**Summary:**

The advancement of digital payments and digital identity is fundamental to achieving financial inclusion. While countries like Malaysia are making strides in aligning and integrating their digital payment systems, the US faces the challenge of prioritizing cash over digital advancements, leading to a missed opportunity for financial inclusion. The link between digital identity and financial inclusion is evident, as seen in the case of India’s Aadhaar system, which resulted in a decline in poverty rates. Embracing digital alternatives to cash, coupled with the adoption of digital identity, can lead to economic growth and increased efficiency.

—

The traditional forms of payment, such as cash, are being challenged by the advancement of digital payments and digital identity. As various countries adopt digital payment solutions, there is an increasing shift from physical identification and physical forms of payments to digital forms. This development has the potential to streamline financial ecosystems and the economy. In Malaysia, significant progress has been made in advancing digital payments and digital identity. The collaboration between Malaysia’s payments network, PayNet, and Ant Group’s Alipay has facilitated cross-border payments, making transactions more convenient for users across multiple countries. The introduction of innovative technologies like facial recognition for payments is reshaping the landscape of digital identity.

On the contrary, the US has encountered a setback in the form of a ban on cashless businesses by the Washington D.C. Council. This decision aims to address equity concerns, particularly for the unbanked population, as approximately 7% of the US population are unbanked. Despite the ban promoting access to retailers for the unbanked, it fails to address the root causes of being unbanked, such as the lack of access to government-issued ID. A digital identity based on personal attributes rather than residential or driving status could offer a solution to this issue. Looking at India’s success with the Aadhaar digital identity system, which led to financial inclusion for millions and a decline in poverty rates, highlights the clear link between digital identity and financial inclusion.

The potential for economic growth and competitiveness lies in accelerating the adoption of digital alternatives to cash, coupled with the integration of digital identity. This shift can drive efficiency and satisfaction for businesses and consumers, ultimately contributing to the growth of economies. Therefore, it is crucial for countries to embrace these digital advancements to achieve financial inclusion and spur economic growth globally.

**FAQs:**

1. What are the benefits of digital payments compared to cash?
Digital payments offer increased efficiency, reduced costs, and enhanced security compared to traditional cash transactions. They also pave the way for financial inclusion and economic growth.

2. How can digital identity contribute to financial inclusion?
Digital identity systems can provide access to financial services for unbanked populations, ultimately reducing poverty rates and driving economic growth.

3. What potential does digital adoption hold for businesses and consumers?
Embracing digital alternatives to cash and integrating digital identity can lead to more efficient business operations, increased consumer satisfaction, and overall economic progress.

4. What role do governments play in accelerating the adoption of digital payments and digital identity?
Governments can drive the adoption of digital advancements by implementing supportive policies, promoting digital infrastructure, and fostering an environment conducive to digital innovation.