Deliver refugee cash assistance without bank fees
Sector: Tertiary sector · Industry: Non-profit organisations · Organisation: United Nations World Food Programme (WFP) · Maturity level: Production
The United Nations World Food Programme (WFP) uses its Building Blocks platform to deliver cash assistance to Syrian refugees in the Jordanian camps of Azraq and Zaatari through its own distributed ledger. Entitlements are held on the blockchain and recipients are identified at the point of sale by iris scan against the existing UNHCR registration. According to the UN Innovation Network, more than USD 23.5 million has been disbursed in around 1.1 million transactions, cutting transaction fees from roughly USD 300,000 to about USD 3,000.
Documentation status
- Project status: Production — Originating from the 2017 pilot in Azraq and since then in ongoing operation for the Azraq and Zaatari camps as well as other deployment countries.
- Evidence: Evidence medium
- Editorial review: pending
Description
The United Nations World Food Programme operates its own distributed ledger with Building Blocks, through which refugees in Jordanian camps receive their cash assistance. Until then, these transfers were made via local banks, which incurred fees, took several days, and required the sharing of personal and biometric data with third parties. Through the shared ledger, several UN organisations can use the same payment view without any single organisation controlling the data of the others.
Building Blocks started in early 2017 as a pilot with around 10,500 Syrian refugees in the Jordanian Azraq camp and was subsequently expanded to the Zaatari camp and other deployment countries. Technically, it is a privately operated, access-restricted ledger based on Ethereum, which only manages the entitlement and payment logic. The WFP thus avoids involving commercial banks as payment intermediaries and instead settles collectively with traders in the camps. At purchase, the identity of recipients is verified by iris scan against the already existing biometric UNHCR registration, so no additional ID or bank card is needed. According to the UN Innovation Network, all approximately 106,000 Syrian refugees in Azraq and Zaatari were served via the system, more than 23.5 million US dollars were processed in about 1.1 million transactions, and transaction fees were reduced from around 300,000 to about 3,000 US dollars. The real progress lies in multiple UN organisations working on the same data basis without giving up their independence or data sovereignty over their beneficiaries.
Perspectives
B2B — organisations perspective
For organisations making recurring payments to a large number of recipients without bank accounts, Building Blocks demonstrates a robust model: entitlement and payment are recorded in a shared ledger, and identity verification takes place at the point of sale. Companies with similar payment structures, such as in development cooperation or compensation programmes, can learn from this how to reduce fees and processing times without relinquishing control over fund usage.
B2C — consumers perspective
For the beneficiaries themselves, the system means that aid is immediately available at the point of purchase and there is no waiting time for bank credits. Since no bank data is shared with third parties, sensitive personal information remains within the aid organisations.
Employees perspective
For staff in aid organisations, work shifts away from coordinating with banking partners and maintaining parallel recipient lists towards supporting acceptance points and quality assurance in the shared ledger. Those working in programme management or financial controlling gain a reliable basis for reports to donors with the shared ledger but must engage with the network’s governance rules and the data protection requirements of biometric verification.
Benefits
General
- According to the UN Innovation Network, transaction fees fell from around 300,000 to about 3,000 US dollars.
- Several UN organisations work on the same payment view without any one of them gaining data sovereignty over the others.
- Personal and biometric data of beneficiaries no longer need to be shared with local banks.
- Payments are available immediately at the point of purchase instead of after several days of processing time.
B2B — organisations
- A robust reference model for mass payments to recipients without bank accounts.
- Significantly lower proportion of administrative costs relative to the amount paid out.
B2C — consumers
- Immediate availability of aid at the point of purchase without a bank card or additional ID.
- No sharing of personal data with commercial banks.
Employees
- Elimination of ongoing coordination with banking partners over individual transfers.
- A shared, auditable data basis for reports to donor organisations.
Challenges
General
- The use of biometric identification for particularly vulnerable persons raises data protection issues that must be secured organisationally and legally.
- The model requires an already existing, reliable registration of beneficiaries and cannot be transferred without this foundation.
- Governance between multiple UN organisations regarding write permissions and data visibility must remain continuously coordinated.
B2B — organisations
- Building a dedicated ledger and acceptance point network is only economically viable with very high transaction volumes.
Employees
- Staff need knowledge of the network’s governance rules and the data protection requirements of biometric verification.
Technology foundation
Building Blocks is a privately operated, access-restricted Ethereum-based ledger that exclusively manages the entitlement and payment logic of the involved UN organisations. A distributed ledger is suitable for this purpose because multiple aid organisations require the same payment view without any one of them gaining data sovereignty over the others.
Implementation examples
Building Blocks in the Azraq and Zaatari camps
Cash transfers via local banks incurred high fees, took several days, and forced the WFP to share personal and biometric data of particularly vulnerable people with third parties.
The WFP pays monthly cash assistance to refugees in the Jordanian camps Azraq and Zaatari via its own distributed ledger. Identity is verified at purchase by iris scan against the existing UNHCR registration.
The pilot began in early 2017 with around 10,500 Syrian refugees in the Azraq camp and was subsequently extended to Zaatari. The WFP records entitlements in an access-restricted Ethereum-based ledger and settles collectively with traders in the camps, instead of serving each family individually through a local bank. According to the UN Innovation Network, all approximately 106,000 refugees in both camps were supported, more than 23.5 million US dollars were processed in about 1.1 million transactions, and transaction fees were reduced from around 300,000 to about 3,000 US dollars.
Transaction fees reduced from around 300,000 to about 3,000 US dollars; more than 23.5 million US dollars paid out in around 1.1 million transactions; approximately 106,000 refugees supported in Azraq and Zaatari (source: UN Innovation Network).
High transaction fees in the payout process, multi-day waiting times for beneficiaries, sharing of sensitive data with banking partners, and the lack of a shared payout view among several UN organisations.
Tags
Humanitarian aid, Cash transfer, Biometrics, Distributed ledger, Cost reduction