Association for Public Policy Analysis & Management

As the population ages around the world, governments have begun to design public policies that improve the well being of older adults in poverty. Noncontributory pension programs or cash transfer programs conditional on age eligibility are one example of these policies. Their implementation can vary, being distributed to participants either in cash or through an electronic payment card (debit cards). The use of debit cards is becoming more frequent because they allow governments to reduce administrative costs for cash transfer programs and make their disbursement simpler. In spite of the advantages, there is concern that some populations may have barriers impeding their use of an electronic benefit system.

The present study examines the use of debit cards as the method of disbursement of a cash transfer program for older populations in Mérida, Mexico. The program was designed in two stages and carried out as a randomized controlled trial by USC and RAND researchers to compare two disbursement methods: cash and debit cards. Using survey data collected before and during the program, the study examines how the disbursement method may affect certain groups’ reception of the transfer.

The research finds evidence that both cash and debit card beneficiaries’ household income increases due to the cash transfer, but the increase is larger and statistically significant only for debit card beneficiaries. Further examination of the pilot conducted with debit card disbursal shows evidence that male beneficiaries are more likely to use the debit card themselves, while those with worst health and those that are illiterate are more likely to rely on family members to use the debit card and retrieve the transfer for them. We also found evidence of a learning curve for debit card use. Over time, beneficiaries reported less problems using automatic teller machines (ATM) and using more the card themselves, instead of relying on the help of family members. We have found no evidence of a differential effect on the access and receipt of the transfer for beneficiaries with cash or debit card disbursement mechanism.

The research concludes that there is no reason to believe that disbursing cash transfers through electronic disbursement methods such as debit cards diminishes the positive impacts of the program on its beneficiaries. If a cash transfer program has positive effects when it is distributed in cash, it should have the same effects when distributed through debit cards.

The findings of this study can be valuable for the implementation of programs for other similar populations especially more advantaged ones. The elderly population in Mérida, which was the target group of this program, constitutes a highly disadvantaged population, having low access to banking services, low literacy rates, and less mobility and independence than younger populations. It appears reasonable to think that the findings are transferable for populations with similar characteristics, or even in better living situations.