Expansion of cash transfer program payment system pushed

The World Bank has urged the Philippine government to widen the payments system when disbursing conditional cash transfers to poor families by reducing its reliance on state-run Land Bank of the Philippines.

“4Ps (Pantawid Pamilyang Pilipino Program) should allow beneficiaries to receive payments at any transaction account of their choice. By allowing beneficiaries to choose an account, it is expected that they will more repeatedly use the same account for their needs,” the Washington-based multilateral lender said in its report, Making Payments More Efficient for the Philippines Conditional Cash Transfer Program.

“This will also help maximize the use of the Philippines’ existing payment system infrastructures, such as PesoNet. This is in line with the objectives of the Philippines’ financial inclusion initiatives as well as the National Retail Payment System framework,” the World Bank added.

In a separate report, the World Bank hailed the 4Ps as a successful program that reduced poverty and income inequality in the country during its 12 years of implementation so far, hence should be emulated by other development programs in the country.

But the World Bank said 4Ps’ payments system could further be improved so beneficiaries would be enjoined to tap other financial products and services besides Landbank’s cash card.

“The current 4P’s payment mechanism should be changed to allow the use of other types of multipurpose transactions account—basic deposit account, current and savings accounts and e-money accounts. The current single-purpose cash card has an extremely limited function that only allows beneficiary to receive only for 4Ps and withdraw cash from ATMs,” it said.

Giving more options for 4Ps beneficiaries to claim their cash would entail less dependence on Landbank, which was the sole payment delivery partner at present. “In order to enable conditional cash transfer beneficiaries to choose a transaction account of their preference, Landbank’s dominance in conditional cash transfer payment delivery should be changed,” the World Bank said.

“The government and stakeholders could develop a plan to gradually shift the payment mechanism from the Landbank cash card to mainstream accounts. By shifting the payment mechanism to the straight-through mechanism, the government [especially the Department of Social Welfare and Development] could significantly save program costs, increase transparency, speed and accountability,” the World Bank said.