Financial Technology Adoption: Network Externalities of Cashless Payments in Mexico

Sean Higgins

American Economic Review, 2024, vol. 114, issue 11, 3469-3512

Abstract: Do coordination failures constrain financial technology adoption? Exploiting the Mexican government's rollout of 1 million debit cards to poor households from 2009 to 2012, I examine responses on both sides of the market and find important spillovers and distributional impacts. On the supply side, small retail firms adopted point-of-sale terminals to accept card payments. On the demand side, this led to a 21 percent increase in other consumers' card adoption. The supply-side technology adoption response had positive effects on both richer consumers and small retail firms: richer consumers shifted 13 percent of their supermarket consumption to small retailers, whose sales and profits increased.

JEL-codes: E42 L25 L81 O14 O33 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aer.20201952

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