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Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.

Key finding:

  1. Without providing a solution to the "last-mile funding" problem, unbanked consumers cannot benefit from digital payment innovations and new forms of digital currency and will therefore continue to be deprived from online commerce and even some in-person services that no longer accept cash.

Center Affiliation: Center for Financial Innovation and Stability

JEL classification: G28, G59, O33, O35, O38

Key words: payments inclusion, financial inclusion, unbanked, digital currency, digital payments, central bank digital currency


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