Cash vs.

Electronic
Payments in
Small Retailing
Estimating the Global Size
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Acknowledgements III
Acronyms And Abbreviations V
Executive Summary VII
1. Introduction 1
2. Methodology 5
2.1. Scope 5
2.2. Estimation 8
3. Country Research 9
4. Global Size Of Digital Vs. Cash Transactions By MSMRs 15
4.1. Person-To-Business Payments For MSMRs 15
4.2. Business-To-Business Payments From MSMRs To Suppliers 17
4.3. Business-To-Person Payments by MSMRs: Payments Of Salaries 18
Annexes 21
A1. Glossary 22
A2. Euromonitor Passport Databases 24
A3. List Of Economies 25
A4. Methodology – Detailed Descriptions 26
A5. Discussion Guides And Questionnaires 34
A6. Country-Level Findings 39
References 93
Endnotes 95

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This report is a product of a collaborative effort
across the World Bank Group’s Finance & Markets
Global Practice (WBG) and the World Economic
Forum (Forum) Financial Services Industry Team,
specifically with the Promoting Global Financial
Inclusion Initiative.
The collaboration was led by Ghada Teima
(Program Manager and Lead Financial Sector
Specialist, WBG) working with a core team – Nina
Bilandzic (Financial Sector Specialist, WBG), Oya
Pinar Ardic Alper (Financial Sector Specialist,
WBG), Nicole Meyers (Project Manager, Forum,
and Financial Inclusion Fellow, McKinsey &
Company). Tony Lythgoe (Practice Manager,
WBG), Douglas Pearce (Practice Manager, WBG),
Massimo Cirasino (Adviser, WBG), Matthew
Gamser (CEO, SME Finance Forum, IFC), and Peer
Stein (Adviser, IFC) provided overall guidance to
the team. Ivan Mortimer-Schutts (Senior Operations
Officer, WBG), Harish Natarajan (Lead Financial
Sector Specialist, WBG), Thomas Lammer
(Senior Financial Sector Specialist, WBG) and
Lois Quinn (Senior Payment Systems Specialist,
WBG) provided technical guidance. The team is
Acknowledgements
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thankful for the multi-phase collaboration with the
World Economic Forum on this topic and for the
contribution from Michael Koenitzer (formerly
Forum), Annelyse Freyman (formerly Forum) and
Lisa Donegan (formerly Forum) at the project
design stages. Euromonitor International provided
analytical support for the study. Aichin Jones
(Graphic Designer, WBG) designed the report.
The team is grateful to the peer reviewers of this
report for their valuable input and guidance chaired
by Samuel Maimbo (Practice Manager, WBG),
including – Matthew Gamser (CEO, SME Finance
Forum, IFC), Harish Natarajan (Lead Financial
Sector Specialist, WBG), Ivan Mortimer-Schutts
(Senior Operations Officer, WBG), Thomas
Lammer (Senior Financial Sector Specialist,
WBG), and Chris Dooley (Project Lead, Promoting
Financial Inclusion Initiative, Forum).
This report would not be possible without the
generous support of the Netherlands’ Ministry of
Foreign Affairs and the Bill and Melinda Gates
Foundation provided through WBG’s Financial
Inclusion Support Framework (FISF) program as
well as the support of the SME Finance Forum.
iii
 1.
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ACH Automated Clearing House

ATM Automatic teller machine
B2B Business-to-business
B2P Business-to-person
B2C Business-to-consumer
C2B Consumer-to-business
IFC International Financial Corporation
MSME Micro, small and medium enterprises
MSMR Micro, small and medium retailers
SME Small and medium enterprises
P2B Person-to-business
POS Point of sale
USD United States Dollars
WB World Bank
WBG World Bank Group
Forum World Economic Forum

