The Real Impact of FinTech: Evidence from Mobile Payment Technology
By Sumit Agarwal, Wenlan Qian, Yuan Ren, Hsin-Tien Tiffany Tsai, Bernard Yeung
Published: November 29, 2025
Source: Centre for Economic Policy Research (CEPR)
Introduction
Financial technology, or FinTech, has revolutionized the financial services industry, driving unprecedented changes in investing, lending, and payments. Despite this transformation, the full economic implications of digital payments, particularly mobile payment technologies, on consumers, small businesses, and banks have not been comprehensively understood.
A recent study by researchers including Sumit Agarwal and colleagues investigates these broader economic effects using Singapore’s nationwide rollout of consumer-to-business (C2B) mobile payments as a natural experiment. Their findings reveal how mobile payments can stimulate small business creation, alter consumer behavior, and induce adaptive responses among financial institutions, illustrating the tangible, multifaceted benefits of low-cost digital payment systems.
Context: FinTech and the Rise of Mobile Payments
Mobile payments have grown explosively in recent years. By 2024, more than 4.3 billion people worldwide were using mobile payments, with high adoption rates in countries such as China, India, Kenya, Singapore, South Korea, Sweden, and Tanzania. Typically involving small, everyday transactions connected to existing credit or debit cards, mobile payments have often been underappreciated despite their penetration into daily economic activities.
Singapore’s mobile payment ecosystem provides a compelling case study. Despite widespread smartphone ownership (73%) and near-universal banking penetration (98%) by 2016, only 3% of Singaporean retailers accepted mobile payments, and cash remained the predominant transaction method for approximately 60% of payments.
In 2017, the Singaporean government and banking sector launched concerted efforts to modernize payments. DBS Bank initiated QR code payment services offering instant, secure, and low-fee transactions, with other banks quickly following. The Association of Banks then introduced PayNow in July 2017, enabling fee-free interbank transfers via mobile numbers or national IDs, later expanding PayNow Corporate for business-to-business (B2B) payments in June 2018. ### Research Design and Data
Using detailed business registration data from Singapore’s Accounting and Corporate Regulatory Authority along with granular transaction records from 138,448 customers of DBS Bank (which serves 82% of Singapore’s population), the researchers charted mobile payment adoption trajectories before and after the rollout of PayNow and assessed related economic changes.
Mobile payment usage surged remarkably within one year—from 8.6% to 33.4% adoption, signup rates rose from 31.9% to 47.9%, and transaction values increased tenfold. The analysis compared affected groups (those enabled to use C2B mobile payments) against control groups (primarily B2B sectors before PayNow Corporate introduction), controlling for time and industry effects.
Impact on Small Business Formation and Operations
Small and cash-reliant merchants stood to gain the most from mobile payments. Benefits included lower transaction fees, faster payments, better transaction record-keeping, and reduced risks linked to cash handling.
The study observed a strong upsurge in the creation of new firms in C2B sectors after PayNow’s launch. Specifically, business entry rates in C2B industries increased by over 18% relative to B2B industries, amounting to a cumulative 268% growth over 15 months. This growth was particularly pronounced among small firms, where the gap between C2B and B2B entries widened substantially. Industries characterized by heavy cash use and locales with low-income populations registered the largest increases. In contrast, affluent and tourist-heavy districts did not see significant changes, underscoring the technology’s role in supporting traditionally underserved market segments.
For self-employed individuals within DBS’s client base (comprising 3.7% of users), the mobile payment rollout translated into tangible operational gains: 6.9% higher cash inflows, 2.9% higher outflows, 2.9% reductions in liquidity reserves, and 3% increases in spending. These improvements signify enhanced cash flow efficiency and business growth potential catalyzed by mobile payments.
Changes in Consumer Behavior
Mobile payments also influenced consumer spending patterns. By tracking consumers who adopted DBS’s PayLah! digital wallet between April 2017 and the PayNow rollout, and comparing them to matched non-adopters, the study identified key shifts:
- Monthly spending via mobile payments increased by SGD 3.10.
- ATM cash withdrawals declined.
- Overall spending rose by approximately 4.1%, equating to SGD 172 per month or about SGD 2,064 annually per consent.
- Credit card purchases grew in both frequency and value, particularly at small retailers.
- No significant changes were observed in bill payments.
The increased consumer spending was not driven by income growth, suggesting that mobile payments eased liquidity constraints, especially for consumers previously dependent on cash transactions. Importantly, the rise in credit usage did not lead to higher delinquency rates, indicating no evidence of increased financial distress or impulse buying.
Adaptations in the Banking Sector
The research also examined how banks responded strategically to mobile payment innovations. Banks reduced the number of ATMs, particularly in traditionally cash-intensive areas, reflecting a transition away from cash infrastructure. Simultaneously, banks expanded credit provision, recognizing the opportunity to serve consumers who were now more engaged in digital payments.
Such adjustments by banks were crucial in amplifying the economic impact of the mobile payment technology, demonstrating the interconnected effects of digital finance on industries and consumers.
Conclusion
The Singaporean experience underscores the profound economic implications of FinTech-driven mobile payments. By enabling affordable, fast, and secure electronic transactions, mobile payments have stimulated small business growth, boosted consumer spending—especially among cash-reliant populations—and prompted vital innovations within traditional banking services.
These findings offer significant policy insights, highlighting how coordinated infrastructure development, government support, and financial sector adaptation can maximize the tangible benefits of digital payment technologies, ultimately fostering inclusive economic growth.
References
- Agarwal, S., Qian, W., Ren, Y., Tsai, H.-T. T., & Yeung, B. (2025). The real impact of FinTech: Evidence from mobile payment technology. CEPR Discussion Papers.
- Buchak, G., et al. (2018), on FinTech and lending.
- D’Acunto, F., & Rossi, M. (2021), on FinTech and investing.
- Higgins, S. (2024), on payment services.
- Hau, H., et al. (2024), on merchant impacts.
For more details, visit the Centre for Economic Policy Research website at https://voxeu.org/columns/real-impact-fintech-evidence-mobile-payment-technology.
