Questions/Answers

Benazir Income Support Programme is the largest social safety net programme of Pakistan, serving almost 5.0 million poorest of the poor beneficiaries, which are provided quarterly cash grants. When I took over as Director General (Cash Transfer), in March 2017, the primary mode of payment mechanism to the beneficiaries was through Pakistan Post and Benazir Debit Card (BDC)/non-personalized ATM card. There were many issues relating to these payment mechanisms, which resulted in sub-optimal service delivery to BISP beneficiaries. Pakistan post payment issues • Manual processes • Long delivery times of the Money Orders (MOs) • Complaints of non-delivery of the MOs • Black mailing of Pakistan post staff for monetary benefits • Non Reconciliation of funds for years Issues related to BDC • The not personalized ATM cards did not have security features of ATM cards for standard bank customers. • The delivery mechanism of ATM cards and their pins were insecure. The card and pin were mailed in the same envelope and were thus misused. • Majority of beneficiaries due to financial illiteracy didn’t know how to use the ATM and were exploited by middlemen who extracted rent. • BDC card replacement procedure of banks was very complex. A beneficiary usually received a new ATM card after a year. All this time the banks retained the funds and earned float. Objective of the Initiative The objective of the initiative was to provide efficient and effective service delivery to the BISP beneficiaries through a new Payment System, which was designed based on One Woman One account , biometric verification system (BVS) and end to end secure digital transactions with emphasis on transparency, accessibility of payment touch points and choice for beneficiaries and efficient Grievance redressal mechanism. The new Payment System were implemented through new banks hired competitively.

The initiative is aligned to Category 1: Fostering innovation to deliver inclusive and equitable services for all including through digital transformation. Though the BISP’s new biometric Payment System is technology driven and is end to end digital but emphasis has been made to ensure efficiency, transparency and effectiveness of the payment system for the illiterate and poor BISP beneficiaries. The payment system provides access of digital systems to the BISP beneficiaries in far flung areas and differently abled beneficiaries, without them paying any cost for the digital transactions and ensuring that they get their due cash grants in full.

The initiative is aligned to SDGs 5, 10, 16 and 17. The initiative also contributes indirectly to SDG 2. The main recipient of cash grants through BISP payment solution is a female of the poor household. Almost 20,000 biometric point of sales/ branchless banking agents and 2000 BVS ATMs of the partner banks are available all across the country. Women can travel to the nearest BVS touch point to withdraw cash themselves. After their successful real time biometric authentication with National Database and Registration Authority (NADRA) database, they receive cash grants themselves. The biometric system has led to increase in mobility of female beneficiaries and also more say for them in the decision making relating to household expenditure . Further, valid Computerized National Identity Card (CNIC) issued by NADRA in partnership with BISP, is mandatory at the time of Payment withdrawal. This has resulted in almost 4.0 million beneficiaries making CNICs, which has also made them eligible to vote. The new payment system also caters for differently abled persons and old age, who are registered in BISP’s system through an Appeals’ criteria. Policy measures and special arrangements have been made for biometric exemptions for payments to such beneficiaries.

Digital payment system has provided a platform for ensuring sustainability e.g. Shock responsive “Ehsaas Emergency Cash Assistance”, which was launched during COVID pandemic, is the largest cash transfer in the history of Pakistan providing Rs 175 billion-180 billion (1.2 Billion USD approx.) to almost 15.0 million-17.0 million beneficiaries in shortest possible time of three to four months and in most difficult conditions, while avoiding the risks of COVID spread. The same platform is being used to provide conditional cash transfers for nutrition initiative for the lactating mothers and education to the children of BISP beneficiaries.

The digital payment system based on BVS and partnerships with banks and NADRA for end to end digital transactions has led to significant reduction in the leakages in the cash transfer mechanisms in the social protection eco-system and the shock responsiveness initiatives. It has also ensured transparency in payments and choice in payment outlets for the beneficiaries regardless of their geographical presence. The partner banks are bound to provide at-least one BVS touch point per 500 beneficiaries at the tehsil level and at-least one BVS touch point at union council level. The BVS touch point include BVS BB agents, BVS ATMs, Special Campsites, BVS enabled branches and Cash on Wheels. If banks fail to ensure the facilities to the BISP beneficiaries as per the contractual arrangements, they are then liable to penalties. The design of the digital payment solution is thus very unique in country’s social protection eco-system, as it is not only innovative but adaptive and responsive and holds each stakeholder particularly the service providers accountable for the service delivery to the poorest of the poor. It thus addresses the governance gaps, which were previously not addressed.

