Policy expertise

Review of Payment System for Social Assistance in Indonesia

Policy Area
Country/Region
Indonesia
Funder
Australian Agency for International Development (AusAID)
Duration
July - December 2012
OPM contact

Alternative payment mechanisms were being considered for beneficiaries of a national cash transfer programme (PKH), including the use of banking facilities. The project sought to: a) examine the effectiveness of the current pilots of electronic payments system in Indonesia (using giro accounts at post offices and “BRI TabunganKu” accounts), and in doing so, identify existing difficulties and options for overcoming them; and b) identify and examine alternative electronic payment systems for social assistance cash transfers in terms of their cost, benefits and business processes required to make them work in an Indonesia context. An OPM team carried out the assignment for the Poverty Reduction Support Facility (PRSF), under the Office of the Vice President. The work included examining and analysing the current payment systems and assessing the feasibility / suitability of alternative payment options by:

  • Conducting meetings with programme stakeholders (executing agencies at national and local levels, partner institutions, etc.), payments system officials, financial service providers, regulators and other relevant programmes;
  • Conducting a survey of beneficiaries to understand their current experience with payment systems and their preferences;
  • Gathering data / relevant project documentation (on costs, procedures in place, previous assessments undertaken, on resources required vs. resources already available, regulatory and capacity issues etc.);
  • Conducting interviews of branch / outlet managers and staff of payment agents, including conducting spot checks: this covers BRI payment outlets and post offices in eight provinces, covering both urban and rural locations; and
  • Conducting interviews with potential implementers, including potential partner institutions at branch / outlet level (e.g. other financial service providers, remittance agents, etc.).
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