Bridging the cash and digital divide in emerging markets
In emerging economies, informal businesses form the backbone of commerce and cash remains their lifeblood. Blipply’s strategy to incorporate cash payments into its merchant app is not a step backward, but a pragmatic leap towards greater financial inclusion and business growth. By acknowledging the realities of the informal economy, this unified approach can help overcome digitisation challenges, leverage cash’s continued prevalence, and unlock value for merchants, partners, and society at large. Below, we explore why embracing cash in a digital platform is crucial, backed by insights from credible development and financial inclusion experts.
The informal economy’s digital dilemma
Emerging markets are characterized by vast informal economies operating largely outside formal financial systems. Globally, 2 billion workers (about 60% of the employed population) engage in informal work, and the informal sector accounts for roughly one-third of economic activity in low- and middle-income countries. Tellingly, over 90% of micro and small enterprises worldwide are informal, tiny businesses with no legal registration or formal financial history imf.org. These entrepreneurs often rely solely on cash transactions, staying off the radar of banks and tax authorities.
Why do so many business owners shun formality? Often they are skeptical that the costs of formalizing – taxes, fees, regulations – outweigh the benefits. Many informal merchants lack trust in institutions or face barriers like low financial literacy, lack of IDs, or poor digital infrastructure. Simply put, digitising the informal economy is not as simple as handing out point-of-sale devices or mobile apps. It requires tackling deep-rooted challenges around trust, education, and incentives. As one expert notes, “The challenge is not digital, but one of trust and quality of experience” – providers must convince merchants and consumers that digital finance is safe, easy, and truly beneficial. Without that trust and a clear value proposition, informal merchants will understandably stick with what they know best: cash.
Cash is still king in emerging markets
Digital finance may be booming, but cash’s reign is far from over in developing economies. Even as mobile money and fintech services expand, everyday transactions in many markets remain dominated by cash. For example, across Africa’s small businesses, cash is the primary medium of exchange by a wide margin. A World Bank study found that African micro, small, and medium enterprises received about $913 billion in customer payments in a year – 84% of that value was in cash. Likewise, these businesses paid most of their own suppliers in cash (nearly 70% of $610 billion in payments). This underscores that for the vast majority of transactions, paper bills still trump digital bytes.
Even in countries at the forefront of fintech, cash retains a strong foothold. Take Kenya – often touted as a mobile money success story. According to FSD Kenya’s FinAccess survey, in 2021 cash was used for almost 95% of daily retail payments (like food and transport), with mobile money at a mere 5%. By 2024, mobile money’s share of daily purchases had surged, yet cash still accounted for about 72% of daily payments. For larger monthly expenses (rent, school fees, utilities), digital payments did overtake cash by 2024, but nearly one-third of those payments were still in cash. The figure below illustrates this shift – cash use is declining, yet remains significant, especially for everyday small transactions:
FinAccess survey data (Kenya) shows cash’s declining yet continued dominance. In 2021, cash was used for ~95% of daily purchases; by 2024 it still accounted for 72%, with mobile money rising to 28%. A similar trend occurred for monthly expenses, where cash’s share (49% in 2021) fell to about 32% by 2024 as digital payments grew.
Crucially, many consumers and businesses operate in a hybrid cash-digital mode. In Kenya, the proportion of people who only use cash for all payments plummeted from 48% in 2021 to 27% in 2024 – a positive sign. Yet fully digital-only users are still a minority (31% in 2024), while the largest segment – 42% – continues to mix cash and mobile money depending on the situation. This pattern is echoed across developing countries. The World Bank’s Global Findexdata reveal that as of 2024, only 24% of adults in developing economies (excluding China) had made a digital payment to a merchant – meaning roughly three-quarters still hadn’t. In sub-Saharan Africa, just 20% of adults paid a business digitally, despite the region’s leadership in mobile money adoption. These numbers drive home a clear point: cash remains a critical part of the economy, and millions of merchants and customers still rely on it daily.
Forcing a “cash-less only” approach in such an environment can backfire. If a small shopkeeper insisted on digital payments only, she might simply lose customers who only have cash in hand. Network outages, illiterate customers who can’t navigate mobile menus, or mistrust of technology can all make cash the default choice in practice. Thus, any digital solution in emerging markets must accommodate cash users or risk excluding a huge slice of the market. Blipply’s decision to integrate cash payments into its merchant app recognizes this reality. It meets merchants and buyers where they are today, while gently guiding them toward a more digital future.
