Ideas & Updates

LEARNING SERIES >> How to unlock the big opportunity in small merchant payments digitization

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Lessons from our work with members in Ghana, India, Mexico, and the Philippines

Running a micro or small business1 is no easy feat in the best of times. In the worst of times, as seen during the COVID-19 pandemic, it can affect the very survival of micro and small enterprises. For example, in Mexico, over 1 million micro, small, and medium enterprises (MSMEs) – which form 20 percent of registered MSMEs – permanently shut down operations in 2020, and almost 80 percent of MSMEs reported a decrease in income.2

Women merchants face additional challenges and inhibitions due to barriers such as lower levels of digital and financial literacy and low access to foundational infrastructure such as national identification documents, connectivity, mobile phones or bank accounts. They also mostly operate in the informal sector, for example, about 56% of informal traders in Ghana’s open markets are women.3


India has 40 million merchants, out of which 92% are informal. Only 7–8 million are women-owned enterprises, most of which operate in the informal sector. Less than 2% are digitized.4

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In a world where consumers and businesses are both embracing digitization, responsible digital payments can offer a pathway towards growth, inclusion, formalization, and higher incomes to millions of micro and small merchants and their families. It can also help economies to drive the recovery from COVID-19-induced economic slowdown and make consistent progress towards their national plans, digital visions, and the Sustainable Development Goals.

This blog series intends to encourage dialogue and collaboration amongst various stakeholders – governments, companies, payment providers, industry associations, and civil society organizations – to unlock the huge opportunity in merchant payment digitization and do it in a way that is responsible, inclusive, works for women and rural merchants, and is truly better than cash.


Of Mexico’s 6.3 million micro, small, and medium enterprises, 94.2 percent are microenterprises, and over half of these are women-owned or women-led5. There are 1.2 million mom-and-pop shops. Only 10% of microbusinesses have a digital presence.6

By capturing lessons from the experience of the Alliance Secretariat team working with our member countries – Ghana, India, Mexico, and the Philippines – and companies, such as Unilever and Grupo Bimbo, the series attempts to answer ‘how’ to build a digital payment ecosystem for merchants, especially women merchants, by:

  • aligning all the actors towards responsibly digitizing merchant payments
  • offering incentives and value proposition that can make micro and small merchants adopt digital payments as a preferred mode of transaction


Out of the Philippines’ 1 million business establishments, 99.5% are micro and small enterprises (including 800,000 retail stores called sari-sari stores) and more than half are owned by women.7 COVID-19 has accelerated the transition of small and micro-retailers to online platforms.8

Several organizations such as the World Bank Group, Gates Foundation, Visa, Mastercard, the Consultative Group to Assist the Poor (CGAP), Global Partnership for Financial Inclusion (GPFI), International Labour Organization (ILO) and others have explored the area of merchant payments and conducted extensive research, including on the estimation and potential of digitization and digital payments. We refer to the ongoing knowledge being generated by these organizations.


MSMEs in Rwanda account for approximately 97% of businesses, with only 33% being women owned. Among these, an estimated 98% of women owned/led businesses are small or micro enterprises.9 Rwanda’s Economic Update 2020 says that adoption of digital tools and services among MSMEs has largely been muted.10

We also refer to the body of work under Financial Inclusion Global Initiative (FIGI)’s Electronic Payments Acceptance Incentives. It lists policies and initiatives implemented across the world by public or private sector (or a collaboration between both), and it catalogues various types of incentives that can be used to drive electronic payment acceptance. The Better Than Cash Alliance was part of the recently concluded FIGI’s Electronic Payments Working Group and has provided technical contributions to the Working Group’s publications and discussions at FIGI Symposia.

  1. A standard international definition of SMEs does not currently exist. The significant heterogeneity across jurisdictions in terms of SME definition is mainly because the ‘small’ and ‘medium’ categories are typically defined relative to the size of the domestic economy. Two key parameters are mainly used to define SMEs: (i) the number of paid employees, and (ii) the financial threshold, such as revenue or total assets. For the purpose of this blog, we are using the definition of the World Bank’s, the Organisation for Economic Co-operation and Development (OECD), and the European Commission of micro (1–9 employees) and small (10–49 employees) enterprises as the focus area and including both formal and informal enterprises.
  2. Devin Olmack and Ashley Speyer, Adapting to Survive: New Study Reveals the Importance of Digital Payments to Small and Micro Businesses in Mexico, 2021,
  4. India Merchant Digitization Summit, 2021 – Hosted by Government of India, FICCI, Better Than Cash Alliance,
  5. INEGI, Economic Census 2019,
  6. Rodrigo Gallegos Toussaint, The Digitalization of SMEs: An Immediate Solution to Exit the COVID-19 Crisis,
  7. Congressional Policy and Budget Research Department, MSMEs in the Philippines, 2020,
  8. Department of Trade and Industry, Digital Payments: A Catalyst for the Growth of E-Commerce in the Philippines,
  9. Establishment Census Report, 2017; National Institute of Statistics of Rwanda;
  10. World Bank Group, Rwanda Economic Update: Accelerating Digital Transformation in Rwanda, 2020,

The views expressed in the United Nations-based Better Than Cash Alliance blogs are those of the author(s) and may not necessarily reflect the official position of the organization.