5 million coupons for food and necessities.
The program catered to new groups of recipients, such as childless households and individuals engaged in informal work following job loss during the pandemic. The program made use of a contact-free payment approach because of COVID-19 restrictions.
Manzi said digital payments were safer and faster than other options and helped keep contact information up-to-date. However, he said that app usage declined as the pandemic faded — and even as the government offered value-added tax (VAT) waivers as an incentive.
Some recipients prefer traditional cash and are concerned that digital technologies may have technical issues or offer inflexible spending options. Uruguay’s government nevertheless aims to expand the app for a variety of purposes and improve communication around it.
Latvia Also Pursuing Accessible Digital Payments
Dina Buse, Deputy Director of the Financial Market Policy Department for Latvia’s Ministry of Finance commented on the adoption of digital payments within the country.
She said that 87% of Latvia’s government disbursements are currently digital. The trend is driven by European regulations, such as the Retail Payment Strategy and the Payment Accounts Directive, which provide EU residents with the right to a basic payment account.
Latvia is now extending digital payments to state benefit payments through the State Revenue Service, which otherwise uses technology to handle personal tax refunds and corporate tax management. Latvia is additionally working with blockchain in an experimental program.
Other countries are also engaged in accessible digital payments. The Global Government Forum noted that a legal guardianship program in the Netherlands provides managed debit cards for individuals who cannot independently manage their finances.
The World Bank, meanwhile, described Mali's Jigisèmèjiri social safety net, Rwanda's Vision Umurenge Program, and Morocco's Daam program as part of the digital payments trend.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
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- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Types of Multi-Currency Accounts
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