Can digital G2P transfers drive financial inclusion and digital payments? Evidence from India

A study on digital payments adoption in India, focusing on beneficiaries of a government relief package, reveals personal and household attributes influencing the likelihood of adopting digital payments, with smartphone ownership and digital literacy improving chances, while gender plays a role. The local digital payments ecosystem also impacts adoption. G2P transfers act as a starting point, but broader access to affordable mobile services, interoperability, and convenient payment interfaces from new market players are crucial for digital payments’ growth and financial inclusion.

The Center for Global Development released a paper that examines the factors that have driven the adoption of digital payments in India by beneficiaries of Pradhan Mantri Garib Kalyan Yojana (PMGKY) which is a comprehensive relief package launched by the government. The study, which hinges on a survey of people benefiting from PMGKY, found that personal and household attributes influence the likelihood of adopting digital payments. Yet, smartphone ownership and digital literacy improve the odds while being a woman reduces them. The local digital payments ecosystem further impacts household adoption and hence favorable personal and ecosystem factors are needed for widespread use. The study also highlights that G2P transfers create an entry point but that widespread access to low-cost mobile telecommunications, interoperability, and the entry of new players offering convenient payments interfaces have been vital to the growth of digital payments.