One of the biggest challenges for charities is the safe transfer of money to your staff working in areas of conflict. A number of issues arise when trying to transfer funds: including the fact that many people will not have bank accounts, that the infrastructure may have broken down so banks are no longer functioning, or that international safe guards against money going to blacklisted countries/areas block those transfers en route.
The issues of staff or contractors not having bank accounts is a particularly difficult challenge, and one that is common amongst the populations that charities tend to work with in the global south. Without a bank account people receive money in cash. Cash is notoriously difficult to track, with paper trails vanishing quickly. Also, carrying large amounts of cash around is dangerous to the bearer – especially if she becomes known as the person who will be accessing that cash. Other issues include difficulty in really knowing if the person the money was meant for actually receives that money.
This is not a new issue and solutions using technology are particularly useful in todays world. For example, the UN is getting money to refugees using biometric data. Registered refugees have a profile which includes capturing of biometric data; when they go to participating banks they can access cash through using iris recognition technology.
Western Union also facilitates transfers of money, with individuals who are to receive that money being pre authorised to do so. Money transfer facilitators such as Western Union, who transfer money without the need of a bank account are incredibly useful for the unbanked, and this is why they have such a monopoly in the global money transfer market. Fees to transfer monies can be £50 or more depending on where you want the money to go. Conversely, the more underdeveloped the location – or high risk for example if there is a current conflict – then the fees are higher.
Trust, based on community networks becomes essential when trying to transfer money, and the hawala system is one product of communities leveraging their own networks to transfer funds. It works based on people, with a trusted individual in the country giving the money to the recipient, and the sender giving the sum + fees to a trusted individual in their own country. Again, we find the problem of having no paperwork to trace, and it’s a system for understandable reasons that governments in particular do not like.
Alternative currency models are also answering the need for accessing money minus having a bank account, with the M-Pesa model being particularly well-known. This model uses mobile credit, as a form of currency. Bit coins are another model of transferring monies, but such digital currency models are so new that regulation has yet to catch up.
The issue of money transfer, and the costs associated, is set to continue for a while yet. Technology is paving the way for novel solutions but in the meanwhile we have to go through painful alternative routes. In a world where global transfers of money are blacklisted to certain countries, in particular, to war zones, as there a high threat of those funds being used for criminal activity its actually even more difficult currently for organisations to send money.