COVID-19 has impacted businesses all over the globe, bringing the entire world to a screeching halt. Along with infecting millions of people, the disease has affected the economy to a point where the situation looks bleak for multiple segments of populations. Economically, the worst hit section is the marginalized population who now seek help from their respective governments in the form of stimulus packages and subsidy distributions.
Governments around the world are adopting measures to tackle the economic and social repercussions of COVID-19. Many countries have introduced changes to their social protection systems during the crisis, with a majority of them scaling up their schemes for direct cash transfers to the marginalized. Immediate cash support seems to be the only way out for close to 656 million people living in extreme poverty, according to the World Bank.
Subsidy Distribution System for Social Welfare
Fintech has a huge part to play in the successful implementation of COVID responses. As a major percentage of these responses involve monetary help, governments of various countries have been resorting to various Fintech tools to send stimulus packages directly to the bank accounts of the vulnerable populations. The most popular tool has been the Subsidy Distribution solution that allows governments to quickly and securely disburse stimulus packages to a large number of people.
While most countries have announced help for their citizens in this crisis, they have had to face certain challenges in implementing the measures. The biggest obstacle in delivering on the promise is to find the right channel for the effective distribution of the funds. Subsidy Disbursement solutions have helped tide over this challenge and offer a secured platform for ensuring timely delivery of funds.
A Subsidy Disbursement Solution for governments provides convenient channels for digitally delivering monetary relief in bulk. The money can directly be sent to individual account holders in real time. The system reduces the possibility of frauds and leakages on various levels by offering traceability and transparency of payments.
Optimization of direct costs of disbursing welfare and convenience for the receivers are some of its multiple benefits. These payments are extremely secured and give governments the freedom to reach the vulnerable without any physical interaction.
Considering that most countries are either under lockdowns or observing strict policies of social distancing, the citizens are hardly in a position to collect cash or use currency notes for essential purchases. Using fintech solutions like the G2P payment systems for digital transfers helps sending the money directly into their bank accounts. This money can then be used for making digital payments and wallet transfers, the most secured way of making payments in the time of Coronavirus.
Why is this Payment Module Popular Worldwide?
- The government subsidy payment system reaches low-income unbanked/underbanked citizens, who are largely affected by the ongoing pandemic and the most in need of stimulus packages.
- The module covers beneficiaries in rural or remote areas who may not have access to banking networks.
- Its ability to automate the end-to-end process of benefit distribution not only saves time by eliminating repetitive tasks, but also reduces defects for effortless execution.
- Governments can trace the payment flow at all levels to make sure monetary relief reaches beneficiaries in a timely manner.
- The flexibility of the payment module allows stakeholders to make changes as and when required, an important advantage in the current scenario as the government aims to reach diversified segments.
- The extensibility and scalability of this payment system allow rolling out multiple programs at the same time.
- The system also secures beneficiary data by eliminating the possibility of unauthorized access.
Global COVID Response
A majority of the countries affected by Coronavirus have announced their economic responses to the disease. As many as 190 countries have introduced over 937 social protection measures as of May 22nd, as per a report by Ugo Gentilini. The most widespread COVID response measure is social assistance transfers making up 59.6% of the total responses globally, and nearly 30.2% of the total measures are cash transfer programs. Close to 57% of these cash-only transfers are new programs introduced in 104 countries, while about 25.4% are one-off payments.
Successful Implementations of Subsidy Disbursement Systems
Many of the countries have already deployed emergency G2P payment programs to facilitate digital payments to their citizens. Countries with higher levels of financial inclusion responded quickly with the help of robust digital payments ecosystem to carry out direct cash transfers. India is one of the countries which successfully leveraged its Pradhan Mantri Jan Dhan Yojana program to deliver account-based social welfare to over 200 million account holders.
Thailand took advantage of the PromptPay system to directly transfer cash to its beneficiaries, while Colombia deployed digital cash transfers by leveraging its advanced payment ecosystem. Non account-based options have been explored in Peru where citizens are given an OTP to get cash from ATMs, banks or agents. Authorities have also been using their databases, mobile and online platforms and social registries in conjunction with subsidy payment systems to deliver emergency payments, as per the report by Ugo Gentilini.
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Conclusion
Large scale payment projects by governments such as social welfare packages during COVID-19 require synergized efforts and cooperation between the authorities and financial service providers. The current situation demands an advanced and customizable Subsidy Distribution system that can address the challenges of disbursing payments to millions of people at a time.
