This study analyzes the factors that determine the adoption of mobile wallets and other payment services in Colombia. Spatial econometric models are used to assess regional heterogeneity using regional data, and machine learning techniques (Decision Tree and Random Forest) are applied to identify individual-level patterns based on microdata. The results reveal significant regional heterogeneity, associated with internet coverage, education, and economic conditions. At the individual level, adoption is primarily influenced by income, age, gender, and individuals’ perceptions of the financial system. While traditional financial products such as debit card face operational and cultural barriers, mobile wallets show higher adoption among younger users who are digitally literate and open to using new technologies.
The most recent
Approach
This study provides an assessment of retail payments and the potential changes brought about by the introduction of mobile wallets in the population’s payment preferences. An empirical evaluation is conducted to compare the adoption of these innovations with traditional payment services. To this end, a territorial approach is considered using spatial econometric models to examine regional heterogeneity, along with a user-level approach based on machine learning techniques to capture individual behaviors and non-linear relationships in the adoption of payment methods.
Contribution
The paper contributes to the literature by combining territorial and microeconomic perspectives to understand the dynamics of the payment ecosystem. It incorporates location as a central element to explain regional gaps in adoption and offers novel evidence on the individual determinants of mobile wallet, debit card, and check usage. Furthermore, it explicitly contrasts traditional payment instruments with mobile wallets, broadening the understanding of the market and the factors that facilitate or hinder their adoption.
The results show considerable heterogeneity in the adoption and use of payment methods and reveal that mobile wallets broaden the range of options available to users.
Results
The findings reveal substantial regional heterogeneity in the adoption of payment services, explained by economic and financial interactions across regions, as well as by differences in digital connectivity and education levels. At the individual level, high heterogeneity in the adoption and use of payment methods is also observed, associated with income, age, gender, perceptions of the financial system, and perceived ease of use of new technologies. Additionally, evidence of multi-homing is found, as a segment of users employs multiple payment methods, suggesting that mobile wallets expand and complement the available payment alternatives.