In this Focus Note, we look at government-to-person (G2P) payments, which include social transfers as well as wage and pension payments. With appropriate experimentation, these payments have the potential to become a vehicle for extending financial inclusion and improving the welfare of poor people. Yet, in most countries, far fewer than one-quarter of G2P payments to the poor land in a financially inclusive account--i.e., one that enables recipients to store G2P payments and other funds until they wish to access them and make or receive payments from other people in the financial system, and one that is accessible, in terms of cost and distance.
Providing poor G2P recipients with financial services could strengthen the development impact of G2P payments. A growing body of evidence shows that financial services enable poor people to better withstand shocks, build assets, and link into the wider economy as fuller economic citizens.