Managing the Contracting Process

The contract should specify desirable but realistic service standards. It might, for example, 

Sixty-five percent of the beneficiaries of the Bolsa Familia program in Brazil collected their benefits from lottery points in 2005. Caixa managed approximately 9,000 lottery outlets. These outlets use POS devices connected to the bank network to process transactions (Lindert and others 2007). 

The use of pay points is appropriate where banks are not available and when their use lowers beneficiaries transaction costs. At the same time, their use requires excellent scheduling and control mechanisms. If the transactions are recorded using paper and pencil, the control system could be operated by local observers such as community elders or local government officials who could help safeguard against corruption by ensuring that the correct people receive the cash. The use of electronic systems such as POS machines and cell phones can improve the transparency and accuracy of transactions. 

Benefits in cash and in kind can be delivered to beneficiaries in a variety of ways, normally using one of two main methods. The first method is to have one of the distributing agencies directly distribute cash or in-kind benefits. The second method is to give the beneficiaries access to the benefits via checks, vouchers, direct deposits into personal accounts, smart cards, cell phones, and the like that can be redeemed at one of the distributing agencies. 

Direct distribution of benefits in the form of cash is common in low-income countries, particularly in the case of cash-for-work programs or emergency programs. The only thing needed to process payments is a list of beneficiaries or a muster roll. The beneficia- 

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