Governments Can Save Up to 75% with Electronic Payment Programs


Government payment programs benefit millions living below the poverty line in developing countries

WASHINGTON, August, 2012- Improvements that make government payment programs more efficient, safer and more transparent can cut related administrative costs by as much as 75 percent.  As part of its commitment to helping governments modernize in this area, the World Bank is releasing “General Guidelines for the Development of Government Payment Programs”, which promotes best practices and establishes standards for developing and improving government payments programs.

Millions of people in developing countries worldwide receive their salaries, benefits and pensions through government-to-person (G2P) payments. But in many cases, they are not being delivered in a cost-efficient way.

“Only 25 percent of low-income countries process cash transfers and social benefits electronically and this percentage is only slightly higher for public sector salaries and pensions,” said Gaiv Tata, World Bank Director, Financial Inclusion Global Practice. “This means that many governments are stretching limited resources, and spending more than they should on paying benefits and salaries.”

The report focuses on cases such as Brazil’s “Bolsa Familia” social safety net program, where the government saved 75 percent on administrative costs by going electronic.  Bolsa Familia easily brought universal coverage to 12.4 million low-income individuals, representing about 30% of the population below the poverty line. By providing beneficiaries with access to a payments account, G2P programs can also expand financial inclusion for millions of the unbanked by serving as their gateway to other financial services. Programs like “Bolsa Familia” provide a lifeline to low-income families so that they can spend on essentials such as food and education.

More efficient government payment programs not only optimize government payouts, but they can also improve revenue generating activities.  “It is estimated that government expenditures and tax collections, which make heavy use of government payment systems, amount to 15 percent-45 percent of the GDP,” explained Massimo Cirasino, World Bank Manager of Financial Infrastructure. “More efficient electronic payment systems not only save the government money, they can also potentially benefit taxpayers and all other users of electronic payments.”

The guidelines, which also address the operational challenges government payment programs face, provide recommendations on:

  • Ensuring that payments and collections support the sound, efficient, and transparent management of public financial resources;
  • Making government payment programs safe, reliable and cost-effective;
  • Ensuring that efforts to modernize government payment programs accelerate the development of national payments systems and promote financial inclusion.

The guidelines were developed in consultation with the International Advisory Group for Government Payments (IAG), which is composed of public sector officials from various countries, as well as NGOs and payment service providers.  The guidelines are available at

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