5.1 Contract the Payment Agent
The contract template and content depend on situational context and is developed by the procurement team. The template can either rely on the framework agreement developed at preparedness stage, or it can be a contract specific to a particular project. Minimum requirements for this contract include:
- Duration of the agreement;
- Cost and type or quality of financial services;
- Clear division of roles and responsibilities between CARE/implementing partner and the provider;
- Monitoring, evaluation, and reporting system;
- Reconciliation process;
- Provisional calendar for critical dates (distribution, reconciliation, etc.);
- Data protection;
- Payment terms.
CARE favors payment agents pre-financing, where both service charges and money transferred to beneficiaries are reimbursed by CARE once beneficiaries receive payment. Depending on project size and the payment agent’s capacity, pre-financing may not be feasible and the contract should plan for performance bond payment of service charges. In all cases, the loss of funds due to fraud or diversion should be covered by the payment agent.