Background

This case study looks at how Crown Agents Bank (CAB) is working with GiveDirectly to deliver payments to beneficiaries in frontier and emerging markets.

GiveDirectly is a not-for-profit organisation operating in Africa that helps families living in extreme poverty by sending them cash transfers, via mobile payments. GiveDirectly transfers funds to individuals in several countries including Kenya, Uganda, Rwanda, and Malawi.

Challenge

GiveDirectly could see that there was a disconnect between the intent of charities operating in East Africa and their ability to deliver funds to people in vulnerable communities. Often those most in need of financial help do not have a bank account - or the ability to get one - and can be in rural areas which lack the infrastructure for global banking and financial services.

This means last mile delivery can be hard and non-profits often have to rely on the help of local, 3rd party service providers. There is also a lack of visibility as to where funds are in their journey getting to beneficiaries, especially if multiple parties and handlers are involved in the payment chain. This can lead to a delay in funds reaching beneficiaries and is potentially open to corruption and fraud. Further, multiple intermediaries handling cross-border payments is expensive, so a considerable percentage of what donors give gets siphoned off at various stages of the transfer process.

Therefore, GiveDirectly looked at how mobile transfers could be used to get funds directly into the hands of the intended beneficiaries.

Solution

Segovia, now part of CAB, is a mobile payments gateway solution, built from the ground up with the sole objective of being as cost-efficient and fast at processing mobile money transfers as possible.

Available as a web portal or via an API, the solution takes the complexity out of mobile money transfers. The solution also includes intelligent error handling to identify any issues that may occur throughout the payment journey and automatically re-tries the transfer to avoid delays or blockers in the chain. The client’s account is only debited once our system can ensure that the payment will reach the intended recipient.

This means clients can create an instruction in any format, without the risk of settlement failure due to incompatibility with other providers that play a part in delivering the final payment to beneficiaries.

As it is designed to be used by NGOs, the solution also has extremely robust monitoring and reporting capabilities, so clients can see where their payment is and when it has reached the intended recipient. Further, as it is part of CAB, the payment benefits from the established compliance controls of a UK regulated bank.

Whilst many similar solutions have been engineered to process up to a certain threshold of transactions, the team behind CAB’s mobile gateway solution pushed far beyond what was needed at the time, looking forward into what would be required as mobile money gained further traction in frontier markets. The platform has been built with scale in mind, possessing the ability to process huge volumes of payments, up to 50,000 in each payment file - something that has proved invaluable to GiveDirectly.

Benefits

Working with CAB allows GiveDirectly to leverage the bank’s extensive network in frontier markets. This means transactions go through smoothly via CAB’s partners, using the technologies to best get funds to beneficiaries fast and securely.

Our mobile/bank payment capabilities cover 100% of all the markets in which GiveDirectly operates. Without the use of CAB’s network, setting up the payment rails required to reach beneficiaries, could take months in research and implementation – time the beneficiaries don’t have. Denis Nyanja, Financial Director at GiveDirectly explains: “We'd typically save two months by avoiding other PSPs [payment services providers] in our programs planning. That's the value that Crown Agents Bank gives us generally, and so anytime we expand into new countries or start a new program within our existing countries, they are always our first option.”

The API integration also allows for easy integration with data software, so GiveDirectly has been able to plug it into its existing system to access the powerful reporting and monitoring from a clear interface, without having to undertake additional training. As well as an automated system, the service boasts fallback pathways offering customer service from a trained consultant should GiveDirectly have a specific issue or requirement they would like to discuss.

Impact

The impact of using the CAB solution was apparent when critical funding was needed in Malawi as a result of the Covid-19 pandemic. Although there was greater transaction volume during Covid-19 in 2020 (15,503 pre-Covid-19 transactions vs. 201,960 transactions during Covid-19), using the CAB bulk transaction-technology meant GiveDirectly saw lower costs for transactions as they were being done at scale ($168,694 USD pre-Covid-19 vs. $98,803 USD during Covid-19) – a total saving of $69,890 USD across its East African programmes. This meant that GiveDirectly was not only able to open new payment corridors, even during lockdown, but more funds reached end beneficiaries at one of the most critical times in the charity’s history.