Cashless Payment Activity: Banking Capacity, Income and Economic Structure in 25 Economies

Payment activity sits between the banks that supply payment services and the economy that uses them, yet most studies centre on one side. The present study asks how much of the cashless payment activity of an economy is associated with its banks, its income and its economic structure, for the 25 jurisdictions with a total cashless payment series in the statistics of the Bank for International Settlements, 2012 to 2024. Three hypotheses are tested and combined. Firstly, payment activity stands higher where banks had more capacity and payment infrastructure in place a year earlier: across economies, credit to the private sector is associated with more payments per adult with income held constant, and within economies payments track the terminals already deployed, though no single measure stands out beyond each economy's own trend. Secondly, a year of faster growth of real gross domestic product (GDP) per adult is a year of faster payment growth (1.10 points per point, p < 0.001), significantly so for card payments and more strongly in emerging economies; no association is detected for direct debits. Thirdly, economies with larger finance, real estate, business and public service sectors settle more payments by direct debit, with income held constant ( ρ = 0.72, q = 0.010 over 72 tests). A Shapley decomposition shows that income and domestic sector shares exceed a placebo benchmark in every specification that includes them, while bank measures do so only under some measures. Hence the explained variation in payment activity is shared among banking measures, income and structure.