Pay it forward (digitally): sizing up the global impact of electronic wages on digital payment usage

This paper explores the extent to which electronic wage payments affect the likelihood that consumers pay merchants digitally. I examine this relationship on a global basis, using microdata from the World Bank’s 2021 Global Financial Inclusion (Findex) survey. Methodologically, I employ a two-stage modeling approach, which first accounts for a consumer’s access to an electronic payment instrument before estimating the effects of electronic wages on digital payment usage. Overall, I find that consumers who receive wages electronically are 15% more likely to make digital merchant payments than those who do not. Electronic wages have a more powerful effect on the probability of making digital merchant payments than the other relevant demographic, personal economic, and connectivity variables included in the model. Only certain geographic indicators have larger effects. Further, in examining heterogeneous effects across regions, the positive and statistically significant effect of electronic wages holds in seven of eight regions—more often than the other explanatory factors. The findings presented in this paper have implications for scholars and policymakers seeking to understand the drivers of digital payment usage among consumers.