The World Bank has said the electronic payment system is capable of improving government payment programmes, makes it more efficient, safer and more transparent as well as cutting related administrative costs by as much as 75 per cent in developing countries.
According to the bank, 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 per cent of low-income countries process cash transfers and social benefits electronically and this percentage is only slightly higher for public sector salaries and pensions,” Gaiv Tata, World Bank Director, Financial Inclusion Global Practice, said in a statement.
“This means that many governments are stretching limited resources, and spending more than they should on paying benefits and salaries,” Tata added.
However, as part of its commitment to helping governments modernize in this area, the World Bank said it is releasing “General Guidelines for the Development of Government Payment Programmes”.
It is to promote best practices and establish standards for developing and improving government payments programmes.
More efficient government payment programmes not only optimize government payouts, but they can also improve revenue generating activities, the World Bank indicated.
“It is estimated that government expenditures and tax collections, which make heavy use of government payment systems, amount to 15 per cent to 45 per cent of the GDP,” explained Massimo Cirasino, World Bank Manager of Financial Infrastructure.
Cirasino argued, “More efficient electronic payment systems not only save the government money, they can also potentially benefit taxpayers and all other users of electronic payments.”