Payment Technology Adoption by SMEs

Experimental Evidence from Kenya's Mobile Money

Patricio Dalton, Haki Pamuk, Daan van Soest, R. Ramrattan, Burak Uras

Research output: Working paperOther research output

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Abstract

This paper reports the results from a field experiment conducted in Kenya to investigate the adoption determinants of a profitable financial technology by small and medium sized enterprizes (SMEs). We offered a randomly selected sample of restaurants and pharmacies the possibility to sign up, on their behalf, for a novel mobile-money technology called Lipa Na M-Pesa, which allows an efficient mobile-money based transaction between a business and a customer. A key feature of Lipa Na M-Pesa is that it is profitable, it does not involve any risk, and it has no registration fee. Our intervention eliminates the transaction costs associated with the adoption of the technology. We find that over a 60% of the restaurants owners/managers decided to sign up for this new technology, while the adoption rates turned out to be about 20% among pharmacies. The high take-up rate in restaurants shows that the small barriers that we released were preventing the adoption of this technology. We use our detailed survey to shed
light on the reasons for not adopting the technology and we find that neither risk, time preferences or trust are important predictors. We hypothesise that status quo bias may be a plausible internal barrier underlying these decisions.
Original languageEnglish
Place of PublicationTilburg
PublisherTilburg University
Number of pages45
Publication statusPublished - Feb 2018

Publication series

NameDFID Working Paper

Fingerprint

Payment
Technology adoption
Kenya
Restaurants
Field experiment
Transaction costs
Owner-managers
Registration
Fees
Status quo bias
Time preference
Predictors

Keywords

  • P2B
  • Lipa Na M-Pesa
  • technology adoption
  • SMEs

Cite this

Dalton, P., Pamuk, H., van Soest, D., Ramrattan, R., & Uras, B. (2018). Payment Technology Adoption by SMEs: Experimental Evidence from Kenya's Mobile Money. (DFID Working Paper). Tilburg: Tilburg University.
Dalton, Patricio ; Pamuk, Haki ; van Soest, Daan ; Ramrattan, R. ; Uras, Burak. / Payment Technology Adoption by SMEs : Experimental Evidence from Kenya's Mobile Money. Tilburg : Tilburg University, 2018. (DFID Working Paper).
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Dalton, P, Pamuk, H, van Soest, D, Ramrattan, R & Uras, B 2018 'Payment Technology Adoption by SMEs: Experimental Evidence from Kenya's Mobile Money' DFID Working Paper, Tilburg University, Tilburg.

Payment Technology Adoption by SMEs : Experimental Evidence from Kenya's Mobile Money. / Dalton, Patricio; Pamuk, Haki; van Soest, Daan; Ramrattan, R.; Uras, Burak.

Tilburg : Tilburg University, 2018. (DFID Working Paper).

Research output: Working paperOther research output

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T1 - Payment Technology Adoption by SMEs

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AU - Uras, Burak

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N2 - This paper reports the results from a field experiment conducted in Kenya to investigate the adoption determinants of a profitable financial technology by small and medium sized enterprizes (SMEs). We offered a randomly selected sample of restaurants and pharmacies the possibility to sign up, on their behalf, for a novel mobile-money technology called Lipa Na M-Pesa, which allows an efficient mobile-money based transaction between a business and a customer. A key feature of Lipa Na M-Pesa is that it is profitable, it does not involve any risk, and it has no registration fee. Our intervention eliminates the transaction costs associated with the adoption of the technology. We find that over a 60% of the restaurants owners/managers decided to sign up for this new technology, while the adoption rates turned out to be about 20% among pharmacies. The high take-up rate in restaurants shows that the small barriers that we released were preventing the adoption of this technology. We use our detailed survey to shedlight on the reasons for not adopting the technology and we find that neither risk, time preferences or trust are important predictors. We hypothesise that status quo bias may be a plausible internal barrier underlying these decisions.

AB - This paper reports the results from a field experiment conducted in Kenya to investigate the adoption determinants of a profitable financial technology by small and medium sized enterprizes (SMEs). We offered a randomly selected sample of restaurants and pharmacies the possibility to sign up, on their behalf, for a novel mobile-money technology called Lipa Na M-Pesa, which allows an efficient mobile-money based transaction between a business and a customer. A key feature of Lipa Na M-Pesa is that it is profitable, it does not involve any risk, and it has no registration fee. Our intervention eliminates the transaction costs associated with the adoption of the technology. We find that over a 60% of the restaurants owners/managers decided to sign up for this new technology, while the adoption rates turned out to be about 20% among pharmacies. The high take-up rate in restaurants shows that the small barriers that we released were preventing the adoption of this technology. We use our detailed survey to shedlight on the reasons for not adopting the technology and we find that neither risk, time preferences or trust are important predictors. We hypothesise that status quo bias may be a plausible internal barrier underlying these decisions.

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Dalton P, Pamuk H, van Soest D, Ramrattan R, Uras B. Payment Technology Adoption by SMEs: Experimental Evidence from Kenya's Mobile Money. Tilburg: Tilburg University. 2018 Feb. (DFID Working Paper).