Why many merchants still choose cash
If digital payments bring so many benefits – speed, safety, traceability – why do merchants cling to cash? Research highlights several practical reasons behind merchants’ enduring preference for cash in many emerging markets:
- Cost and friction: Many current digital payment systems impose fees, frictions, or risks that don’t align with small merchants’ needs. For instance, transaction fees or unfavorable rates can eat into the razor-thin margins of a microenterprise. A CGAP analysis noted that digital merchant payments remain limited in Africa in part because existing systems add costs and complexity without clear upside for merchants. By contrast, accepting cash has essentially zero marginal cost – no fees for swiping a card or withdrawing mobile money. Unless digital tools are as cheap and convenient as cash, merchants have little incentive to switch.
- Trust and transparency: In cash-based communities, physical money is trusted and readily understood. Digital transactions can feel abstract or risky. Many merchants worry about fraud or errors in electronic payments, or simply do not trust that a tiny phone confirmation is as “real” as paper cash. As one financial inclusion expert observed, building trust is paramount – “for providers, it may seem small to get a person to trust you with $10, but for that individual it’s a huge amount”. Any glitches or bad experiences (failed transactions, network downtime) reinforce the instinct to stick with cash under the mattress.
- Customer habits: Merchants don’t make the switch to digital in isolation – their customers’ behavior matters immensely. If the bulk of customers want to pay in cash, a shopkeeper will cater to that or lose business. In many informal markets, customers themselves may lack access to digital instruments or simply prefer cash for its anonymity and simplicity. Until digital payments reach a critical mass of consumer adoption, merchants face a chicken-and-egg problem: why invest in accepting mobile money or cards if hardly anyone around is asking to use them?
- Value proposition: Beyond the payment itself, merchants ask: “What’s in it for me?” A basic mobile money transaction may be fast, but if it offers no added value over cash (and perhaps added hassle), uptake will be slow. Successful digital merchant solutions have learned to sweeten the deal with features that solve real pain points. For example, one obstacle uncovered have been the chronic shortage of small change – customers and shopkeepers waste time scrambling for coins and often settled with candy in lieu of change. A solution can be “digital change-back”: if a customer pays partly in cash, the merchant can send the remaining small change to the customer’s mobile wallet. This clever feature address a daily headache, making merchants keener to try the digital wallet. The broader lesson is that digital systems must solve the everyday problems cash creates (like lack of change, theft risk, record-keeping hassles) to win merchants over.
- Conflicting incentives: It’s worth noting that in many emerging markets, merchants themselves often double as mobile money agents. A corner store might earn commissions for cash-in/cash-out services. In such cases, pushing fully digital payments could undercut one of their income streams (fewer cash withdrawals mean fewer commissions). An IFC report observes that merchant payment initiatives sometimes “directly compete with one of agents’ revenue streams”, so providers must compensate by offering alternative revenue or benefits to those merchants. In other words, a shopkeeper who is an agent will adopt a new merchant payment system only if it doesn’t leave her worse off financially.
These factors explain why a “digital-only” stance can leave many merchants behind. The upshot is that cash won’t disappear overnight, and merchants will continue to use it until digital alternatives truly match or exceed cash on convenience, cost, and trust. This is precisely why Blipply’s merchant app does not demand an all-or-nothing leap. By including cash transactions within the app’s ecosystem, Blipply acknowledges cash’s role while positioning merchants to gradually reap digital benefits.
Unified systems: Marrying cash and digital for progress
A unified merchant system that records both cash and digital transactions offers the best of both worlds. It lets informal merchants continue serving all customers (cash-payers and e-payers alike) and logs every sale in one place, creating a rich digital trail of their business activities. This approach turns cash from a “blind spot” into part of the digital ledger. Why is this so powerful? Because the data generated from transactions may be the most valuable currency of all.
When small businesses have digital transaction records, they effectively start to build a financial identity and history – something they’ve never had on a purely cash basis. One IFC expert put it succinctly: “Cash is expensive, limiting, and difficult to transact. Digital finance gives you the ability to build transaction histories and a credit score to access credit and savings that you don’t have in a cash economy.” In other words, electronic records convert an “informal” shop into a data-verified business, opening doors to financial services. Banks and lenders can’t lend to a ghost, but they can lend to a merchant who can demonstrate steady daily sales, even if some of those sales were in cash, because the unified app captures it all.
