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CCER讨论稿:The Rise of E-Wallets and Buy-Now-Pay-Later:Payment Competition, Credit Expansion, and Consumer Behavior

发布日期:2023-05-26 03:30    来源:

E2023011                                                        2023-05-26


Wenlong Bian, Lin William Cong, and Yang Ji



The past decade has witnessed a phenomenal rise of digital wallets, and the COVID-19 pandemic further accelerated their adoption globally. Such e-wallets provide not only a conduit to external bank accounts but also internal payment options, including the ever-popular Buy-Now-Pay-Later (BNPL). We examine, for the first time, e-wallet transactions matched with merchant and consumer information from a world-leading provider based in China, with around one billion users globally and a business model that other e-wallet providers quickly converge to. We document that internal payment options, especially BNPL, dominate both online and on-site transactions. BNPL has greatly expanded credit access at the extensive margin through its adoption in two-sided payment markets. While BNPL crowds out other e-wallet payment options, it expands FinTech credit to underserved consumers. Exploiting a randomized experiment, we also find that e-wallet credit through BNPL substantially boosts consumer spending. Nevertheless, users, especially those relying on e-wallets as their sole credit source, carefully moderate borrowing when incurring interest charges. The insights likely prove informative for economies transitioning from cash-heavy to cashless societies where digital payments and FinTech credit see the largest growth and market potential.

Keywords: Cashless, Consumer Credit, FinTech, Financial Inclusion, Mobile Wallet.

JEL Codes: E42; G20; G23; G51