The Challenge

Digital payment systems have been increasingly introduced by governments and financial service providers across the world to enable quick, convenient, and secure transactions. However, despite these systems’ advantages, the successful integration of a digital financial technology often depends on both consumers and merchants adopting it.¹ In instances where this does not occur, the technology can fail to reach widespread uptake, leaving potential benefits unrealized. For instance, IPA evidence from Mexico showed that following a large-scale rollout of debit cards in many cities, misperceptions deterred a share of merchants in other cities from adopting point-of-sale terminals, reducing the potential for attracting new customers and earning higher sales and profits.

In particular, Pakistan faces a coordination challenge between consumers and merchants in adopting RAAST—the country’s instant payment system. An initial survey for this intervention found that while a large majority of merchants and consumers valued digital payments, each side believed the other preferred cash—discouraging adoption on both sides of the market. As a result, transactions on RAAST remain low, slowing the platform’s economic impact. Can correcting these misperceptions and creating common knowledge that both sides value digital payments catalyze coordinated, widespread uptake?

The Evaluation

Researchers are conducting a randomized evaluation in Pakistan to measure whether correcting misperceptions about digital payment preferences can increase adoption among retail merchants and consumers.

The intervention takes place in Okara, Bahawalnagar, and Muzaffargarh districts in the Punjab region and involves 1,200 retail merchants and 1,200 consumers who have access to digital payment services. Across the three districts, 281 markets (areas with merchants and consumers) have been randomly divided into the following groups:

• Comparison Group: Merchants and consumers receive only a common script that elicits their estimates of local attitudes toward digital payments and offers a small financial prize for the most accurate estimate. No further information or incentives are provided.
• Two-sided information: Merchants are informed of the share of local households that report valuing digital payments, while consumers are informed of the share of nearby merchants who report valuing digital payments. SMS reminders reinforce this message.
• Coordinated information: Merchants and consumers receive the same two-sided information, plus an additional message informing them that the other side of the market will also be informed. This creates common knowledge of preferences to facilitate coordination. SMS reminders reiterate this two-sided message.
• Financial incentives: Merchants and consumers are promised a financial reward conditional on demonstrating digital transactions after the intervention (merchants must show at least 15 unique digital transactions; consumers must show at least 5 digital payments). SMS reminders restate the conditions and reward value.

Researchers will measure the intervention’s impacts on digital payment uptake and usage, merchants’ and consumers’ beliefs and misperceptions about the other side’s preferences, discussing or encouraging digital payments with outside peers and family, and foot traffic and average transaction size for merchants.

Results

Results will be available in 2026.

Sources

^1. Vlaicu, Razvan. "Digital Payments Adoption by Consumers and Firms: Implications for Financial Inclusion." (2025).
Ricci, Luca Antonio, Calixte Ahokpossi, Saad Noor Quayyum, R. A. Turk, Anna Belianska, Mehmet Cangul, H. Fuje et al.

"Digital payment innovations in sub-Saharan Africa." IMF Departmental Paper, International Monetary Fund, Washington, DC (2025).