Tuesday, September 14, 2010

The importance of payment infrastructure to support aid activities

Our world has been rocked by a number of natural disasters of which the earthquake in Haiti and the floods in Pakistan are some of the most recent ones that spring to mind. The individual suffering and hardship of poor people are severe in such instances. Luckily, many aid organisations exist that offer support into disaster areas.

These organisations are dependent on many aspects and resources that are critical in the delivery of aid: transport, personnel, food, equipment, medical supplies. Without these and many other things, it would not be possible to offer support. If these things are not available in the stricken countries, it is possible to ship them from other countries. It may take some time, but after a few days, supplies can be landed in the disaster areas and aid can proceed.

One of the most important resources, required by aid organisations to be effective is a good payment system. Payment systems are required to distribute monetary aid, to pay local suppliers and to pay staff. (Read here). Substituting payment systems with cash leads to many types of inefficiencies and sometimes even to fraud and corruption.

Important components of existing payment systems are often also destroyed in disasters: ATM's and bank-branches washed away, connecting lines down, no electricity etc. Furthermore, payment systems cannot be flown in quickly or miraculously established in a few days. Payment systems requires many components that must work in harmony with each other and that cannot just be switched on overnight. This is why payment systems based on mobile communication, using simple handsets and not requiring expensive infrastructure are so well-suited for emergency work. Countries with well-established mobile payment infrastructure are in a much better position to respond in instances when they are confronted with disasters.

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