Drivers of Digital Payment Adoption: Lessons from Brazil, Costa Rica, and Mexico
Digital payment platforms can displace cash and extend financial services to underserved populations, yet many adults worldwide remain unbanked. Leveraging granular microdata on individual transactions and user characteristics, we argue that broad cash substitution via peer-to-peer (P2P) platforms depends on a “rapid low income-gradient”, the speed at which adoption spreads from affluent early users to lower-income groups. In three Latin American cases, Brazil’s Pix, Costa Rica’s Sinpe Móvil, and Mexico’s CoDi, we document that low adoption costs, strong network effects, coordinated supply-side integration, and early awareness efforts enabled Pix and Sinpe Móvil to reach nearly all income segments within five years, whereas CoDi remains characterized by low usage and predominantly high-income adopters.
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