IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v114y2024i11p3469-3512.html

Financial Technology Adoption: Network Externalities of Cashless Payments in Mexico

Author

Listed:
  • Sean Higgins

Abstract

Do coordination failures constrain financial technology adoption? Exploiting the Mexican government's rollout of 1 million debit cards to poor households from 2009 to 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 percent 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 percent of their supermarket consumption to small retailers, whose sales and profits increased.

Suggested Citation

  • Sean Higgins, 2024. "Financial Technology Adoption: Network Externalities of Cashless Payments in Mexico," American Economic Review, American Economic Association, vol. 114(11), pages 3469-3512, November.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:11:p:3469-3512
    DOI: 10.1257/aer.20201952
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20201952
    Download Restriction: no
    File URL: https://doi.org/10.3886/E202904V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20201952.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20201952.slds
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20201952.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/aer.20201952?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Argente & Paula Gonzalez Alvarez & Esteban Méndez & Diana Van Patten, 2025. "Drivers of Digital Payment Adoption: Lessons from Brazil, Costa Rica, and Mexico," NBER Working Papers 34280, National Bureau of Economic Research, Inc.
    2. Van Hove, Leo & Kotkowski, Radoslaw & Polasik, Michal, 2026. "A scaling law for two-sided networks? Empirical evidence for a mobile payment scheme," Telecommunications Policy, Elsevier, vol. 50(1).
    3. Mukharlyamov, Vladimir & Sarin, Natasha, 2025. "Price regulation in two-sided markets: Empirical evidence from debit cards," Journal of Financial Economics, Elsevier, vol. 172(C).
    4. Daiji KAWAGUCHI & Sagiri KITAO & Manabu NOSE, 2025. "CEO Age and Technology Adoption: Network effects in e-commerce propagation in Japan," Discussion papers 25023, Research Institute of Economy, Trade and Industry (RIETI).
    5. Katharina Hartinger & Erik Sarrazin & David J. Streich, 2025. "Banking for Boomers – A Field Experiment on Technology Adoption in Financial Services," Working Papers 2505, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 27 Mar 2025.
    6. Barros, Fernando & Delalibera, Bruno R. & Neto, Valdemar Pinho & Rangel, Victor, 2025. "Natural disasters and financial technology adoption," Economics Letters, Elsevier, vol. 247(C).
    7. Tatsuru Kikuchi, 2026. "Technology Adoption and Network Externalities in Financial Systems: A Spatial-Network Approach," Papers 2601.04246, arXiv.org, revised Jan 2026.
    8. Ambler, Kate & Bakhtiar, M. Mehrab & Bloem, Jeffrey R. & Uddin, Mohammad Riad, 2025. "Show me the money! Experimental evidence on preferences for cash vs. digital payment," IFPRI discussion papers 2385, International Food Policy Research Institute (IFPRI).

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:114:y:2024:i:11:p:3469-3512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.