Acronyms and Abbreviations

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In 2014, the World Bank Group (WBG) and
the World Economic Forum (Forum) agreed to
promote a shared vision of financial inclusion. This
study is a part of that collaborative effort to foster
knowledge to grow responsible financial inclusion
through usage by merchants of electronic payments
(often nowadays referred to as digital payments), in
particular by small retailers, with a specific focus
of the retailers’ role in person-to-business (P2B),
business-to-business (B2B) and business-to-person
(B2P) payments: payments for retail sales, supplier
payments, and wage payments.
For this purpose, concurrent with the underlying
study, the WBG and the Forum conducted a
stocktaking analysis of innovative cases of electronic
payment adoption and usage by small merchants
(World Bank Group and World Economic Forum,
2016). This study is a companion piece to that, and
aims to identify the value of the digital gap—the
value of cash transactions that could be migrated to
electronic payments—in retail payments globally
with a focus on formal micro, small and medium
retailers (MSMRs), and in doing so, inform the
analysis and recommendations of the stocktaking
study.
The findings of this study indicate that MSMRs make
and accept payments estimated at USD 34 trillion in
an annual basis in the form of supplier payments,
wages and salaries, and receipts from consumers,
USD 15 trillion of which are estimated to be done
electronically and the rest, USD 19 trillion, is in
paper form (cash and checks). Electronic payments,
Executive Summary
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as opposed to cash, are more commonly accepted
and used by non-grocery retailers, and by retailers
larger in size.
At the same time, there is a large variance across
countries in terms of the use and acceptance of
electronic payments by MSMRs. In developed
and upper-middle income countries, almost all the
salaries are paid electronically by medium retailers,
and the majority are paid electronically by small
and medium retailers. However, MSMRs in lower-
middle income and low income countries use
mainly cash for the same purpose. The majority of
the P2B and B2B payments, both in terms of value
and volume, are electronic in the more developed
economies.
Data availability has been a big challenge in
identifying the global size of cash and electronic
payments in retail. To fill the gap, this study
undertook primary research in seven economies,
and simulations were run to estimate the global
size. This paper is a reference paper that discusses
the scope and the methodology of this exercise,
and presents the findings. As data availability has
been a challenge, the scope of this research was
defined to ensure reliability of the estimates at the
global level. For example, informal sector was left
out as it is a vast exercise by itself to estimate the
payment flows in the informal retail sector, with
the acknowledgement that a large number of cash
transactions are done in the informal sector. Also,
the scope is restricted to micro, small, and medium
retailers, leaving out large retailers. This excludes
vii
 a large number of electronic transactions. Supplier and the type of product, may involve electronic
payments are restricted to those that are made to payments as well as paper payments. Possible
the immediate suppliers, leaving out the rest of the directions for future research include expanding the
distribution chain, which, depending on the country study to cover one or more of these issues.

* B2B payments include only those payments by retailers to their immediate suppliers, and does not include other B2B payments up the
distribution channel.
Source: Team estimates based on trade interviews, pulse surveys and literature review
All maps in this report were produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other
information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries. IBRD 40364, September 2013.

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
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The importance of financial inclusion for eradicating extreme poverty by 2030, and increasing
development has been recognized in the international the share of income held by the bottom 40%.
development community and by most policy makers
While there are many ingredients to achieving
in developing economies. According to the Global
universal financial access, the potential impact
Findex database, an estimated 2 billion adults
of extending digital financial services through a
globally do not have access to a transaction account
more widespread acceptance at small retailers
with an authorized and/or regulated service provider
is substantial. Traditional retailers in developing
and that can be used to send and receive payments
economies, the majority of which are micro, small,
or to store some value. Yet, research shows that poor
and medium enterprises (MSMEs), most often do
people have active financial lives and need a range
not use electronic payments and are excluded from
of financial services to take advantage of economic
the formal financial sector. They can help expand
opportunities and manage and mitigate risks.
the use of electronic payments by consumers. It is
Similarly, while small and medium enterprises
through the regularity and the frequency of purchases
(SMEs) generate the most new jobs, employ the
from everyday retailers that retail payment solutions
largest number of people in aggregate, and hence
become valuable to consumers and generate an
are important for job creation and economic growth,
anchor for them within the formal financial sector.
200 million enterprises in developing economies are
constrained in terms of financing. The retail market is a many-to-many environment
in which inter-operable payment and processing
Recognizing the transformational potential
practices are required for the market to reach scale.
of universal financial inclusion for economic
Figure 1 displays the stakeholders in retail payments,
development, the World Bank Group (WBG)
and shows the different types of payment flows.
President put forward an ambitious goal of universal
financial access. Universal Financial Access by 2020 Figure 1 – Payment Flows
vision is to ensure that everyone has access to a
transaction or deposit account -- whether accessed Payee Government
Payer Consumer Business Agency
through a bank account, payment card, mobile wallet,
or other financial instrument. This will provide a Consumer P2P P2B P2G
strong foundation to achieve the broader future goal Business B2P B2B B2G
of universal financial inclusion, in addition to being Government
instrumental in achieving the WBG’s twin goals of Agency G2P G2B G2G
P=Person, B=Business, G=Government

