The rapid rise of information technology has transformed finance, particularly in the areas of investing (D’Acunto and Rossi 2021), lending (Buchak et al. 2018), and payment services (Higgins 2024). Mobile payments exemplify this shift: by 2024, over 4.3 billion people worldwide used them, with adoption exceeding 80% in many countries, including China, India, Kenya, Singapore, South Korea, Sweden, and Tanzania. However, the development is often overlooked because mobile payments typically involve small, everyday transactions and are often linked to existing credit or debit cards in advanced economies.
In Agarwal et al. (2025), we examine the real effects of FinTech by exploiting Singapore’s 2017 nationwide mobile payment rollout. In contrast to prior studies that separately analyse the impact of FinTech on households (Agarwal et al. 2024), merchants (Hau et al. 2024), and financial intermediaries (Buchak et al. 2018), we document how mobile payments simultaneously reshape all three sectors and how cross-sector interactions amplify the overall economic impact. Beyond showing that mobile payments spur small business formation and alter consumer spending habits, we highlight that the aggregate impact depends crucially on how traditional financial institutions, particularly banks, adapt their payment and credit strategies in response to the technology shock.
Singapore’s adoption of QR payment technology and data sources
Singapore offers an ideal setting for studying mobile payments. In 2016, despite 73% smartphone use and 98% banking coverage, only 3% of retailers accepted mobile payments, with cash still used for 60% of transactions. In 2017, the government championed digitalisation to boost efficiency and innovation while banks developed the supporting infrastructure. DBS Bank launched QR code payments in April 2017, enabling low-fee, instant, and secure mobile transactions, which other banks soon adopted. The Association of Banks introduced PayNow on 10 July 2017 for fee-free interbank transfers via mobile or ID numbers, followed by PayNow Corporate in June 2018. By contrast, the US FedNow, launched in July 2023, supports instant transfers but lacks PayNow’s person-to-person feature.
Singapore provides a natural experiment to assess the impact of mobile payments on businesses, consumers, and banks. Using business-level data from Singapore’s Accounting and Corporate Regulatory Authority and 2016–2018 transaction-level data from 138,448 representative customers of DBS (which served 82% of residents), we find that mobile payment use rose from 8.6% to 33.4%, sign-ups from 31.9% to 47.9%, and transaction values increased by tenfold within a year.
We hypothesise that the widespread adoption of QR payment technology is likely to reshape the business landscape, consumer behaviour, and the retail banking sector. To assess these effects, we compare changes before and after mobile payment adoption between an affected group and a distinct control group, controlling for industry, time, and interaction effects.
Business creation and the adoption of mobile payments
Mobile payment adoption offers the greatest benefits to small, cash-reliant merchants by lowering transaction costs, speeding up payments, improving record-keeping, and reducing cash-handling risks, all of which can drive business growth.
Thus, we compare business entries in consumer-to-business (C2B) and in business-to-business (B2B) industries after the April 2017 adoption of PayNow (C2B mobile payments) but before the June 2018 adoption of PayNow Corporate (B2B mobile payments). We find that entry rates were similar before April 2017 but diverged sharply afterward: C2B entries rose by over 18% relative to B2B, with a cumulative increase of 268% in the 15 months following. Among small firms, the C2B–B2B gap widened from 18% to 24%, while for large firms it fell from 18% to 7.7%. These results hold across industries with both high and low exit rates.
Refinements confirm the pattern: excluding ambiguous sectors strengthened the results, cash-heavy industries and low-income neighbourhoods showed the largest entry gains, and no effects were observed in affluent or tourist districts. The C2B–B2B difference disappeared after June 2018, when PayNow Corporate extended mobile payments to B2B transactions, confirming the C2B-specific effect.
Among DBS clients, 3.7% were self-employed. After mobile payment adoption, they saw 6.9% higher cash inflows, 2.9% higher outflows, 2.9% lower liquidity holdings, and 3% higher spending, all of which are statistically significant. These results suggest that Singapore’s mobile payment rollout enhanced the formation of small businesses, income, and operational efficiency among self-employed merchants.
Consumer responses to the adoption of mobile payments
We next examine consumer responses to mobile payment adoption. Using DBS data, we define affected consumers as adopters of PayLah! (DBS Bank’s digital wallet launched in 2014) between April 2017 and the rollout of PayNow, matched to similar non-adopters via propensity score matching based on pre-2017 demographics and financial information.
From April 2017 to April 2018, adopters showed clear differences:
- Mobile payment spending rose by SGD 3.1 per month.
- ATM withdrawals declined.
- Total and credit card spending increased.
- Bill payments were unchanged.
Overall spending rose 4.1% – about SGD 172 monthly (SGD 2,064 annually) per consumer – equivalent to over SGD 100 million in annual aggregate spending in our sample, which was only 5% of the DBS consumer base. Thus, the overall effect is economically substantial.
We find that the spending increase was not driven by income growth and the consumption increase was strongest among previously cash-reliant consumers, suggesting mobile payments eased liquidity constraints and boosted purchases from small merchants. Credit card data also confirmed more frequent and higher-value transactions at small retailers. The increase in credit card spending could be attributed to banks expanding their credit card facilities. We find no signs of impulsive or debt-driven spending emerging, as delinquency rates and spending composition remained stable.
Changes in retail banking strategies
We examine how banks adjusted their retail strategies after the adoption of mobile payments. Before QR payments, approximately 3–3.2 million Singapore residents held cards, but cash still accounted for 60% of transactions. The rise of free mobile payments prompted banks to streamline ATMs and expand credit card offerings.
DBS data show accelerated ATM closures in cash-heavy, low-cost districts, while credit card ownership, number of cards per user, and credit limits all increased: mobile payment users were 1.6% more likely to become cardholders. A comparison of single- versus multi-bank customers suggests that these changes reflect a strategic adaptation to mobile payments, rather than competitive pressure.
Conclusion
FinTech has transformed finance, yet the broader effects of digital payments on consumers, businesses, and banks remain underexplored. Using national business data and DBS transaction records, our study examined Singapore’s rollout of consumer-to-business mobile payments.
Within a year, adoption expanded rapidly, triggering three key shifts: (i) small business formation increased, and self-employed owners experienced higher revenues, lower liquidity needs, and greater spending; (ii) consumers benefited from eased cash constraints and increased total expenditure, using both mobile payments and credit cards as their credit access expanded; and (iii) banks reduced ATM deployment in historically cash-intensive areas while expanding credit provision.
These findings demonstrate the tangible economic impact of low-cost digital payments and highlight the need to study their broader welfare effects.
References
Agarwal, S, P Ghosh, J Li, and T Ruan (2024), “Digital payments and consumption: Evidence from the 2016 demonetization in India”, The Review of Financial Studies 37(8): 2550–85.
Agarwal, S, W Qian, Y Ren, H-T Tsai, and B Yeung (2025), “The real impact of fintech: Evidence from mobile payment technology”, Management Science, forthcoming.
Buchak, G, G Matvos, T Piskorski, and A Seru (2018), “Fintech, regulatory arbitrage, and the rise of shadow banks”, Journal of Financial Economics 130(3): 453–83.
D’Acunto, F, and A Rossi (2021), “Robo-advising”, in Handbook of Technological Finance, Palgrave Macmillan.
Hau, H, Y Huang, H Shan, and Z Sheng (2024), “FinTech credit and entrepreneurial growth”, Journal of Finance 79(5): 3309–59.
Higgins, S (2024), “Financial technology adoption: Network externalities of cashless payments in Mexico”, American Economic Review 114(11): 3469–512.