Two-Sided Financial Technology Underadoption: Experimental Evidence from Jordan

Sabrine Bair, Josepa Miquel-Florensa and Hakan Ozyilmaz

No 24-1582, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This study examines the underadoption of digital wallets as network goods through a field experiment conducted in Jordan. We elicit consumers’ and merchants’ willingness-to-pay (WTP) for interoperable mobile wallets using an incentive-compatible mechanism and measure their expectations regarding cross-market adoption. Our findings indicate a low demand for digital wallets across both sides of the market, with consumers and merchants willing to pay approximately 35% and 40% of the market price, respectively. While consumers’ aggregate expectations of merchant adoption are accurate, they exhibit considerable individual heterogeneity. Crucially, consumers’ sensitivity to cross-network effects is limited: a 1 p.p. increase in crossside adoption expectations translates into a 0.013 USD increase in WTP. Meanwhile, merchants significantly underestimate consumer adoption and demonstrate approximately half the sensitivity of consumers to cross-side network effects. These results hold significant implications for designing interventions that exploit network effects in order to increase digital wallet adoption.

Keywords: financial inclusion; network effects; digital wallet; digital financial literacy (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ara, nep-dcm, nep-exp, nep-fle and nep-pay
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