merchant payment—including 670 million in India

Banked adults who make merchant payments only in cash present another opportunity for increasing the use of digital payments

Another large opportunity to increase account use is to more fully digitalize merchant payments. In developing economies, 1.6 billion adults with an account made merchant payments only in cash (map 2.5.4). Although the Global Findex 2021 survey did not directly ask whether adults made at least one merchant payment, it is reasonable to assume that all adults had done so, meaning that, on average, almost half of adults with an account made merchant payments only in cash. This average is heavily skewed by the fact that just 8 percent of account owners in China only used cash to make merchant payments. Examining the data for developing economies without China reveals that two-thirds of adults with an account made merchant payments only in cash. In India, that share was 85 percent—or 670 million adults. In Bangladesh and Tanzania, more than 90 percent of adults with an account made merchant payments only in cash, and that share was 75 percent in Indonesia, 54 percent in Kenya, and about 40 percent in Brazil, South Africa, and Türkiye (figure 2.5.6). Ideally, people with an account—and, in particular, those who receive a payment into their account—would keep their funds in the account and use them to make purchases or payments directly from the account. The Global Findex 2021 survey payments data show that many account owners did just that. However, in many developing economies digital payments are not yet widely accepted for everyday purchases at local retail stores and markets. Merchants may not find it attractive to accept digital payments if fees are high or if the enabling physical infrastructure—such as electricity and data network connectivity—is unreliable. A regulatory environment that makes it cumbersome to formalize a business, or one that taxes digital payments, may also discourage merchants from accepting digital payments.36 Thus the challenge of transitioning more adults to digital payments is not just a matter of motivating demand, but also a matter of enabling supply, so that account owners have the option to pay digitally.

MAP 2.5.4 In developing economies, 1.6 billion adults with an account made no digital merchant payment—including 670 million in India

Adults with an account making no digital merchant payment in the past year, 2021

Source: Global Findex Database 2021. Note: Data on digital merchant payments were not collected in most high-income economies. Data are not displayed for economies for which no data are available.

36.  See Klapper, Miller, and Hess (2019) for a discussion of how digital financial services—including those accessed through mobile phones and the internet—can encourage businesses to formalize their operations.