Does channeling government-to-person (G2P) payments through bank accounts encourage financial inclusion and use? This paper explores the factors that have driven the adoption of digital payments in India by beneficiaries of PMGKY, the large-scale COVID-19 relief program launched in May 2020. India’s 2013 move to pay social benefits through direct transfers into bank accounts significantly increased account ownership, but uptake of digital payments has been slower, although it has accelerated more recently through smartphone-based apps. Recipient survey data shows that personal and household attributes influence the likelihood of adopting digital payments. Smartphone ownership and digital literacy improve the odds while being a woman reduces them. The strength of the local digital payments ecosystem also exerts significant influence on household adoption; favorable personal and ecosystem factors are needed for widespread use. The historical progression shows that G2P transfers create an entry point but that widespread access to low-cost mobile telecommunications, interoperability, and the entry of new players offering convenient payments interfaces have been vital to the growth of digital payments.

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