Consumer payment choices, costs, and risks: Evidence from Zimbabwe.
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Date
2021
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Abstract
Very little is known about payment choices in the African context and in
developing countries in general. Their unique infrastructures and economic nuances
suggest that both the availability of instruments and supporting structures in the
payment system are different from the general perception. This exploratory study
investigates the payment choices in Zimbabwe, a country that claims the existence
of a near cashless society. Through a descriptive and logit analysis based on survey
data, we find that a strong preference for cash, coupled with cash shortages and
inadequate infrastructure for electronic payments, has resulted in a multitiered
pricing system, with significant premiums for digital payments. This perverse effect
counters the heavily lauded benefits of mobile payments in developing countries.
We argue that the demand-side bias in government policies will not effectively
counter persistent currency failures and the resultant inflation, both of which havea strong influence on payment choices. We recommend that the government
should consider polices that will reduce merchant adoption costs to encourage
widespread use of digital payment instruments, such as debit cards.
Subjects: Microeconomics; Development Economics; Finance
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Simatele, M. and Mbedzi, E. (2021) Consumer payment choices, costs, and risks: Evidence from Zimbabwe. Cogent Economics & Finance, 9(1)