Scoping Report on the Payment of Social Transfers through the Financial System

This report scans existing schemes in developing countries, to document options and considerations for enhancing the payment mechanisms of social transfer schemes.Add on and Add in are two approaches that enhance the developmental impact of a social transfer scheme. In the Add on approach, additional financial services are provided to recipients after the grant is paid. In the Add in approach, the means of grant payment becomes a financial product platform such as a bank account.The overall impact of social transfer schemes depends on design, implementation, oversight and monitoring of payment mechanisms. A simple five-step process can be used to develop an enhanced payment strategy that is linked to overall design and implementation of a social grants scheme. These steps include:

• Clarifying payment objectives;
• Identifying and analyzing feasible payment alternatives;
• Deciding on a payments strategy;
• Specifying and managing the tender process;
• Ongoing payment strategy monitoring and development.