Pre‐ and Post‐ <scp>COVID</scp> Digital Financial Service Adoption and Income Inequality: A Disaggregated Analysis Based on Education and Geography

ABSTRACT The COVID‐19 pandemic has accelerated the adoption of digital financial services (DFS), but its impact on income inequality remains underexplored, especially when considering the role of education and geography. This study investigates the implications of COVID‐19 driven digital financial service adoption, educational level on income inequality, with a specific focus on the unique dynamics within Central Africa (Cameroon), Southeast Asia (Malaysia), and West Africa (Nigeria). Using the Global Financial inclusion data, the study engaged the logit and marginal effect regression. Result shows that digital financial transactions (DFTs), particularly digital payments made is a significant driver of upward income mobility across Nigeria, Cameroon, and Malaysia, both before and after COVID‐19. Also, the pandemic increased existing inequalities along gender and education lines but improved financial digitization, thereby raising the effects of digital payments on upward income mobility from 14 to 15 percentage points pre‐COVID to 18–22 percentage points post‐COVID. The findings further show that the individuals' ability to convert digital access into income gains was significantly contingent upon gender, educational level, and location. Educated individuals and urban residents benefited more from financial digitization in terms of upward income mobility, whereas women recorded stronger income gains post‐COVID, suggesting narrowing gaps in digital finance benefits. However, receiving digital payments showed more context‐specific effects, significant in Cameroon pre‐COVID and in Nigeria post‐COVID, highlighting variation in remittances, social transfers, and institutional responses. The study concludes by recommending present and future financial digitalization policies which would help prioritise the provision and security of digital payment technologies. Also, the policies must move beyond accelerating access to strengthening digital capability. Likewise, given the significant gains recorded by women, policies must continue to support female digital inclusion through tailored interventions including gender‐responsive financial products and women‐focused outreach. Lastly, the significant urban–rural divide requires massive public investment in closing the digital infrastructure gap.