Fraud prevention technologies that require users to input unique identifiers at the point of sale, such as chip and pin or advanced biometrics, contribute to enhancing the transparency of a G2P payments program. With enhanced digital eligibility verification and de-duplication, administrators can ensure allocated funds reach target beneficiaries, ensuring money is not wasted.

Since 2020, the Romanian Ministry of EU Funds has aimed to increase administrative efficiency and to reduce misuse of funds since transitioning cash and paper vouchers to prepaid cards with chip and pin protection.⁷ The program targets low-income elderly and homeless individuals. While launched during the pandemic emergency, the success of the program has led to the expansion of digital payments capabilities to other Romanian social welfare beneficiaries.

Today, prepaid cards are being deployed across a range of social welfare support programs in Romania including for payments for school supplies for children of low-income parents, food support for those who are at risk of poverty, support for newborns and funds for schoolteachers’ professional development.⁸ The various card programs in Romania are an example of how transitioning welfare payments from cash to prepaid cards allows administrations to effectively track, trace and ensure public funds are reaching those most in need.⁹

For instance, in 2015, seven years after the program’s launch, the U.S. Treasury Department estimated that sending the 53 million checks replaced by the Direct Express® program would have cost the government approximately $66 million.¹³ This is well illustrated in the United States, where the Direct Express® Prepaid Debit Mastercard program, administered by the U.S. Treasury Department, provides millions of beneficiaries with Social Security, Supplemental Security Income (SSI) and other types of government benefit payments.¹⁴ This electronic distribution of funds has resulted in significant cost savings for the federal government.

Source: Direct Express® Program; Direct Express® Saves Americans $150 Million Annually (The Greensheet).

Digitalizing these payments has allowed local U.K. authorities to alleviate the costs of financial processing, reducing charges associated with financial controls while enabling efficiencies in comparison to cash or check processing.¹⁵ Digitalization has simplified a previously complex paper-based method of tracking, running audits and managing expenditures. In the United Kingdom, public sector agencies are also deploying digitalization solutions to offer better G2P payment services at a lower cost. NEPO supports over 100 English public sector bodies to streamline G2P payments to recipients.

Additionally, in Argentina, one of the first countries to leverage digital identification technologies to improve the efficiency and targeting of G2P pension and welfare programs, the government successfully identified inclusion errors across multiple G2P payment programs. According to The World Bank, through digitalization and identity verification, the government saved approximately $303 million over an eight-year period, which is about eight times the $38 million in World Bank funds deployed to implement the project.¹⁶

Spending controls can help to address specific policy goals for a particular program, be it supporting small business ecosystems, brick and mortar establishments, or specific subsets of the economy, such as cultural institutions or food and services. With clear parameters, these technologies help to restrict the misuse of funds and facilitate the ability to track how program goals are being met. For example, spend can be diverted and filtered to be used at relevant businesses, while cash access can be restricted, if required. Furthermore, transaction limits can also be introduced through G2P programs deploying prepaid cards.

In Germany, Mastercard has collaborated with several municipalities to streamline social welfare and protection payments to those in need, including refugees and asylum seekers, resulting in a change in federal German law to allow refugees to receive benefits via a payment card.¹⁷ In 2024, the Free State of Bavaria and various municipalities across the states of Saxony, North Rhine-Westphalia, Thuringia and Mecklenburg-Vorpommern launched pilot programs to provide prepaid payment cards to refugees to be used in retail stores and vending machines. As of end of 2024, more than 125,000 payment cards have been issued and over 110 service authorities connected.¹⁸

The card’s prepaid function allows the district administrations to individually top up or unload funds, significantly reducing administrative effort compared to distributing cash.¹⁹ Most importantly, however, the spending controls have helped German public bodies tackle public misperceptions around the misuse of funds by refugees, while providing targeted, timely support to migrants in need.

And in Mexico, Mastercard partner and financial solutions provider Toka, a fintech that facilitates approximately 1.5 billion MX$ in G2P payments for one million beneficiaries across the country annually has also observed the power of implementing controls. Through digitalized G2P payment programs, illicit purchases as otherwise possible with cash have been removed, allowing governments to have greater impact than a cash payment would provide.²⁰

In instances where administrators are seeking to control and monitor the effectiveness of G2P programs, these controls can be a powerful precursor to catalysing spend with small businesses and other merchants while providing rich insights to understand the effectiveness of such initiatives.

In 2020 in Jersey, Channel Islands, at the height of the COVID-19 pandemic, Mastercard prepaid cards were distributed to the island’s 105,000 citizens and pre-loaded with £100. The funds could be spent in store with retailers on the island, over the phone and online with locally registered businesses. The scheme reported having a £10 million multiplier effect on the local economy, benefiting over 2,000 businesses.²¹

Another impactful program in Los Angeles that rolled out at the height of the pandemic, the Angeleno Card, revealed the power of payments data in informing the municipality on where to direct targeted support for those most in need. With robust performance tracking of where citizens were utilizing funds, the city was able to uncover that approximately 40% of payments were spent on food, followed by 15% across retail and discount stores.²²

When G2P payments are digitalized, they create a digital trail that can provide near real-time data on program outcomes. Digital payments provide us the opportunity to jointly generate insights to help agencies navigate shifts in citizen behavior and economic volatility. This enables agencies to monitor and evaluate program performance and impact, while potentially replicating successful programs elsewhere.

G2P administrators must think beyond the fiscal advantages of digitalization to appreciate the transformative potential of these programs on society more broadly. Digital G2P payments help to reduce the shadow economy by ensuring that G2P transactions are transparent and traceable. This transparency can also help to minimize tax evasion and fraud, thereby increasing government revenues. By transitioning G2P to digital methods, governments can crack down on illicit activity and strengthen the public purse as a consequence. The resulting increased revenues can be reinvested into the economy, providing a multiplier effect for more resilient growth.

A 2020 Mastercard analysis of 146 countries at varying levels of economic development, classified as advanced, emerging, transition, low income and least developed, showcase a clear correlation — the higher percentage of G2P payouts made via cash results in a greater percentage of shadow economy activity.³⁸

Source: ThoughtLab research, commissioned by Mastercard. Analysis of interaction between financial inclusion, digital payments usage, and the shadow economy from 2002–2018. 2020.