Consider what happens when merchants use a comprehensive digital platform:
- Better business insights: With all transactions tracked, even a micro-entrepreneur can see their daily and monthly sales, peak times, and inventory turnover. This improves decision-making and financial management. Over time, it encourages the merchant to shift more of their trade into digital form, since the more they digitize, the easier their bookkeeping becomes.
- Access to credit and growth One of the most transformative benefits of a unified payment system is access to credit. Informal merchants have long been excluded from formal financing simply because they lacked a verifiable financial history—no transaction records means no credit score, and without a score, no institution will lend. It’s a vicious cycle: no records, no loans; no loans, no growth. Blipply breaks this cycle. By enabling merchants to log every transaction—whether paid via mobile wallet, bank app, or cash—Blipply creates a single, consolidated stream of verified income data. This digital trail becomes a powerful tool for building financial identity. Over time, it paints a picture of the merchant’s business performance, cash flow stability, and growth potential. Blipply’s platform is designed not just to track payments, but to unlock credit. By integrating with credit providers and enabling API-based data sharing (with consent), Blipply gives lenders access to rich, real-time data that reflects true business activity—not just what goes through the bank, but what happens at the counter. The result:
o Merchants who previously relied on informal lending or personal savings can now access affordable working capital.
o Creditworthiness is no longer based on paperwork or guesswork, but on transparent transaction behavior.
o Lenders can serve a previously unreachable segment with greater confidence, reduced risk, and scalable models.
Blipply turns every sale into a step toward financial empowerment—one transaction at a time.
- Seamless transition to digital payments: Including cash in a digital system isn’t about keeping merchants stuck in old ways; it’s about easing their transition to new ways. By using the app to record cash sales, merchants become comfortable with the technology and see its benefits (like simpler accounting and better overview of their business). They also begin to form habits of digital record-keeping. As digital payments become more popular with their customers, these merchants will be ready – their app already handles it. Moreover, unified apps can prompt or incentivize merchants to convert cash to e-value. For instance, if a merchant records a large cash sale, the app could suggest, “Deposit this cash at an agent to reflect in your balance”, gradually encouraging formal account use. The end goal is to “keep money digital” as much as possible by offering a convenient on-ramp for every cash transaction into the digital ecosystem. In the long run, this reduces the costly cycle of cash-in, cash-out and keeps more value circulating digitally.
Ripple effects: Benefits for merchants, partners, and society
Adopting a unified cash-and-digital system doesn’t just help individual shopkeepers – it creates a win-win for all stakeholders in the financial ecosystem, from Blipply’s Telecom partners to credit provider partners and the broader economy:
- Empowered merchants: For individual merchants, the impact is transformational. They can maintain their customer base (no turning away cash-paying patrons) while gaining the advantages of formal tools. Over time, they develop a financial track record that can qualify them for loans, insurance, or supplier credit – empowering them to expand their inventory or open new outlets. They also gain protection and peace of mind; with sales logged, they can separate personal and business finances and reduce losses. And while cash will still flow in, merchants who adopt digital tools often find the risks of holding cash (theft, loss, miscounting) diminish. Even partial digitization improves security – for example, mobile money experts note that every bit of cash converted to e-money is less cash a merchant has to store or transport, lowering exposure to theft. In short, merchants become more resilient, creditworthy, and poised for growth – graduating gradually from the shadows of informality.
- Stronger Telco/Credit partners: Blipply’s strategy also directly benefits its white-labeled telecom partners and other financial service partners. Mobile network operators have a keen interest in keeping transactions digital on their platforms. Each time a merchant accepts digital payments (or even records cash in a digital ledger), it anchors that merchant deeper into the operator’s ecosystem. This can translate to higher usage of the telco’s mobile money service (more transaction revenue and customer stickiness for the operator) and less drop-off to cash. In fact, telecom-led mobile money providers see merchant payments as the “key to a broader digital ecosystem” – because if people can pay merchants digitally, they have far less need to cash out. That in turn means fewer costly agent commissions for cash handling and a healthier digital circulation of money. A GSMA report notes that agent networks remain crucial for converting cash to digital, but the long-term vision is to reduce dependency on cash-outs by enabling everyday digital payments. By offering a merchant app that embraces cash rather than ignoring it, Blipply helps telco partners gradually convert informal cash flows into measurable digital usage. The telco can also leverage the rich data from the app (with proper consent and privacy safeguards) to identify promising merchants for additional services. In sum, partners get more volume on their payment rails, new revenue streams (through merchant services), and improved customer loyalty.
