Increasing the use and coordination of cash as a form of humanitarian assistance is a tenet of The Grand Bargain adopted at the World Humanitarian Summit in 2016. The Grand Bargain signed by 21 donors and 31 aid organizations recognizes that cash-based aid (rather than in-kind aid) can deliver individual choice and empowerment to affected people while strengthening local markets. To increase the transparency, speed and longer-term value of these cash transfers, Strategic Impact Advisors (SIA), a member of SBAIC, provided technical assistance to USAID to forge a common set of principles to use digital channels to deliver cash aid in humanitarian relief. USAID has recognized the value of digital delivery of payments over physical cash and pushed the global movement since its primary role in founding the Better than Cash Alliance in 2012.
As a subcontractor to NetHope under its cooperative agreement with USAID, SIA supported the development of a draft for eight core principles on the use of digital payments in humanitarian assistance. The principles provide an approach for effective, fair, and sustainable use of digital payments as the cash transfer mechanism. Dubbed the Barcelona Principles, in recognition of the formative work done in that city, the work was led by USAID’s Center for Digital Development digital financial services team, Office for Disaster Assistance and Food for Peace. The Barcelona Principles were developed with input from 21 donor and aid organizations, including USAID, the U.S. Department of State, UN Agencies, European Civil Protection and Humanitarian Aid Operations (ECHO), the Bill and Melinda Gates Foundation, and leading aid organizations including the International Rescue Committee (IRC), Mercy Corps, and Save the Children.
The principles prioritize meeting the recipients’ emergency needs first while encouraging digital payments. When cash is digital and linked to a store value or deposit taking account held at local institutions, humanitarian assistance provides an opportunity for broader financial inclusion that can support longer term recovery and resilience of communities and individuals. Principles 4-8 provide direct guidance on selection of digital payment providers and scale of use:
- Select payment mechanisms for recipient empowerment;
- Collect data that is relevant and proportional;
- Safeguard the right to data privacy and protection;
- Facilitate pathways to financial inclusion when possible and appropriate. This fourth principle suggests that priority be given to open-loop systems that connect recipients with a personal account that leverages local markets and ecosystems without a preference for the modality of a mobile phone or card-linked accounts accessible at agents, merchants, ATMs, and bank branches. If digital payments are not possible at the onset, the principles encourage agencies to plan for future inclusive payments by continuing to assess opportunities to use digital payments as programs mature and infrastructure that may have been damaged is restored;
- Prioritize and build on existing local systems and infrastructure. Principle 5 asks agencies to give preference to local, regulated digital financial and payment services and to work with existing national identification schemes, when available and secure, to strengthen access to national ID systems;
- Invest in organizational preparedness to quickly leverage digital payments, when appropriate. Principle 6 requests that agencies prioritize, and donors invest in, organizational preparedness to deploy digital payments. This includes developing organizational operational policies with supplemental training and guidance for staff around designing and implementing a digital payment delivery mechanism. Digital payments also require new organizational standards for monitoring, reporting and data management for digital payment delivery mechanisms. SIA has provided technical assistance to humanitarian aid organizations and administered a series of grants from USAID to humanitarian organizations to develop trainings and test digital payment systems in humanitarian response including in the Mali, the Democratic Republic of Congo, Pakistan and Somalia;
- Develop institutional and collective capacity for effective humanitarian – private sector engagement. Principle 7 suggests that humanitarian organizations institutionalize service provider capacity and service quality assessments to facilitate due diligence and decision making on products and services. SIA has helped organizations develop payment product agreement templates and worked with USAID implementing partners globally to promote private digital-payment service providers commercial interest in serving the humanitarian community; and
- Coordinate the use of multipurpose and shared payment systems. As digital payment systems continue to expand in reach and diversity, a value of interoperable platforms is being recognized. Principle 8 articulates a preference for use of interoperable payment systems that enable transfers to be made across multiple payment platforms and provide distribution and access to services in a non-exclusive manner.
Since the initial drafting in 2016, the Barcelona Principles have been discussed at the World Humanitarian Summit, The World Economic Forum, and other ICT4D, humanitarian, and DFS events. A draft version of the principles can be found here.