Paper short abstract:

How have states shaped, and been shaped by, payments companies when delivering welfare payments, and what are the implications of this? This is developed using the example of the South African social grant payments system.

Paper long abstract:

Financial inclusion is often taken to mean increasing the access of 'unbanked' populations to loans, investments or bank accounts. But increasingly, financial inclusion can also refer to the access of poor or banked populations to cashless payment methods. These practices are supported and promoted by international NGOs such as the 'Better than Cash Alliance', international development organisations and multinational payment companies. One way that states have sought to promote access to cashless payments for their poor populations is to partner with national and multi-multinational payment companies, using cashless technologies to make welfare transfers. By creating bank accounts for recipients and handing out associated cards, states can rapidly incorporate their unbanked populations into financial circuits. They are also able to use the technologies to pursue social policy objectives, as well as ensuring valuable and reliable income streams for the associated providers. However, these policies are accompanied by important concerns about privacy and exploitation, often related to poverty or an absence of basic financial literacy. This argument is demonstrated using the experience of the South African Social Grant system set up in 2012 with the South African state MasterCard, and national banks and payment companies. As well as creating a bank account for over 10 million recipients, biometric details are taken and are required to access the monies.