The Benefits to Government of Connecting Low-Income Households to an E-PaymentSystem: An Analysis in India

Abstract:     
Governments around the world have within their hands a powerful catalyst to promote financial inclusion – their own payment interaction with low-income households. Indeed, government is frequently the largest micro-payer and bill payer in the country. Delivering government payments electronically will not only connect low-income households to an electronic grid, but the government itself will derive sizable benefits from automating these flows. A recent study by McKinsey, which was commissioned by the Bill & Melinda Gates Foundation, explores the inefficiencies in India’s government payment systems and estimates the monetary and non-monetary benefits of making all of India’s government payment flows electronic. The study finds that automating these payments could save the Indian government US $22.4 billion per year, equal to nearly 8 percent of the total payment flows between the government and its citizens.

Number of Pages in PDF File: 8

Keywords: electronic payments, financial access, financial inclusion, mobile banking, government payments

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