already making, but without the benefit of an account and outside the formal financial system. The challenge in each case is for the private sector to design appropriate financial products that meet the needs of the unbanked and make using an account at least as easy, convenient, and affordable as the alternatives.

# Moving cash payments into accounts

One promising opportunity to expand financial inclusion among the unbanked is to digitize payments by moving cash payments into accounts. Shifting to digital payments has many potential benefits, for both senders and receivers.<sup>9</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>10</sup> It can enhance the security of payments and thus lower the incidence of associated crime.<sup>11</sup> And it can increase the transparency of payments and thus reduce the likelihood of leakage between the sender and receiver.<sup>12</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 saving and the substitution of formal for informal saving.<sup>13</sup> In short, the benefits of digital payments go well beyond convenience. If provided efficiently and effectively, digital payments can transform the financial lives of those who use them.

But digitizing payments and shifting cash payments into accounts is not without challenges. These challenges 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>14</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.

# _Wages and government transfers_

Digitizing wages and government transfers is an obvious way of rapidly expanding financial inclusion because the decision of a single actor—such as the government or a large private sector employer—can affect many recipients. In addition, when governments shift wage and transfer payments from cash into accounts, and private sector employers do the same with wage payments, this creates a foundation for a digital payments infrastructure upon which other private sector payments and person-to-person payments such as remittances can build.

Indeed, the Global Findex data suggest that both governments and the private sector can play a pivotal role in increasing financial inclusion by shifting into accounts payments that are now made in cash. Globally, more than 20 percent of unbanked adults—more than 400 million people—receive wages or government payments in cash.

Shifting only the payment of government wages from cash into accounts could increase the number of adults with an account by up to 35 million.<sup>15</sup> Doing the same for government transfers could increase the number with an account by up to 130 million.<sup>16</sup> Overall,

> THE GLOBAL FINDEX DATABASE 65