G20 Policy Guide: Digitisation and informality - Harnessing digital financial inclusion for individuals and MSMEs in the informal economy

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Access to and use of financial services plays a critical role in supporting inclusive and sustainable development. Despite remarkable progress in the financial inclusion agenda, large segments of the population remain excluded from the formal financial system. Many financially-excluded individuals and firms are found in the informal economy. Digitisation offers an unprecedented opportunity to address eligibility and affordability barriers to formal financial inclusion faced by informal individuals and firms. In particular, digitisation can (i) facilitate identity verification, (ii) promote digital payments and (iii) improve the information environment. However, to fulfil its potential digitisation also requires attention to (iv) financial consumer protection and financial literacy. The G20 Policy Guide presents a set of key policies that support the delivery of interventions to facilitate financial inclusion of individuals and firms operating in the informal economy. It focuses on four key areas that can ease eligibility and affordability barriers. The following table summarises the key recommendations for each policy area.