From Cash to Digital Transfers: The Story So Far

This brief addresses the key elements of digitizing cash transfers in order to enable financial inclusion in a way that it not only leads to account opening, but also account use. It is based on both qualitative and quantitative research conducted in Andhra Pradesh, India. The brief helps understand customer, provider, and government perspectives as to why 16 million government-to-person (G2P) accounts are not being used except for once a month to disburse the G2P payment. It identifies several barriers to the use of G2P accounts such as lack of awareness among recipients, closed-looped technology solutions, high costs, and lack of incentives for banks to deliver financial products. Other key findings include:

• One of the key elements of offering digital G2P is connectivity, either through broadband or GPRS, which is unavailable in many Indian villages;
• Terms and conditions for financial service providers to operate as G2P providers are currently unclear and vary from state to state;
• Postal department has been a major driver of payments and has digitized its payments in several districts;
• Some nonbanks have launched pilots to deliver G2P payments;
• Customers are more likely to switch to digital channels if several services are bundled.