for school fees or utility bills allows people who already have an account to benefit more fully from financial inclusion—by enabling them to make the payments in a way that is easier, more affordable, and more secure.

Moving from cash-based to digital payments has many potential benefits, for both senders and receivers.<sup>6</sup> It can improve the efficiency of making payments by increasing the speed of payments and by lowering the cost of disbursing and receiving them.<sup>7</sup> It can enhance the security of payments and thus reduce the incidence of crime associated with them.<sup>8</sup> And it can increase the transparency of payments and thus reduce the likelihood of leakage between the sender and receiver.<sup>9</sup> Shifting to digital payments can also provide an important first entry point into the formal financial system, which can lead to significant increases in savings and the substitution of formal for informal saving.<sup>10</sup> But digitizing payments and shifting cash payments into accounts is not without challenges. These include making up-front investments in payments infrastructure, ensuring that recipients understand how accounts work and can be accessed, and taking steps to guarantee a reliable and consistent digital payments experience. Also important is to educate new account owners on the basic interactions involved in a digital payments system—using and remembering personal identification numbers (PINs), understanding how to deposit and withdraw money, and knowing what to do when something goes wrong.<sup>11</sup> Moreover, the benefits of moving cash payments into accounts are realized only if sending or receiving payments electronically is at least as easy, affordable, convenient, proximate, and secure as doing so in cash.

Financial inclusion and access to finance are different issues. Financial inclusion is focused on use, but lack of use does not always mean lack of access. Many people lack access to financial services in the sense that these services have prohibitive costs or that there are barriers to their use, such as regulations requiring onerous paperwork, travel distance, legal hurdles, or other market failures. Others may choose not to use financial services despite having access at affordable prices. Nevertheless, there is growing recognition that most of the barriers that limit access to services can be overcome by better policies.

# What the Global Findex database measures

Measurement is key to understanding financial inclusion and identifying opportunities to remove the barriers that may be preventing people from using financial services. The Global Findex database, launched in 2011, has made it possible for the first time to measure financial inclusion in a systematic and comparable way for adults around the world. The first edition, which measured financial inclusion as having an account that can be used to store money and receive payments, provided more than 60 indicators for 148 economies on how adults save, borrow, make payments, and manage risk.

Three years later, the second edition of the Global Findex database provides an update on the indicators collected in 2011 while adding more nuanced data on mobile money and domestic payments. The world’s most comprehensive gauge of global progress toward financial inclusion for individuals, the database allows policy makers, researchers, businesspeople, the development community, and others to see how the use of financial services has changed over time.<sup>12</sup> 3 THE GLOBAL FINDEX DATABASE