Main recipient of cash grants is a female head of the poor eligible household. The country did not previously have an initiative which could target the Women. Through this initiative cash assistance is directly provided to female beneficiary and thus empowering them and making them an important stakeholder in the decision making process of a household. The biometric system has led to increase in mobility of female beneficiaries. Further, valid CNIC issued by NADRA is mandatory at the time of Payment withdrawal. This has resulted in almost 4.0 million beneficiaries making CNICs and thus making them eligible to vote.

The cash grants through digital payment system are provided to differently abled persons and old aged who are also vulnerable segments and are registered in the BISP’s payment system, besides the regular female BISP beneficiaries. Policy measures and special arrangements were made for biometric exemptions for those beneficiaries who have faded thumb/finger prints or are amputated. Further, digital payment system has provided a platform for ensuring sustainability and inclusiveness in the social protection payment eco-system e.g. the Shock responsive Ehsaas Emergency Cash Assistance, which was launched during the COVID pandemic, was largest cash transfer in the history of Pakistan providing Rs 175 billion-180 billion (1.2 Billion USD approx.) to almost 15.0 million-17.0 million beneficiaries in the shortest possible time, in the most difficult conditions. The same payment system platform is being used to provide conditional cash transfers for nutrition and education for male and female children of the BISP beneficiaries. The initiative has led to increased mobility of women, increase in voice/control relating to household expenditure of the beneficiaries. The timely emergency cash assistance during COVID pandemic also avoided the risk of rioting.

Digital Payment System has evolved since 2017/18. BVS Payment system was first piloted in 9-10 districts by April, 2017. It was expanded to 35 districts by June 30, 2017 and 80 districts by February, 2018. By end 2018, 90% of the beneficiaries had been converted to BVS payment solution. From February-April, 2019, the BVS payment design was further refined in consultation with stakeholders including the regulators and an RFP was launched in April, 2019 for selection of new banks. The new banks were selected in October, 2019 and the new digital payment system was immediately rolled out. The Communication strategy also evolved over time. Initially in 2017, messaging for beneficiaries relating to tranche release was done through print media. However, based on the External evaluation study, communication through local notables, BISP beneficiary committees, BISP’s call centre and FM radio were started by 2018. Banks were encouraged to display standees and banners in national and local languages at the payment touch points. Subsequently, by 2019 a huge effort was made to collect the mobile numbers of the beneficiaries and the word of mouth communication effort was supplemented by SMS messaging in national and local languages through BISP’s unique code “8171” before each tranche release. The M&E systems have also evolved over time. It initially entailed field monitoring by the field office staff during the disbursement of quarterly cash grants. This was also supplemented by periodic monitoring visits of the partner banks’ staff. Subsequently, by 2018 system of Spot checks and process evaluation was designed by the BISP’s M&E team for the quarterly tranche monitoring. A WhatsApp group was established with each region for reporting of issues during the field monitoring. SOPs for pre, during and post tranche disbursement monitoring activities were also formulated in 2018.

• Migratory nature of the beneficiaries and old contact addresses/ numbers was a major challenge. This was obviated by mobilizing beneficiaries through BISP’s local offices, partnering with NADRA, Pakistan Telecommunication Authority and the partner banks for collecting the current addresses/ numbers of the beneficiaries. • Network connectivity issues in border/ mountainous areas were addressed through partnership with Special communications network. • Issues such as roaming of BVS devices and different standards of BVS devices etc. were addressed through contractual arrangements and by engaging the regulators. • Cyber fraud was reduced by implementing the recommendations of Cyber-crime working group.

The initiative is based on operational learnings of BSIP. It is technology driven end to end ensured through contractual arrangements with partner banks and NADRA. BVS based payment model is unique due its transparency, ease of access of payment touch points, choice for beneficiaries, real time reporting, fraud detection and timely grievance redressal. BISP has also opened up BVS ATMs of partner banks, which is unique in country’s history as BVS ATMs have never been used for payment withdrawals in any social protection programme of the country. Further, BISP is also leading the initiative for inter-operability of BVS touch points.

