Digital payments are often presented as a way to bring more people into the financial system. Mobile wallets, online transfers and app-based payment systems are now central to how governments, banks and technology firms talk about expanding access to financial services.
Authors
- Mesbah Sharaf
Professor of Economics, University of Alberta
- Abdelhalem Shahen
Associate professor, Imam Muhammad ibn Saud Islamic University
This is particularly significant today. Around the world, governments are investing heavily in digital finance as part of broader development and sustainability strategies. In Canada, public efforts have focused on strengthening digital payment infrastructure and regulation rather than expanding access directly.
Payments Canada is undertaking a multi-year modernization of core payment systems , including the development of a real-time payment rail, while the federal government has introduced a consumer-driven banking framework to support secure data sharing and innovation in financial services.
From emerging economies to high-income countries, digital payments are seen as tools for inclusion, resilience and growth, from India's Unified Payments Interface to Brazil's PIX instant payment system .
At the same time, digital payments do not work equally for everyone. Our recent research suggests a more complex picture of digital payments.
A more complex picture
Digital payment technologies can support financial inclusion , especially in places where traditional banking services are limited.
By reducing the need for physical bank branches, digital platforms can lower costs, save time and make basic financial services easier to use, particularly for low-income and rural populations who can access accounts and payments through mobile phones rather than in-person banking.
Evidence from multiple countries shows that digital financial services reduce transaction costs and expand access to formal financial tools for households and small businesses that were previously excluded.
For many households and small businesses - particularly in developing and emerging economies - this has expanded access to accounts and payment services.
Foundations matter for adoption
In our study, we reviewed research from the past decade about how digital payment technologies affect financial inclusion worldwide.
One of our key findings is that digital payment systems tend to perform best when certain conditions are already in place. Reliable internet and mobile networks, affordable devices and basic digital skills all matter for people to be able to use and benefit from digital payments .
Where these foundations are weak or uneven, adoption remains limited, even when digital payment options are widely available. Research shows that limited digital infrastructure, low internet access and weak technology readiness can act as significant barriers to adoption, meaning that simply introducing new technology does not guarantee that people will use it.
Trust also plays a crucial role. People are more likely to use digital payments when they trust the financial system behind them and feel confident their money is safe, and when security and privacy concerns are addressed .
In countries where financial institutions are weak or consumer protection is limited, digital platforms often struggle to gain widespread acceptance. This was the case with Nigeria's eNaira , where fewer than 0.5 per cent of the population was using the digital currency a year after launch and most wallets remained inactive.
In such settings, cash frequently remains the preferred option , even when digital alternatives exist.
Persistent gender and socioeconomic gaps
Gender gaps are another recurring pattern. Across many countries, women are less likely than men to use digital financial services. These differences aren't caused by technology itself, but by broader social and economic factors .
Women often have less access to mobile phones, lower digital literacy and less control over financial resources. As a result, digital payment systems can reflect - and sometimes reinforce - existing inequalities rather than eliminate them.
Income and education levels also influence adoption. People with higher incomes or more education are generally better positioned to adopt digital payments and benefit from them.
For lower-income users, concerns about fees, data costs, security and usability can discourage regular use . This helps explain why many digital payment platforms report high registration numbers but much lower levels of sustained activity.
The institutional and regulatory environment also shapes outcomes. Evidence shows that digital payments are more effective when supported by clear rules, strong consumer protections and well-functioning oversight.
When regulation is unclear or enforcement is weak, users may hesitate to rely on digital platforms for everyday transactions. When digital payments are integrated into a broader, trustworthy financial ecosystem, they are more likely to contribute to meaningful inclusion .
Promises and limits of technology
Newer technologies, such as blockchain-based payment systems, are sometimes presented as a way to overcome these challenges . While they may offer advantages in specific contexts, our research shows the evidence remains cautious .
Their effectiveness depends heavily on regulation, institutional capacity and user confidence. As with other digital tools, outcomes vary widely across countries and communities.
It's clear that digital payments are not a simple solution. Their impact depends on how they're designed, regulated and used within existing social and economic systems.
For policymakers and firms, this has important implications. Expanding financial inclusion is not just about introducing new technologies or increasing the number of digital accounts. It requires attention to affordability, usability, trust and the barriers faced by groups that are already disadvantaged. Without this broader perspective, digital finance risks widening gaps rather than closing them.
Digital payments can play a valuable role in promoting financial inclusion, but only under the right conditions. The evidence shows that technology can support inclusion, but it cannot replace the institutional, social and policy foundations on which inclusive financial systems ultimately depend.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
