FinDev Blog

Can Cash Transfers to Digital Wallets Be a Lifeline During the Pandemic?

A look at BRAC’s experience in Bangladesh
Photo credit: BRAC/ Pronob Ghosh.

Rina Akhter was struggling to make a living as a domestic worker in Bangladesh when COVID-19 hit. Each month, she would take home $47 to her family of four, while her husband, a daily wage earner, earned about $72 per month. Their total monthly household income of $119 had to cover her teenage daughter’s education, her family’s household necessities, health care costs and rent. When the government of Bangladesh declared a countrywide lockdown on 25 March to combat the spread of COVID-19, Rina’s husband lost his job. Along with millions of other low-income households, they faced extreme food shortages due to the sudden income shock from $119 to $47 per month. To support these households, BRAC was one of the first to fund and implement a countrywide emergency cash transfers initiative.

Designing a digital cash transfer process

In the first round of transfers, BRAC distributed cash to 100,000 households suffering from acute food shortages. Each household, with an average of four members, received $18 for two weeks of food. At the same time, BRAC’s microfinance program continued to return savings to clients on an emergency basis for those who needed instant cash due to the sudden countrywide lockdown. However, getting cash into people’s hands proved to be a challenge, due to lockdowns in certain areas as well as the need to maintain social distancing while managing crowds.

To address these challenges, our digital cluster team designed a rapid disbursement process and immediately started sending transfers to BRAC participants’ digital wallets. The process proved to be an efficient and effective way to reach low-income households almost immediately. We successfully disbursed cash transfers and returned savings digitally to more than half a million households.

Evaluating the experience

To assess the effectiveness of our digital cash transfer initiative, we conducted a mixed-methods survey in July 2020, which included phone interviews with 1,634 female participants. Our interviewees, all of whom had received the cash transfers through digital wallets, had the following profile:

  • 51 percent from urban areas, 49 percent from rural areas.
  • Average age of 33.
  • Just over five years of education on average.
  • Primary income source was from daily wage earners, with only 22 percent involved in small businesses.
  • In 23 percent of the households, women were directly involved in income-generating activities, contributing 35 percent of the household income through small businesses, salaried jobs or daily wage earners.

The key insights from our survey were the following:

Phone and mobile wallet ownership and usage: The survey revealed that 77 percent of the participants had their own phones, and among those who had phones, 76 percent had mobile wallets. Those who did not have phones or mobile wallets used family members’ wallets to receive the cash transfers.

The emergency digital cash transfer initiative prompted 37 percent of the participants to open digital wallets for the first time during the pandemic. Only 24 percent of the participants said they knew how to use mobile money, and used it mainly for mobile recharge, cash-in, and cash-out purposes, but not for most financial transactions.

BRAC survey results: Phone and digital wallet ownership

Need for support during the cash-out process: Once participants received funds in their wallets, they had to go to a nearby agent to receive the cash funds, or “cash out.” 41 percent of participants went to the agents themselves to cash out, while 59 percent relied on their husbands’ or other family members’ support to cash out. The reasons stated by participants for not going to agents themselves were:

  • 48 percent did not want to go out due to COVID-19.
  • 27 percent thought they would have to share their PIN with the agent.
  • 6 percent had physical disabilities.
  • 6 percent did not want to bear the transport cost.
  • 3 percent did not have any nearby agents.

Experience with agents during cash-out: About 99 percent of the participants had a satisfactory experience with agents while cashing out and the average travel time to reach an agent was only 14 minutes. These positive results were due to a Central Bank directive issued in April 2020, which recognized digital wallets as a key transaction medium during the pandemic and stated that agents should keep their shops open and serve the population.

Usage of cash transfers: Similar to other experiences with electronic transfers in humanitarian responses, our survey found that 98 percent of participants cashed out the entire fund at once upon receiving their digital cash transfers. The participants revealed that they used the fund for multiple purposes, but mostly for food consumption.

BRAC survey results: Usage of cash transfers

The overall feedback for this initiative was positive, as 89 percent of the participants were content to receive the cash transfers through digital wallets. Through this experience, we have seen that even people who are technology resistant can be brought into the digital ecosystem and start adopting new technology when they feel that the service truly benefits them. Digital wallets can act as a tool to include low-income households, especially women, in the financial system.  In order to keep up this momentum, we must continue to provide incentives for our clients to open digital wallets and use them actively. It is our responsibility to provide financial education and consumer protection to make our clients aware of the risks involved in digital finance and help them to avoid those risks.

The silver lining to the unprecedented disaster of COVID-19 is that it has created opportunities to advance financial inclusion among underserved populations by prompting people’s adaptation to digital platforms.  We hope to continue innovating with new initiatives that put our clients first and better equip them to access financial services by integrating them into the digital ecosystem. 


Comments on this page are moderated by FinDev Editors. We welcome comments that offer remarks and insights that are relevant to the post. Learn More

Syed Muhammad Mustafa , GiZ Pakistan, Pakistan
18 October 2020

Excellent insights which contributes immensly to the literature produced by Hu, Homles and CGAP. The author is absolutely correct in stating that the pandemic even though catastrophic for livelihoods and health systems, has none the less revealed how women can be empowered through well designed interventions during times of crisis. Digital wallets is one such instrument which empowers women by giving them access to financial services and paves the way for greater financial literacy (A pre-requisite for economic growth). Our experiences in the MENAP, SA, SEA regions have revealed that state/central bank regulations (often influenced by institutions such as FATF) play a critical role in the ability of governments to create digital wallets.

Moonmoon Shehrin , BRAC, Bangladesh
21 October 2020

Thank you so much for your comments! It is very true that regulations and government has a very vital role to create an ecosystem for digital payments.

Taposi Roy , BRAC, Bangladesh
15 October 2020

I would like to add a comment that, we need a good ecosystem and a very well constructed policy for digital financial service. Government and Regulatory Authorities should be pushed to have a client-centric initiative to promote digital finance also. Otherwise lot's of this kind of initiatives may fail to keep the momentum.

Moonmoon Shehrin , BRAC, Bangladesh
21 October 2020

Thank you for your comments! You just got it on point

Nur Hossain , Bangladesh
14 October 2020

Great work..these insight will help us in design thinking and client centric innovation.

joseph ukpong , seedvest limited, Nigeria
14 October 2020

Quite an impressive reportage. No doubt digital enable will surely deliver value in capturing the underbanked, especially women.

Moonmoon Shehrin , BRAC, Bangladesh
21 October 2020

Thank you!

S Farooq
14 October 2020

Whats the number of participants?

Moonmoon , BRAC, Bangladesh
21 October 2020

1634 participants

Leave a comment