The impact of financial inclusion on digital payment solution uptake within the Gulf Cooperation Council Economies

Recognizing the role of society in the sustainability of payment system innovation through the quadruple helix framework, this study analyzes the causal influence of demand-side financial inclusion indicators on society's uptake of digital payment solutions (DPS) within the regional economy of the Gulf Cooperation Council. To this end, the present study relies on data extracted from Global Findex surveys (in 2014 and 2017), as well as the economic theory of random utility maximization, to model individuals' DPS uptake decisions “ceteris paribus.” The maximum likelihood estimation revealed no gender-based gradient in DPS uptake behaviors; additionally, financial inclusion indicators such as transaction account ownership and debit card ownership did not significantly influence endogenous or exogenous DPS uptake decisions between 2013 and 2017. However, all remaining financial inclusion indicators did significantly influence DPS uptake. Assessing these findings through the lens of open innovation and the ongoing efforts from the Arab Regional Payment System project, which seeks to expand financial inclusion by facilitating access to transaction accounts, there is reasonable evidence to suggest that complementary financial inclusion policies addressing the use dimension of DPS (i.e., extending access to saving and borrowing, along with digital payroll practices for both private and public enterprises) would contribute to more effective policy on financial inclusion in the region.