The initiative is based on operational learnings during my stint as Director General (Cash Transfer), BISP and based on BISP's not so good experiences with Pakistan post, mobile banking, smart card and BDC payment mechanisms of the past. It is inspired by BISP's own Vision and Mission for empowering women, removing inequalities and ensuring transparency and effectiveness in the payment disbursement mechanism. The digital payment solution was finalized after multiple rounds of internal and external consultations with different stakeholders. The payment solution is being used for different initiatives of BISP i.e. UCT, CCT & Shock responsiveness for cash disbursements.

Important aspect of the initiative is data sharing of the beneficiaries between BISP, the banks and NADRA through secure and integrated web services. There are almost 20 reporting APIs integrated between BISP and banks. There are also different reporting dashboards showing status of disbursements and withdrawals. Funds reconciliation and settlement is near real time. There are also biometric reporting dash boards with NADRA and a separate web-service for biometric verification of BISP beneficiaries. Biometric logins at the time of Branchless Banking (BB) agents’ login, MAC binding/IMEI tagging and Geo fencing of devices is reported through integrated web services, for fraud detection.

The design of the payment solution has been made keeping in view the diverse cultural and geographical contexts of our country. With population spread across almost 882,000 square Kms in mountains, valleys, rural and urban areas and deserts, the Payment solution was dovetailed keeping in view the extreme weather conditions, rough terrains, network inaccessibility etc. In the bordering or mountainous areas and deserts with significantly low network availability, the partner banks were asked to enter into partnerships with Special communications network and also provide Cash on Wheels. For the Province/region with large expanse of land with accessibility issues for the beneficiaries, the banks have been bound through contracts to provide at-least one Payment touch point in each village, cash on wheels and also establish special camp site. Special Policy measures have been taken for making payments at bank branches to those who are differently abled and for those whose biometrics are not possible.

The digital Payment solution proved to be pivotal in providing largest emergency cash assistance in 2020 during the COVID 19 pandemic to almost 15.0 million-17.0 million people across Pakistan, in the shortest possible time and in the most difficult conditions. Almost Rs 175 billion- 180 billion (1.2 Billion USD approx.) were disbursed during the COVID pandemic, through this digital payment system. Had this digital system not been established, churning out the largest cash assistance programme during the pandemic may not have been possible. The digital payment solution was also recently used to provide cash grants to the affectees of border areas affected by enemy shelling/firing. The digital payment solution is capable of being transferred to other contexts or regions. It is worth mentioning that other Provinces/regional governments have approached BISP for using its payment system for transfer of cash grants to the vulnerable segments such as unemployed daily wage workers identified by them and those affected by COVID. Recently, Federal Ministry of Overseas Pakistanis has also approached BISP for cash disbursements through the BISP’s digital payment system, to the Overseas Pakistanis who have returned back during COVID and are un-employed.

A Banking Consultant was the only resource that was hired from market for dovetailing the payment system design keeping in view the technological innovation and future technologies. The MIS Systems were revamped and the APIs were developed by MIS team. The effort was all in-house, based on the knowledge reserve of cash transfer operations and its challenges/issues in the local context. The banks that were competitively hired in October 2019 for the implementation of the new refined model, offered much lower service charges rates, resulting in savings of Rs 2.0 billion (almost USD 15.0 million) per annum for the government.

The initiative is sustainable and scalable, as it proved its robustness during the disbursement of cash to almost 15.0 million-17.0 million beneficiaries during the COVID pandemic in the shortest possible time and in the most difficult conditions. BISP has been approached by the various Provincial/Regional Governments for cash disbursements through the BISP’s digital Payment system. Further, for the shock responsive programmes, BISP is being approached to use its end to end digital payment system for provision of cash assistance to the affected/vulnerable segments of the population.

Yes

The initiative has been evaluated internally by M&E Wing, BISP. A comprehensive external third party evaluation of digital payment system is in process but in 2019 M/s Oxford Policy Management (OPM), conducted evaluation of different initiatives of BISP which also evaluated BVS payment system. M&E Wing evaluated quarterly tranche disbursement based on the following: • Pre-Tranche POS Verification • 50 Spot Checks of payment disbursement process at payment touch points • Beneficiary Feedback Surveys of 150 beneficiaries for each tranche. Data collected from field is then analyzed and a report formulated. These efforts are supplemented by M&E by Bank’s teams and BISP's field offices.

