Digitalization is the common usage of the Government as it spreads across all the walks of human life. From a Vegetable Vendor to an Income tax payer use the new way of making their payments digital. Digital literacy has become a need of the hour since the onset of De -monetization. A systematic random sampling study was done among a group of villagers to evaluate the usage of digital services and to make financial payments online. This study is mainly to understand the various factors that hinder the active use of financial services. It also focused on how digital literacy is away forward to Financial Inclusion. The findings of the study suggest that external forces like arrival of new digital services, demonetization and the internal factors like lack of knowledge in using digital devices and new payments methods, cost of digital devices contribute to the financial exclusion. It is found that there is much more need to increase the financial and digital literacy among rural people. Even though Government takes various measures to increase and enhance the digital literacy and bring Financial Inclusion in rural India, changes must be introduced in creating awareness in order to make sure that benefits of financial services reach the intended targeted group of society. Government should take the necessary steps to induce people in the usage of digital facilities and making it easily accessible to the rural population of India.