In the last 17 years the world has seen several threatening viruses and pandemics such as SARS (2003), influenza A H1N1 (2009), Ebola (2014) and Covid-19 (2020). In each of these cases, digital payment technologies were employed as a public-health tool to deal with the fallout and contain the spread of these viruses.
During the SARS outbreak of 2003, digital payment and e-commerce were expedited in China, while mobile wallets were employed during the 2014 Ebola outbreak. In 2020, the COVID-19 pandemic again initiated concern about viral transmission via cash, as internet searches related to ‘viruses’ and ‘cash’ were intensified (Bank for International Settlements). Many organisations including the World Health Organisation urged consumers to use contactless technology if possible. Thus, non-contact-based digital methods of payment such as internet transfers, digital payment apps, Quick Response (QR) codes and mobile wallets were recommended to reduce touchpoints and the spread of COVID-19.
Digital Payments have also been employed during pandemics to ensure the quick, safe and easy disbursement of government funding to those in urgent need of assistance. A case study on the “Benefits of digitising payments to Ebola Response Workers in Sierra Leone”, found that mobile wallet use at the height of the Ebola crisis increased the timeliness of salary payment to response workers and resolved the issue of stolen salaries. This measure improved patient care and strengthened the capacity to contain the disease and saved over US$10.7 million. The government of Togo, a small West African nation of 8 million also leveraged high mobile phone ownership to quickly distribute emergency financial support to half a million people in less than two weeks. The Columbian government also used mobile money to help citizens without bank accounts gain access to the 2020 government transfer program, Ingreso Solidario. Whilst, direct transfers and debit cards were used by the Trinidad and Tobago government to provide income support to citizens experiencing financial challenges as a result of COVID-19. Digital grants were also extended by the mayor of Point Fortin, Kennedy Richards Jr, to provide financial relief to individuals in the borough affected by the COVID-19 pandemic.
Financial Technology (FinTech) firms were utilised by many countries during the COVID-19 pandemic to disburse funds to Small and Medium Enterprises (SMEs). Keeping SMEs afloat are considerably important, as according to the World Bank, SMEs account for approximately 90% of businesses worldwide, more than 50% of employment, and also are less likely to obtain bank loans. Thus, during the COVID-19 pandemic a pilot cross-border blockchain finance platform was utilised in China to deliver over US$200 million in loans to 87 businesses. Chinese FinTechs were also applauded by Tobias Adrian, financial counsellor and director of the IMF, for their critical role in credit allocation to SMEs.
The direct electronic cash transfer facility for the distribution of salaries, tax refunds, subsidies, vouchers, or grants during pandemics were not only important for providing funds to individuals that need to maintain physical distancing but sustained their purchasing power. The rising use of these digital payment facilities by households around the world also reduced in-person transactions, reduced the need for in-store purchases and minimised the need for in-person visits at financial institutions, thereby reducing the likelihood for viral spread.
The Trinidad and Tobago International Financial Centre supports the embrace of innovative technology provided by FinTechs. Digital payment systems should be further developed to ensure the quick, efficient, and transparent digital delivery of funds to provide income support to banked and unbanked individuals and businesses in a time of unprecedented pandemics, or in the case of any other unforeseen incident.
Your Resourceful Ally