Indicators: Impact Evaluation (2018-19) • Impact of cash transfers on consumption • Impact of cash transfers on beneficiaries’ investments in productive activities • Impact of cash transfers on gender equality and women’s empowerment • Impact of the Conditional Cash Transfer on education Tools used: • Household survey • Household questionnaire: Women’s questionnaire, Child anthropometry, Learning assessments • Qualitative research: Women’s empowerment assessment, Livelihoods questionnaire, Access to education • Process Evaluation: Spot Check questionnaires, Beneficiary feedback interviews

• Women's empowerment BISP continues to have a strong impact on women’s empowerment in a wide range of dimensions including greater mobility, increased autonomy in decision making, increased personal savings, increased political participation. • Education The CCT for education continues to have impressive positive impacts on education, increasing enrolment rates, reducing grade repetition, for which the digital payment system is used for transfer of conditional cash grants. • Productive investments The evaluation does not find evidence that the BISP is leading to productive investments. • Process Evaluation: • BVS is easy to use for the beneficiaries • Beneficiaries do not need other person’s help for withdrawing money • BVS is a transparent method and only the recipient can receive the payment • Processing time is less i.e. in seconds: only applying thumb-impression on device and getting money themselves. • Geo fencing has made POS comparatively more accessible and has reduced travel expenses • Role of the middle agent has disappeared • Point of Sale (POS) are quite crowded as many are located in small shops. The partner banks have accordingly been asked to increase POS points and also open up more BVS ATMs.

BISP is governed by the BISP Act. Secretary BISP is the Principal Accounting Officer, while Chairperson BISP gives policy directions relating to the programme based on approvals by BISP Board and the BISP Council. Dr. Sania Nishtar, Chairperson BISP is also the Special Assistant to the Prime Minister on Poverty Alleviation and Social Protection. The BISP board comprises of eminent economists and social protection practitioners etc and meets almost every quarter. President of Pakistan is the Chief Patron, while the Prime Minister is the Executive Parton of BISP Council, which meets annually. BISP has regional presence with almost 400 tehsil offices (www.bisp.gov.pk). Since, 2019 BISP has been placed under the administrative control of newly created Poverty Alleviation and Social Safety Division under the Revised Rules of Business dated October, 2020 (www.cabinet.gov.pk) The main initiative of BISP is cash transfers to the poorest of the poor, who were identified through a nationwide National Socio Economic household survey. The digital payment system for quarterly payments to these beneficiaries is carried out in partnership with the banks through their branchless banking network/BVS ATMs/Special arrangements and NADRA, which maintains the citizens’ ID. BISP, the partner banks and NADRA are bound through contractual arrangements.

The stakeholders’ engagement was inclusive, extensive and carried out in phases. In the first phase, various committees of different Wings of BISP were notified for giving their views/recommendations for the new payment system including financial management and real time reconciliation, Grievance Redressal mechanism, MIS/Technology improvements, Monitoring & Evaluation and Beneficiary communication and outreach. Meetings of these sub-committees were convened on almost weekly basis. Meetings were also held with regional and local officers of BISP to get their feedback for improving new payment solution from the service delivery perspective. In the second phase, discussions were held with the Regulators such as State Bank of Pakistan, Pakistan Telecommunication Authority, Auditor General of Pakistan, Controller General of Accounts and NADRA. A Banking Consultant was also hired for value addition based on his Industry experience. The Payment solution drafted based on these internal and external stakeholder consultations was shared with the development partners (World Bank, DFID etc) and taken to the BISP board, comprising of prominent ex-bankers, social protection and financial management specialists, for their expert feedback. After different rounds of discussions of with the BISP board members, the Payment Solution was further refined and rolled out after approval of the BISP Board.

There are a few challenges which need to be addressed. Foremost challenge that BISP faces is the financial and digital illiteracy of the majority of the beneficiaries. To overcome this, BISP in collaboration with the banks and development partners is launching a financial literacy and financial inclusion programme for the beneficiaries. This will be a long term project, which will be initiated on a pilot basis first and then up-scaled nationwide. The theme of the project is “Graduation through financial inclusion”. The Initiative will raise awareness of the beneficiaries about opening their mobile savings wallets and using different financial and insurance products, with the ultimate aim of poverty alleviation. The digital payment system aims for achieving inter-operability for BVS ATMs and BVS touch points to address Issue of over-crowding at BVS touch points during disbursements. Discussions are on-going with One Link Switch for BVS ATMs inter-operability and inter-operability of Branchless Banking (BB) agents of different telcos through the AMA switch. Once, implemented almost 20,000 BVS ATMs of all banks will be available all across the country for payment withdrawal. Similarly, BVS outlets of BB agents of all telcos will be opened up for all the beneficiaries across the country.