The Social Meaning of Mobile Money: Willingness to Pay with Mobile Money in Bangladesh

Mobile money has spread globally, introducing new payment technologies and reducing dependence on cash. Using mobile money can affect spending decisions and how people perceive money itself. Behavioral household finance shows that people are often more willing to spend when using less tangible forms of money like debit and credit cards than when spending in cash. We test whether a similar positive "payment effect" holds for mobile money. In contrast, we find a consistently lower willingness to spend in Bangladesh, where mobile money is now widespread. We draw on surveys embedded within an experiment that allows us to control for the relationships between senders and receivers of mobile money. The findings are consistent with mobile money being earmarked or labeled for particular uses. For rural households, who typically receive remittances from relatives working in the city, for example, mobile money often comes with expectations of how the money should be spent. Spending with cash, in contrast, tends to be more fungible. In urban areas, where the sample is largely comprised of remittance-senders, payment effects are substantially smaller.