Effect of Digital Payment Systems and Mobile Wallets on Consumer Behavior and Financial Inclusion

Abstract

The fast growth of digital payment platforms and mobile wallets has altered the nature of consumer engagement with the financial service, especially in emerging economies. This paper discusses how adopting digital payments will impact consumer behavior, financial decision-making and financial inclusion in general. Based on the available empirical research and world financial inclusion data, the paper contends that mobile wallets can result in increased access, build efficiency of transactions, and formal financial inclusion of underserved population. Results show that convenience, perceived security, trust and technological literacy play a significant role in consumer adoption behavior. Additionally, online payment systems lower transaction costs, enhance transparency, and enable women, rural consumers and the low-income groups to access the financial system. The authors find that digital payment systems are a boost to the inclusive finance sector, yet, under the condition of reinforcement of regulatory frameworks, digital literacy programs, and cybersecurity systems.