When digital payments unlock access to credit: New evidence from firms in 101 economies

Access to credit remains one of the most persistent constraints faced by firms—especially small and young ones—in developing economies. Despite decades of financial sector reforms, as of 2025 more than one in seven formal firms worldwide still struggled to obtain external finance, and nearly one in four reported unfavorable loan terms. At the same time, digital payment systems have expanded rapidly, transforming how firms transact with customers and suppliers. Can these two trends be connected?

A new global study using firm-level data from 101 economies provides compelling evidence that they are connected. Firms that receive payments electronically are significantly less likely to be credit constrained—particularly in environments where information is scarce and financial infrastructure is weak.
 

Why payments matter for credit

Lending is ultimately an information problem. Banks need reliable signals to assess a firm’s ability to repay, yet many firms—especially small and informal ones—lack audited financial statements, long credit histories, or verifiable records of sales. In such settings, lenders either ration credit or charge prohibitively high interest rates.

Electronic payments change this equation. When firms receive payments digitally—through bank transfers, mobile money, or e-wallets—they generate verifiable transaction trails. These data provide lenders with concrete, high-frequency information on sales revenues and cash flows, so they can better assess creditworthiness and reduce information asymmetries.

This informational channel is increasingly relevant as payment systems modernize, which is a theme explored in recent All About Finance blogs on payment system oversight and its broader economic implications. Digital payments are not only about speed and efficiency—they also reshape how information flows through the financial system.
 

What the data show

Using the World Bank Enterprise Surveys and B-READY data, the study analyzes nearly 50,000 firms surveyed since 2021, when questions on electronic payments were introduced. Firms are classified as fully credit constrained, partially constrained, or unconstrained, based on their borrowing behavior and loan outcomes. Three findings stand out.

First, receiving electronic payments is strongly associated with better access to credit. Firms that receive payments electronically are about 3 percentage points less likely to be fully credit constrained—a sizable effect given that only 15 percent of firms fall into this category globally. Importantly, this relationship is driven by receiving payments digitally, not by making them. From a lender’s perspective, incoming payments reveal more about a firm’s revenue-generating capacity than outgoing payments do.

Second, the benefits are largest for firms that are the hardest to assess. The effect of electronic payments is strongest for small firms, young firms, less productive firms, and firms without audited financial statements (figure 1). For these businesses, digital transaction data can partially substitute for missing financial records, improving visibility and trust in the eyes of lenders.
 

Figure 1: Electronic payments matter most for small, the least productive, and young firms

Third, country context matters. Electronic payments are especially powerful in economies with weaker credit information systems, lower levels of financial development, and larger informal sectors. In these environments, traditional credit registries and collateral frameworks often fail to serve firms effectively. Digital payment data become an alternative source of borrower information, helping lenders overcome structural information gaps (figure 2).
 

Figure 2: Marginal effect of receiving electronic payments, by quality of business environment

Complementing—not replacing—financial infrastructure

One concern that is often raised is whether digital payments simply duplicate the role of existing credit information systems. The evidence suggests otherwise. In countries with strong credit bureaus and registries, the marginal benefit of electronic payment data is smaller—but still present. In countries where such systems are weak or incomplete, the benefits are much larger.

This finding aligns with broader discussions on payment system oversight and financial infrastructure. Well-designed payment systems do more than move money efficiently; they support transparency, data generation, and trust—key ingredients for credit market development.

From digital inclusion to productive finance

Much of the global conversation on digital finance has focused on households—how digital payments expand financial inclusion, smooth consumption, and support resilience, particularly during shocks such as the COVID-19 pandemic. This new evidence highlights an equally important dimension: digital payments can improve access to finance for firms[CR1] .

By reducing information asymmetries, electronic payments help lenders allocate credit more efficiently—financing firms with viable business models that may otherwise be excluded. This has implications not only for firm growth, but also for aggregate productivity and economic development.
 

Policy implications

The findings point to several policy priorities.

1. Promoting widespread adoption of electronic payments by firms. Policies that encourage digital payment acceptance—such as interoperable payment systems, low transaction costs, and merchant onboarding—can have benefits well beyond payments themselves.
2. Integrating payment data into credit ecosystems. Regulatory frameworks should facilitate the responsible use of transaction data for credit assessment, while safeguarding consumer and firm privacy.
3. Strengthening complementarities with credit infrastructure. Digital payments are most effective when combined with improvements in credit registries, collateral systems, and financial supervision.
4. Focusing on small and medium-sized enterprises and informal-to-formal transitions. The gains from payment digitalization are largest where information gaps are greatest—among small firms and in more informal economies.

As countries continue to modernize their payment systems, the payoff may extend far beyond faster transactions. By unlocking information, digital payments can help unlock credit—and with it, growth, productivity, and inclusion.
 

Reference

Galilea, Manuel; Farazi, Subika; Mare, Davide Salvatore. Firm Credit Constraints and Electronic Payments: A Global Analysis. Policy Research Working Paper No. 11287 Washington, D.C. : World Bank Group.