Case Study on the Use of Smartcards to Deliver Government Benefits in Andhra Pradesh, India

51 Pages Posted: 18 Jul 2011 Last revised: 3 Aug 2011

Date Written: October 1, 2008


Since late 2007, Indian technology company Financial Information Networks and Operations (FINO), in collaboration with the state government of Andhra Pradesh and several partner banks, has delivered payments from two separate government programs (the National Rural Employment Guarantee Act (NREGA) and Social Security Pensions (SSP)) to beneficiaries using a platform based on smartcards and mobile smartcard readers. In this report, we describe the smartcard payment system and analyse its impact on the beneficiaries of the programs and the efficiency of program delivery.

Our analysis reveals that, the smartcard payment system has resulted in greater convenience and empowerment for beneficiaries and reduced fraud at the back end. With the smartcard payment scheme, beneficiaries spend fewer days waiting for payments to become available and less time waiting in line at transaction points for their payments to be processed. In addition, anecdotal evidence suggests that the use of smartcards, by ensuring that payments to female beneficiaries are delivered to the beneficiaries themselves and not their husbands or brothers, has resulted in increased women’s empowerment. Further, we uncover limited evidence that the smartcard system has reduced levels of fraud in NREGA and SSP by a) identifying fictitious beneficiaries during the enrolment stage and b) by making it more difficult for NREGA supervisors to over-report work done.

In the last half of this report, we describe FINO’s plans to offer savings accounts to beneficiaries using the smartcards and investigate the potential for other additional financial services or government benefits to be delivered as well. Due to the current extremely low levels of access to savings products by NREGA workers and SSP pensioners, we predict that the addition of savings products is likely to have significant impact on the financial inclusion of beneficiaries. However, we find no other suitable services which could relatively easily be delivered via the existing payment system.

Keywords: NREGA, smartcards, branchless banking, agent banking, G2P

Suggested Citation

Johnson, Doug, Case Study on the Use of Smartcards to Deliver Government Benefits in Andhra Pradesh, India (October 1, 2008). Available at SSRN: or

Doug Johnson (Contact Author)

Independent ( email )

No Address Available

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