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Adoption and welfare effects of payment innovations: The case of digital wallets in Peru

Author

Listed:
  • Arturo Andia

    (Central Reserve Bank of Peru.)

  • Jose Aurazo

    (Bank for International Settlements and Central Reserve Bank of Peru.)

  • Marcelo Paliza

    (Central Reserve Bank of Peru.)

Abstract

Digital wallets like Yape and Plin have gained widespread popularity in Peru, allowing users to make instant payments through quick response (QR) codes or mobile phone numbers. This paper examines the drivers of their adoption and their impact on everyday life. Using market share data for six digital payment instruments and cash from January 2019 to April 2024, we estimate the demand for payment instruments and find that features such as lower fees, 24/7 immediate payments, QR code payments, and interoperability with point-of-sale (POS) terminals are key to their success. Our estimates suggest that a PEN 0.01 (USD 0.003) increase in payer fees would reduce the market share of the digital wallets by 0.31 percentage points (pp), while debit cards and cash would gain usage. Simulations further indicate that removing 24/7 immediate transfers would reduce digital wallet usage by 15.75 pp, discontinuing POS payments by 26.01 pp, and eliminating QR code functionality by 4.45 pp. Furthermore, our findings suggest that the adoption of digital wallets has contributed to a sustained increase in consumer welfare among banked individuals over time.

Suggested Citation

  • Arturo Andia & Jose Aurazo & Marcelo Paliza, 2025. "Adoption and welfare effects of payment innovations: The case of digital wallets in Peru," Working Papers 2025-006, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2025-006
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    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2025/documento-de-trabajo-006-2025.pdf
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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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