Adoption and welfare effects of payment innovations: The case of digital wallets in Peru

Arturo Andia, Jose Aurazo and Marcelo Paliza
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Arturo Andia: Central Reserve Bank of Peru.
Jose Aurazo: Bank for International Settlements and Central Reserve Bank of Peru.
Marcelo Paliza: Central Reserve Bank of Peru.

No 2025-006, Working Papers from Banco Central de Reserva del Perú

Abstract: Digital wallets like Yape and Plin have gained widespread popularity in Peru, allowing users to make instant payments through quick response (QR) codes or mobile phone numbers. This paper examines the drivers of their adoption and their impact on everyday life. Using market share data for six digital payment instruments and cash from January 2019 to April 2024, we estimate the demand for payment instruments and find that features such as lower fees, 24/7 immediate payments, QR code payments, and interoperability with point-of-sale (POS) terminals are key to their success. Our estimates suggest that a PEN 0.01 (USD 0.003) increase in payer fees would reduce the market share of the digital wallets by 0.31 percentage points (pp), while debit cards and cash would gain usage. Simulations further indicate that removing 24/7 immediate transfers would reduce digital wallet usage by 15.75 pp, discontinuing POS payments by 26.01 pp, and eliminating QR code functionality by 4.45 pp. Furthermore, our findings suggest that the adoption of digital wallets has contributed to a sustained increase in consumer welfare among banked individuals over time.

Keywords: Consumer welfare; Demand estimation; Digital payments; Digital wallets; Innovation; Peru (search for similar items in EconPapers)
JEL-codes: G23 G28 L51 L96 O16 R11 (search for similar items in EconPapers)
Date: 2025-08
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