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Blockchain - Empowering Financial Inclusion

In November 2019, the second Africa Blockchain Summit addressed the issue of its immediate potential both for central banks and for the financial system as a whole.

This event gathered central banks, local & regional banks and technology providers as well as African and international financial market players, involved in the development of the blockchain technology.

During the summit, HPS & Bank Al-Maghrib presented a Proof of Concept (PoC) for a use case to enhance financial inclusion within Morocco that focuses on using blockchain technology to deliver real, tangible benefits to Moroccan citizens. Adopted at a national level, the solution allows citizens to access a range of digitalized State Benefits through the mobile phone.

About the initiative

HPS played a pivotal role in designing this initiative with Bank Al-Maghrib using its PowerCARD payments platform. The value of the Blockchain technology was highlighted through the enablement of this use case of financial inclusion.

How it works?

The system is built around 5 simple steps:

  1. Creation of the State Benefit program

The State Benefit agency (i.e. the government) creates a program and defines the budget allocated to this program, the beneficiaries, the type of product (e.g.: food, school equipment), etc.

  1. Identification of the beneficiaries

Identifying beneficiaries is key to allocate and distribute State Benefits. Data collection needs to be specific, accurate, and must include all supporting documents to uniquely identify the beneficiaries (in this example, Moroccan citizens).

  1. Eligibility criteria

As soon as a beneficiary is identified, all the data collected is checked by the State Benefit agency. Then, Blockchain technologies are used to generate a unique identifier (UID) for each beneficiary.

  1. State Benefit allocation

Once the beneficiary is identified and has demonstrated their qualification for the program, the State Benefit agency grants him the State Benefits (one or more).

  1. Payment by the beneficiary

The beneficiary then initiates the process by opening an account in one of the payment institutions adopting the Blockchain technology. The payment institution uses Blockchain to check and approve the authenticity of the beneficiary in order to validate the account.

Benefits of the system

This initiative benefits three main groups: citizens, merchants and governments (see figure below).

PowerCARD enables citizens to access their State Benefits by using HPS technology via their mobile payment application (M-wallet) to directly benefit from the allowance based on their profile. By doing so, the consumer pays only the net amount and the bank settles the amount of the benefit directly to the merchant. This system allows citizens to access State Benefits with utmost discretion and confidentiality. The mobile payment application combined with this initiative allows the instant payment of State Benefits.      

The whole payment experience for the merchant is seamless: the merchant gets paid for the total amount of the purchase by the citizen’s bank (that will retrieve directly the part coming from the State Benefit agency) but more importantly there is no queue at the checkout and no social stigma for the citizen around any component of the transaction.

The solution allows the government to identify which citizens are eligible for State Benefit: it helps reduce fraud as well as the overall cost of the operation – by digitalizing State Benefits, governments gain in efficiency.

The figure highlights an example of application for an amount of $45 of state benefits. A customer eligible to a certain type of government aid can purchase that item and benefit directly form the amount of the State Benefit: he will pay only the remaining amount.

The operation is seamless for the merchants as they receive directly the total amount of the purchase (in this example: $150).

Click here to see the video presenting the PowerCARD use case during the Africa Blockchain Summit.

To know more about HPS initiatives for financial inclusion and blockchain technology, please contact sales@hps-worldwide.com.