Digital payments in humanitarian aid context
Digital payments for humanitarian aid delivery: Evidence from Pakistan
Humanitarian organisations can be sceptical about using digital payments to deliver aid to vulnerable populations. However, new evidence from Pakistan reveals that digital wallets can deliver aid and improve humanitarian outcomes as effectively as traditional cash transfers, while reducing the time and cost of collection – offering a practical, scalable alternative for fragile and low-income settings.
When humanitarian organisations distribute aid, they face a fundamental challenge: how to quickly and safely get money into the hands of those who need it most. Traditional cash distributions require recipients to travel to collection points and wait in long queues, imposing significant costs on already vulnerable populations.
In Pakistan, where over 20 million people require humanitarian assistance due to natural disasters and economic crises, this challenge has become increasingly urgent. Could digital payments offer a better way?
Breaking new ground in humanitarian aid delivery
Many aid organisations remain sceptical about digital payments, assuming that vulnerable populations lack the technical skills to use mobile money. Building on work conducted in Afghanistan, we investigate whether technology, and mobile wallets in particular, can be an effective alternative for distributing humanitarian aid.
As part of an IGC project on humanitarian aid and its consequences, we conducted a randomised controlled trial with 2,450 extremely vulnerable women across three districts in Sindh, Pakistan. These women represented typical humanitarian aid recipients: 84% had no formal education, only 5% had ever used mobile money, and most faced severe food insecurity and deprivation.
Figure 1: Characteristics of aid recipients
Notes: This figure represents the characteristics of 2,450 vulnerable women across Sindh who were included in the study – most of whom have no formal education, limited access to credit, and face food insecurity. Figure generated by the authors.
Participants were randomly assigned to receive four monthly payments of USD 25, either through digital wallets or 'cash-like' transfers, or no payment at all (control group). This design allowed us to rigorously compare the effectiveness of digital versus cash-based delivery for the first time.
How does digital aid impact spending?
We found that participants spent their funds to cover basic needs: 93% spent on food, 76% on medicine, 39% repaid debts (mostly for groceries), and 38% bought clothes for their children. However, our findings also demonstrate that digital aid works as well as – and often better than – traditional cash delivery when it comes to improving socioeconomic outcomes. Our results revealed that digital aid:
- Increased food security: Recipients in both digital and cash groups experienced significant improvements in food security. The number of days households went without meals dropped substantially, with the largest improvements concentrated among young children aged 0-4 years. Remarkably, digital recipients showed a 22% greater reduction in food insecurity compared to cash recipients.
- Enhanced nutritional diversity: The aid enabled recipients to significantly diversify their diets, with digital and cash recipients showing similar gains. Recipients increased consumption of proteins and fruits – previously rare in their diets – as well as essential fats. This shift toward more nutritious foods represents a meaningful improvement in household welfare.
- Improved mental wellbeing: Mental health improvements were substantial across both delivery methods. Recipients reported greater life satisfaction, reduced stress about meeting basic needs, and increased optimism about their families' futures. These psychological benefits proved equally strong regardless of whether aid arrived digitally or as cash.
- Enabled access to medicine: A striking finding was that digital recipients were significantly more likely to afford medicine when household members fell ill. While 76% of all recipients spent some aid on medicine, affordability among those receiving digital payments improved nearly three times compared to those receiving cash-based payments.
Figure 2: Impact of aid on health and wellbeing, by delivery method
Note: While aid in any form improved food security, nutrition, and mental wellbeing, digital payments had larger impacts than traditional cash transfers. Figure generated by the authors.
Digital delivery reduces the burden on recipients
Beyond humanitarian outcomes, digital delivery offered practical advantages by lowering the cost and time taken to collect aid. Digital recipients spent 20% less on transportation to collect their aid (PKR 139, relative to PKR 170) – for households surviving on less than USD 2 per day, savings of even PKR 31 (approximately USD 0.11) per payment represent a significant relief. Time spent travelling to access funds also dropped by 7% with digital delivery.
Despite having minimal prior experience with technology, over 99% of digital recipients successfully accessed their funds – a rate identical to that of cash collection. The feared 'digital divide' simply did not materialise.
Figure 3: Practical benefits of digital payments
Notes: Digital aid reduced both the time and financial cost of collecting payments. Almost all recipients successfully accessed their funds, matching traditional cash collection rates. Figure generated by the authors.
Addressing concerns about aid diversion and household dynamics
Our research directly investigated two primary concerns about digital aid: aid diversion, and impact on household dynamics. Overall, less than 5% of recipients reported that anyone had requested informal payments or "taxes" on their aid, with no difference observed between digital and cash delivery, contradicting widespread assumptions about aid capture in fragile settings.
We also found that providing aid to women through digital channels did not increase intrahousehold conflict: Fewer than 4% of recipients reported any disputes related to the aid, regardless of delivery method. Even in a highly patriarchal context, most women (91%) maintained complete control over spending decisions.
Policy lessons for humanitarian organisations
These findings have immediate relevance for humanitarian agencies worldwide. Our setting in Pakistan represents an ideal test case: if digital aid can succeed amid limited digital literacy, conservative social norms, and infrastructure challenges, it holds promise for similarly constrained contexts.
A key insight is that recipients adapt quickly when given appropriate support. Despite 95% of participants having never used mobile money before, they learned to withdraw funds with basic training. For humanitarian agencies, these results underscore the need to leverage existing infrastructure and invest in simple support. Mobile money networks already reach most communities where humanitarian aid is needed. Building on private sector platforms can be faster and cheaper than creating new distribution systems, and basic training materials and helpdesks can make digital systems accessible even to illiterate populations. The investment required is minimal compared to the ongoing costs of physical cash distribution.
What does this mean for vulnerable populations in need of humanitarian aid?
For millions awaiting assistance in Pakistan and beyond, adopting digital payments can have a profound impact on the lives of those most in need. It reaches the most vulnerable as effectively as traditional methods while reducing the time and financial burden faced by recipients.
In an era of shrinking humanitarian budgets and growing needs, digital aid delivery offers an efficient solution that works within the systems and infrastructure we have today – not just in some distant future.