Digitizing payments, particularly government-to-person (G2P) payments, has been a key focus of the digital development community. Shifting the payment of social transfers from cash to direct deposit via bank or mobile money accounts can directly improve efficiency for governments and convenience for beneficiaries. It may also produce positive spillovers such as boosting financial inclusion and empowering women. But do these spillovers materialize, and under what circumstances?

We explored these questions as part of a 2023 study of Bangladesh’s Primary Education Stiped Program (PESP). Here, we revisit that study with a specific focus on what the Chittagong Hill Tracts can reveal and how that might inform the future of the program.

What We Heard From Mothers in 2023 About Digital Payments

PESP—a government program that pays stipends to mothers of primary-school children— transitioned from cash to digital payments in 2017. Two years later it switched to a new payment service provider, Nagad. To assess whether recipients were really benefiting from digital G2P, we surveyed 1,092 mothers across Bangladesh.

The results were encouraging. Mothers overwhelmingly preferred payment through mobile wallets over cash handed out at their children’s schools (93 percent), and they preferred Nagad to the previous payment provider (90 percent). There was evidence that the transfers themselves were having non-material benefits as well, with 73 percent of mothers reporting that PESP had increased their involvement in household decision-making.

However, whether mothers used their mobile wallets for transactions beyond cashing out PESP stipends was a more complex story. For women who indicated that they had never owned a mobile wallet before, using their PESP account for things like transferring funds was associated with a mix of personal attributes, especially being able to read a text message and seeing a reason beyond PESP for opening an account. Only about 10 percent of mothers new to mobile financial services who could not read or who could not recall a motivation for having a wallet prior to PESP did anything more than cash out their benefits.

Other measures of empowerment were mixed as well, with a third of mothers claiming that they themselves controlled the stipend, as opposed to a male or jointly. Furthermore, while we explored the urban-rural divide in our survey, our results said little about regional and household factors that our previous research has shown can influence outcomes such as the use of digital payments.

Read the full article about digital payments and gender equity by Brian Webster, Alan Gelb, and Anit Mukherjee at Center for Global Development.