DevExplains: Open vs. closed loop systems for humanitarian payments

By Lisa Cornish 02 December 2016

A credit card. Photo by: Michal Jarmoluk 

Payment systems are a hot topic for the development sector but the jargon can be overwhelming. Devex has your quick guide to making sense of the two main options.

Open loop systems

When thinking of open loop payment systems, think of credit cards.

Open loop systems enable payments to be made at many different locations from a centralized digital wallet that is connected to personal account information. Money can be spent in advance; it does not have to exist in the account for payment to be approved. These systems enable payments to be made or goods to be purchased from a wide variety of merchants.

Open loop systems are generally best if the goal is to maximize recipient choice. They work most effectively if these systems have broad acceptance from local merchants and financial institutions already. In the humanitarian context, they have been utilized in post-disaster or conflict recovery programs to rebuild local economies.

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About the author

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Lisa Cornishlisa_cornish

Lisa Cornish is a Devex reporter based in Canberra, Australia. Lisa formerly worked with News Corp Australia as a data journalist for the national network and was published throughout Australia in major metropolitan and regional newspapers, including the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane and online through news.com.au. Lisa additionally consults with Australian government providing data analytics, reporting and visualization services. Lisa was awarded the 2014 Journalist of the Year by the New South Wales Institute of Surveyors.


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