Financial Technology Adoption: Network Externalities of Cashless Payments in Mexico, American Economic Review
Do coordination failures constrain financial technology adoption? Exploiting the Mexican government's rollout of one million debit cards to poor households from 2009-2012, 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% 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% of their supermarket consumption to small retailers, whose sales and profits increased.
Higgins, Sean Kendrick. 2022. Financial Technology Adoption: Network Externalities of Cashless Payments in Mexico. American Economic Review.LINK