Bridging the digital divide with identity and payment systems

The Covid pandemic has affected every aspect of our lives, from how people work to how they shop to where they live.

Among these changes has been a shift of government services and payments to the online realm, driving a renewed sense of urgency about the need for robust digital ID and payment systems to make these services work. and payment protocols.

But for those marginalized due to remote location, poverty, age, or a variety of other reasons, the lack of a digital ID can further disenfranchise them, making them invisible in the online world. As a result, they may be disconnected from essential services such as vaccination programs and cash payments for pandemic relief which are increasingly organized online, despite the likelihood that they are the most needy of these. service in society.

Ensuring that all people can access government services and electronic payments through a trusted digital ID system is increasingly a cornerstone of functional societies and development. It’s a reality that caught the attention of the World Bank, which launched a digital identity program and an initiative focused on digitizing government payments.

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The Identification for Development (ID4D) program was used by the Philippine government to help build its digital identification system, the Philippine Identification System (PhilSys). The program’s technical assistance helped the PhilSys registration of more than 52 million people last year and facilitated the opening of bank accounts for more than 6 million low-income households, according to the World Bank.

In circumstances where people can only access government services remotely, due to pandemic-related issues or their rural location, they can verify their identity online with a smartphone, internet connection and digital ID. People “won’t have to travel by boat or plane to access certain services,” says Jonathan Marskell, senior program manager at ID4D.

Vyjayanti Desai, practice lead at ID4D and the Government to Person Payments Digitization (G2Px) program, says, “The digital channel is an additional channel, not a replacement for manual processes,” as internet connections can be slow or unavailable remotely. areas.

To fill this gap, the government has set up “mobile registration centers [that] go to a specific place for a period of time, especially for remote communities,” says Desai. Social workers from the Department of Social Welfare and Development also visited members of poor communities in their homes to register them.

Marskell says, “By enabling those with the digital capabilities to access online services, governments can redirect resources to focus on those without the digital capabilities.

Distance isn’t the only thing keeping people from signing up for digital IDs and services. The lack of identity documents such as birth certificates is another problem. This has prompted the government to allow many forms of ID documents for ID registration, so having a birth certificate, for example, is not a requirement, Marskell says.

This flexible and inclusive approach is important to ensure that more people can be registered, “otherwise you perpetuate a vicious cycle of non-registration and non-identification”, he says.

Provide help digitally

The transition to digital payments goes hand in hand with the establishment of a digital identification system. First, with an ID, it becomes easier for people to open bank accounts to access digital payments. Second, governments need a secure way to verify the identity of people online when paying them digitally.

During the Covid pandemic, many governments rolled out social assistance programs unprecedented in scale and scope. The Philippines rolled out the Covid-19 Social Improvement Program (SAP) to help people through the pandemic, which involved cash transfer programs covering up to 83% of households. The country’s Ministry of Finance has described it as “the largest social protection program in the history of the Philippines”.

One of the main challenges is to quickly identify those eligible for social assistance. Some rural people or people working in the informal economy may not have formal identification documents and are therefore not included in databases such as the income tax registry, making them difficult to identify. reach.

Another priority is to establish ways to make payments remotely and quickly. When governments provided cash, “the money had to go in trucks, which is not safe for the villages,” says Desai. “Once a month, people line up [and] take hours of a day, or even days, to receive this money. Electronic payments can help governments avoid this problem.

In the Philippines, only 22% of social program recipients have bank accounts, which has led to delays in SAP payments, says Karl Kendrick T. Chua, director general of the National Economic and Development Authority. Huge crowds have formed in local government offices to collect money, creating a public health risk during the pandemic.

“It doesn’t just have a direct cost in terms of fees that might have to be paid, but it also comes down to indirect costs – mothers have to take time off from work [or] find someone to take care of the kids,” Maskell said.

By strengthening digital ID and payment systems, governments can help people quickly verify their identities and receive payments digitally without long lines or wait times. In Thailand, for example, agencies can send money to a bank account tied to people’s IDs or phone numbers, making sure they’re paying the right people.

And beyond the pandemic, secure digital payments enabled by digital IDs can transform the way governments deliver welfare and other services. The Philippines’ national poverty reduction strategy, the Pantawid Pamilyang Pilipino program, for example, is shifting to digital payments to quickly transfer medical and healthcare subsidies to poor families.

Replacing cash payments with digital payments can also be a game-changer in other circumstances, such as humanitarian emergencies. Governments can provide relief funds to rural communities that have been hit by natural disaster quickly and transparently, even if their physical access has been made difficult.

Inclusive infrastructure

People with disabilities, the poor, and sexual and gender minorities have different needs, Desai says, adding that governments should hold focus group sessions to better understand those needs and avoid exacerbating exclusion.

Looking at the challenges people face when registering identity documents, the ID4D program in Timor-Leste found that it is essential to keep the process simple and avoid collecting unnecessary data. “Because the more data you collect, the more you need to verify,” Marskell says. It could also create additional costs and data privacy issues.

Digital payments and ID systems offer a tremendous opportunity for governments to think beyond program-specific goals, such as faster distribution of payments, says Desai, adding that they can be a great social and economic leveler. .

For example, the World Bank helped link the Benazir Income Support Program, a poverty reduction program in Pakistan, to the national ID system. Targeting female heads of households resulted in a 95% increase in the number of women registered in the ID system. It also means that women do not have to depend on their husbands or brothers to access government services. In addition, women received direct cash transfers from the program, which enabled them to make decisions within the household and channel funds towards their children’s education.

Beyond embracing human-centric design, technology is another enabler that can help governments accelerate their digital ID journey. India’s digital ID program, Aadhaar, uses biometrics like iris scans and fingerprints and has registered 99.9% of the adult population.

Governments in countries like the Philippines and Morocco have also embraced open source software, Desai says. By using open source tools to create digital IDs, governments can avoid the pitfalls of vendor lock-in, which makes system change costly and slow.

But in some cases, the main challenges are not technology, Marskell says, but outdated policies and legal frameworks. For example, some countries still require people to sign physical documents after receiving payments from the government.

“If the policy and legal framework isn’t in place, if the processes aren’t well-designed and inclusive, all of these technologies won’t make a big difference,” he says. Governments should seek to update these policies to create a better environment for digital transformation.

Sometimes taking the first step towards digitization is the hardest part. Mozambique, for example, has developed a “digital payment readiness score” to identify areas ripe for digital payment initiatives. The score is based on indicators such as mobile network coverage and the availability of mobile money agents.

As societies straddle physical and digital space, governments must ensure that all citizens are recognized and accounted for, no matter who or where they are. With inclusive and robust digital ID systems, women no longer need to rely on their husbands or brothers to open bank accounts, and farmers don’t have to spend hours commuting to town to access services. ID4D and G2Px have helped many countries move towards their digitization goals, but there is still a long way to go.

About Geraldine Higgins

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