- Fuel for credit providers: The data emanating from a unified merchant app is a goldmine for banks, microfinance institutions, and fintech lenders. One of the perennial problems for lending in emerging markets is the “thin file” syndrome – most small entrepreneurs have no formal credit history or verifiable financial statements. Lenders thus find it too risky or costly to serve them, resulting in an estimated $5+ trillion financing gap for MSMEs globally. With cash-inclusive digital records, suddenly a street vendor looks less like an “unknown risk” and more like a micro-business with monthly revenues and growth trends that can be analyzed. Credit providers can plug into Blipply’s platform (via APIs or partnerships) to assess merchants’ turnover and offer tailored loans, invoice financing, or credit lines. The IFC has documented cases where payment data are used to underwrite credit – and they tend to show strong repayment when done responsibly. For lenders, this means a new pool of customers to fuel portfolio growth, all while advancing financial inclusion goals. As more merchants formalize their sales digitally, these lenders can competition, better rates, and innovative products (e.g. merchant cash advances repaid via a percentage of digital sales). It’s a virtuous cycle: data leads to credit, credit leads to business growth, and growth leads to more data and demand for financial services.
- Societal impact and inclusion: At a macro level, bringing informal commerce onto hybrid digital platforms generates broader economic benefits. Financial inclusion is a proven driver of development – when individuals and businesses gain access to savings, credit, and insurance, they invest more in health, education, and enterprises. Digital financial services have been linked to poverty reduction and resilience, especially for women and rural populations. In fact, mobile money’s expansion contributed an additional $600 billion to the GDP of countries with mobile money between 2013 and 2022 – a 1.5% boost to GDP in those economies. Much of this impact comes from increased economic activity and efficiency among previously excluded groups, like informal merchants. By digitizing even a portion of the informal economy’s cash flows, countries can enjoy higher transparency and tax revenue (as merchants graduate from purely shadow transactions to traceable ones). Governments can better support these businesses too – for example, by analyzing digital transaction data to design SME programs or extending social safety nets to entrepreneurs who were once “invisible.” There’s also a community benefit: when small shops thrive and expand, they create jobs and improve local service delivery. And with more merchants accepting digital payments, customers benefit from convenience and safety (no need to carry wads of cash) – it cultivates a more inclusive digital commerce environment that leaves no one behind, not even the cash-reliant customer or the smallest market seller.
Conclusion: Embracing reality to drive change
In the race to digitize emerging market commerce, it’s tempting to view cash as the enemy – a relic to be eliminated. But the evidence and on-the-ground realities tell a different story: cash remains deeply entrenched, and any successful digitization strategy must work with it, not against it. Blipply’s strategy to integrate cash payments into its merchant app reflects a nuanced understanding of this truth. By doing so, Blipply isn’t promoting cash over digital; it’s providing the bridge that merchants and customers need to cross into the digital economy at their own pace.
This inclusive approach tackles the informal economy’s digitization challenges head-on – building trust through a tool that respects existing behaviors while demonstrating new benefits. It acknowledges the continued reliance on cash in daily transactions and leverages it as a stepping stone rather than a stumbling block. It addresses merchant behaviors and barriers by delivering a clear value proposition: use one app for all your sales, get hassle-free records, and access rewards like credit when you’re ready. It highlights the power of unified systems in creating financial identities for the “unbanked” merchants, unlocking credit and growth opportunities that were once out of reach. And ultimately, it paints a picture of broader impact – where not only are entrepreneurs thriving, but telecom partners have stronger ecosystems, lenders have new markets to serve, and society reaps the rewards of a more inclusive, dynamic economy.
In emerging markets, digital and cash can – and for now, must – coexist. By embracing that reality, Blipply is positioned to accelerate the very outcomes that fully digital systems aspire to achieve: more empowered merchants, more cash flowing through formal channels, and more lives uplifted by financial inclusion. In the journey toward a cash-lite future, the surest path is a bridge that welcomes everyone to cross. Blipply is building that bridge, and the evidence says it’s the right way forward.
Sources:
- World Bank/IMF reports on informal economy and financial inclusionimf.org
- GSMA Mobile Money insights and industry data
- FSD Kenya – FinAccess 2025 survey on cash vs digital payment trends
- CGAP research on merchant payments and cash usage barriers
- IFC findings on digitizing merchant payments (Lesley Denyes, Digital Access: The Future of Financial Inclusion in Africa)
- PovertyAction/CGAP discussions on merchant concerns (theft, trust) and need for agent networks
