Powerful Lessons from the Mexican Government’s Shift to Electronic Payments
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17th December 2013

The government saves $1.27 billion a year by using new technology.
For many developing nations, paying social benefits or government worker salaries is a daunting and costly task. Disbursed in cash, and traveling a complex path from the distributor to the individual recipient, these payments are highly inefficient, adding significant costs to already strapped budgets. Lack of transparency in cash transactions can also create the conditions for mishandling of payments, with many documented cases of significant percentages being lost to unauthorized or incorrect payments. Moreover, cash payments often don’t reach recipients in a timely manner, require waiting in long lines, or leave the recipient vulnerable to theft, making the economic situation of many citizens even more tenuous.
There is a much better alternative: electronic payments, which are inherently more efficient and allow for timely, direct payment from government treasury to recipient. The shift from cash to electronic payments is one that more governments make every year.
While the benefits of the transition – from cost savings and transparency for the government, to safety, security and a pathway to gaining access to formal financial services for the recipient – are well documented, some nations are reluctant to undertake this shift. They remain uncertain about how to manage the process and unconvinced that it will deliver a meaningful return. Emerging markets, in particular, face technology, infrastructure …

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