Payment Technology Adoption by Small and Medium Businesses: Experimental Evidence from Mobile Money in Kenya
What determines the use of electronic payment instruments by merchants in developing countries?
Abstract
What determines the use of electronic payment instruments by merchants in developing countries? Are there barriers to payment technology adoption? To shed light on these questions, we offered a randomly selected sample of merchants in Kenya the possibility to sign up for free and on their behalf, for a novel electronic-payment technology (Lipa Na M-Pesa), which allows an efficient mobile-money based transaction between a business and its customers. Our intervention allows us to identify the preference to adopt the payment technology, once informational and monetary barriers to adoption are resolved. We find that over a 60% (20%) of the treated restaurant (pharmacy) owners revealed their willingness to adopt the technology. This evidences an unmet latent demand for this technology. We also find that businesses with past exposure to mobile-money instruments and with lower visibility concerns are more willing to adopt the technology. Moreover, sixteen months after our interventions, we observe that business owners who adopted the technology continue using it and feel safer.
Citation
Dalton, P., Pamuk, H., van Soest, D., Ramrattan, R., & Uras, B. (2018). Payment Technology Adoption by SMEs: Experimental Evidence from Kenya’s Mobile Money. (DFID Working Paper). Tilburg: Tilburg University.
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