Empowering Unorganized Vendors through Digital Payments: Financial Inclusion, Adoption, and Structural Challenges

Abstract Digital payment systems have emerged as central instruments in global financial inclusion strategies, particularly in developing economies characterized by large informal sectors. Unorganized vendors—street traders, hawkers, micro-retailers, and self-employed informal entrepreneurs—constitute a significant share of urban and peri-urban economic activity yet remain structurally excluded from formal financial systems. This review synthesizes interdisciplinary scholarship from development economics, information systems research, financial inclusion studies, and institutional theory to examine the transformative potential of digital payments for empowering unorganized vendors. Drawing on empirical evidence from India, Sub-Saharan Africa, Southeast Asia, and Latin America, the paper analyzes how digital payment adoption enhances transaction efficiency, financial identity formation, credit access, income resilience, and economic formalization. However, structural constraints—including digital literacy deficits, infrastructural inequality, gendered digital divides, regulatory rigidities, cybersecurity risks, and socio-cultural resistance—limit sustained and equitable integration. The review argues that digital payments represent a necessary but insufficient condition for structural empowerment and proposes a layered ecosystem approach to inclusive digital transformation. Keywords: Digital Payments, Financial Inclusion, Unorganized Vendors, Informal Economy