Rapid advances in digital technology, particularly in digital payments and identification systems, have created vast new opportunities for governments to interact and transact with their citizens. These innovations can be harnessed to transform the way states implement poverty-reduction programs and to help achieve the Sustainable Development Goals (SDGs). Digital payments promise faster, more transparent, and lower-cost delivery for existing cash-based government transfers. They can help eliminate wasteful (fuel) subsidies without hurting the poor. Digital identification systems that enable governments to uniquely identify beneficiaries can also support improved public service delivery. Moreover, having a recognized, verifiable identity is often a prerequisite for being able to fully participate in political, economic, and social life. It is a pillar of financial inclusion and poverty reduction, yet an estimated 1.5 billion people lack official identification. CGD research offers new ideas and practical guidance for policymakers on the successful implementation of digital payment and identification systems. It explores the role of digital technology in achieving a wide range of development outcomes, from gender equality to health and to sustainable energy use, while addressing the risks and barriers of deploying novel solutions.