Helping International Development Organisations solve the last mile payment problem - blog

Mobilising funds to get them into the hands of those who need them is one of the most critical, and sadly most complicated aspects of international development and crisis response. For international development organisations, the final movement of funds to individual recipients or field project offices, ‘last mile payments’, is often the toughest part of the process.

Understanding the last mile payment problem is crucial for international development organisations, whether they are state-backed, multilateral or NGOs. According to the United Nations Convention to Combat Desertification (UNCCD), “the disbursement of payments to last-mile customers in rural communities… is often limited due to poor transportation and communication infrastructure and the relatively small size of financial transactions.” [1]Put simply, in hard-to-reach markets many individuals do not have ready access to essential financial infrastructure.

In times of crisis, this problem becomes ever harder to solve. When a market is disrupted as a result of external events, such as a natural disaster, political instability or conflict, banking for international development organisations is rarely as simple as sending funds to and from your local house bank branch. Rather, specialist knowledge is essential if funds are to make it to where they are needed.

Turning to non-traditional payment methods in hard-to-reach markets

While digital payments are increasingly becoming the predominant and preferred delivery mechanism for financial transactions around the world, many countries lack the essential identity verification mechanisms essential to facilitating smooth transactions. Payments are a highly regulated process, but information from the World Bank suggests that more than one billion people currently lack access to appropriate identity verification processes[2].

The matter is further complicated by the fact that most of the larger banks internationally have begun to withdraw from hard-to-reach regions, as their appetite for perceived higher levels of risk declines.  As a result, transactions in these regions are increasingly being carried out along non-traditional payment corridors thanks to the support of non-bank financial institutions such as fintechs. These organisations play a vital role in allowing individuals access to the urgent monetary aid they require, as well as assisting in the development of emerging markets to bypass problems arising from unstable or unsuitable infrastructure. The expert advice and support of fintech-powered organisations can transform international development efforts.

Technology is increasingly being used to reach underbanked communities in developing nations, with institutions like the World Economic Forum and the European Union (EU) championing ‘financial inclusion’. [3][4]For example, smartphone ownership is growing rapidly around the world[5], and digital identities, mobile wallets and remote Digital, Monitoring Reporting & Verification (DRMV), combined with recent advancements in global mobile network coverage, allow individuals to take charge of their own finances from their mobile phone.

For those without mobile access, prepaid cards that act similarly to credit or debit cards, but are locked to individuals’ biometric profiles, can be used to address many issues with last-mile payments. Thanks to inbuilt security measures, these cards do not require ID or proof of address, providing flexibility in areas where communications infrastructure is lacking or sporadic. We have partnered with Paycode, a fast-growing technology provider, with a unique solution that is addressing the identity, cost and connectivity challenges faced at the last mile by underserved and unbanked communities. Paycode employs biometric smart cards or mobile interfaces, to simplify the process of making and receiving payments, tracking transactions, and data management.

These financial technological advancements and more are overcoming the last-mile payment problem. As a UK-regulated provider of wholesale foreign exchange (FX) and payments services, Crown Agents Bank (CAB) has supported hard-to-reach markets globally for more than 200 years. Our focus is on core payments infrastructure, and we support international development organisations, governments, commercial and central banks and non-bank financial institutions globally. If you would like to discuss how we can help get money to those who need it, please get in touch.

[1] https://www.unccd.int/resources/publications/financial-and-digital-inclusion-last-mile-payments-trends-sustainable-land

[2] https://id4d.worldbank.org/global-dataset

[3] https://www.weforum.org/agenda/2022/05/new-technologies-improve-financial-inclusion/

[4] https://neighbourhood-enlargement.ec.europa.eu/news/eu-and-ebrd-boost-support-financial-inclusion-2024-02-29_en

[5] https://www.pewresearch.org/global/2019/02/05/smartphone-ownership-is-growing-rapidly-around-the-world-but-not-always-equally/#:~:text=In%20emerging%20economies%2C%20too%2C%20smartphone,24%25%20report%20having%20a%20smartphone