NGOs are essential organizations in helping people in need who aren’t covered by government services. In 2020 and 2021 in particular, many NGOs have been working overtime to help with the extra social issues that have come about due to the pandemic. However, with a global presence, banking is not always that simple for these types of organizations. Instant payment solutions can be a way to address the challenges present in current working structures.
With NGO operations extending across multiple different regions, distributing services as well as fundraising efforts often require complex logistics and planning.
These processes can be a challenge for traditional banking systems in regions where banks are not accessible, multi-national, or sometimes not trustworthy. In much of the developing world, banking is a different experience that causes several obstacles for NGOs, reducing their ability to administer efficient (and sometimes life saving) support.
NGO challenges that instant payments can solve
Nonprofits, charities, and NGOs serve an important purpose in their communities and overseas. Some key challenges include:
- Lack of high transactions’ speed that is especially relevant for emergencies
- Distributing funding where banking infrastructure is limited or even non-existent
- Local currency exchanges taking a large chunk out of the payments
- With multiple intermediaries, funds often get stuck or lost in the process
- Exchange volatility making for greater losses when performed at the wrong time
- Accountability and record-keeping for transfers
How can we cover regions with underdeveloped banking infrastructure?
In a 2016 study Mobile Money Transfers, financial service providers noted the existing payment “challenges due to NGO disbursements being made in remote and rural areas where network infrastructure and agent distribution are not as well developed.”
Some of the world’s most disadvantaged people are serviced by NGOs in regions with little infrastructure, and this extends to banking too. There can also be issues regarding bank trust or reliability, and concerns about currency fluctuations or collapse. Whether it’s receiving funding for the NGO, or transferral of funds to necessitous parties who may not use banks at all, these difficulties can be persistent and pervasive. It is not always possible to find an international bank to perform these services which are taken for granted in other regions. While solutions like Western Union are often the stopgap, using these solutions is costly and time-consuming. These fees are significant, and according to The 2020 McKinsey Global Payments Report, “In 2019, cross-border payments totaled $130 trillion, generating payments revenues of $224 billion that come from transaction fees.”
An instant payment solution like DTransfer can be used to send money to the underbanked while having transparency on how much of it ends up in the recipients’ bank account.
We were happy to work with DTransfer: you always know up-front what amount of money is going to land in our Tanzanian account and what are the costs.
Andreas Reiffenstein, UHURU Microfinance - solutions for the underbanked
How do NGOs increase transparency in money management?
It’s critical that organizations can account for every payment made. NGOs are required to have comprehensive financial reporting for accountability when it comes to both donations and other forms of funding.
With DTransfer’s tracking features, you’ll know exactly where the funds are even as they make their way to remote regions. Our solution makes it easy to generate reports and understand cash flow which can have a significant impact on an organization’s public perception.
How to manage currency risks
Currency stability and exchange rates can fluctuate significantly, particularly in certain markets. This can make settlement periods difficult to gauge and lead to poor performance of cash. Instead, instant payment solutions ensure that the exchange rate now is what you will send or receive.
DTransfer offers low currency risks. By using blockchain, NGOs can see the current rate, which is updated in real-time.
If you’d like to get in on the instant transfer revolution, join DTransfer.