1. Introduction
1
 Small retailers have a potentially key role in
adoption and eventual widespread use of digital
payment instruments. The benefits of transforming
small retailers into non-cash transaction partners
include:
• Boosting the value of non-cash payments to a
broader consumer market (P2B payments).
• Using the information on timely supplier
payments in credit decisioning (B2B payments).
• Expansion of transaction account ownership (B2P
payments).
Expanding access to a basic transaction account that
allows for payments and store of value is considered
a first step to broader financial inclusion. The use
of basic payment or savings accounts can gradually
lead to access to and usage of other financial services,
such as credit, insurance, or pensions. Figure 2
summarizes the foundations and catalytic pillars for
universal access to and frequent usage of transaction
accounts (CPMI and World Bank Group, 2016).
The aim of this study is to understand the digital
payments gap globally, with a focus on B2B, P2B,
and B2P transactions of micro, small and medium
retailers. In doing so, this study will form the basis
of, and motivate, an analysis of the foundations for
accelerating the integration of small retailers into the
financial sector by providing estimates for the size
of the electronic vs. paper-based transactions in the
B2B, P2B and B2P small retail segments globally.
Concurrent with the underlying study, the WBG and
the Forum also conducted a stocktaking analysis of
innovative cases of electronic payment adoption and
usage by small merchants (WBG and WEF, 2016).
This study is a companion piece to that joint report.
Unfortunately, reliable data comparable across
countries do not exist to gauge the size of these
payment flows either in terms of value or in terms of
volume. The focus of this current study, therefore, is
to generate and map reliable estimates of the global
size of the digital vs. cash transactions for B2B, P2B
and B2P transactions in the small retailer context.
These estimates would correspond to only parts
of the dark shaded rectangles in Figure 1 as large
retailers are left out. Measuring the size of these
payment flows is in fact fundamental for informed
policy making as well as raising the appetite of the
private sector to implement innovative approaches
to retail payments for micro, small, and medium
retailers (MSMRs).
An analytical approach is developed to estimate
the global value and volume of P2B, B2B and
B2P payments by MSMRs. The analysis therefore
generates a more detailed understanding of the
role small merchants play in accelerating financial
inclusion through their adoption of digital payments
mechanisms by providing the relative size of cash
vs. digital payment flows for the MSMR segment.
In doing so, this study aims to fill the gap in
understanding the barriers and incentives for the
use of digital payments use from the perspective of
small retailers.
The main findings of the analysis are as follows:
• Total value of B2B retail payments worldwide by
MSMRs to immediate suppliers are estimated to

Figure 2 – Foundations And Catalytic Pillars For Effective Usage To Reach Universal
Financial Access

Universal Access
To and Frequent Usage of Transaction Accounts

Catalytic Pillars Transaction Leveraging

Readily Awareness
Drivers of Access Account and large-Volume
Available and Financial
and Usage Payment Recurrent
Access Points Literacy
Product Design Payment Streams

Financial and ICT Infrastructures

Foundations
Legal and Regulatory Framework
Critical Enablers
Public and Private Sector Commitment

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
2
 be $13.3 trillion, 53% of which (approximately
$7 trillion) are made electronically, and the
remaining $6.3 trillion is in cash and checks.
• Total value of B2P retail payments worldwide by
MSMRs are estimated to be $2 trillion, 50% of
which are made electronically.
• These imply a market size of $34 trillion globally
for payments by small retailers, $15 trillion of
which are made electronically, and $19 trillion
made in cash and checks.
• Electronic payments are more widely used
by non-grocery retailers compared to grocery
retailers, regardless of whether it is B2B, P2B or
B2P transactions.
Developing and accelerating acceptance of electronic
payments by small merchants is essential to expand
financial access. A basic transaction account that
enables payments and store of value is considered
an entry point to the formal financial system and
can act as a gateway for individuals to adopt other
1. Introduction
relevant financial services they need to smooth their
consumption and manage income shocks. However,
it is not sufficient to just equip individuals with basic
transaction accounts. The use case becomes more
and more effective as individuals gradually move to
a cashless economy where electronic payments are
widely accepted for regular and frequent purchases.
The rest of this report is organized as follows.
Section 2 provides an overview of the methodology.
Findings of the analysis are presented in sections
3 and 4, on country research and global research,
respectively. The report also has six annexes: a
glossary of terms is provided in Annex 1. Annex 2
includes information on the proprietary databases by
Euromonitor International used in this study. The list
of economies used in estimating the global size is in
Annex 3. Annex 4 provides technical details on the
methodology. Discussion guides and questionnaires
on which the primary research is based are provided
in Annex 5. Annex 6 includes detailed country-level
results.
3
2.1 SCOPE
FORMAL MICRO, SMALL, AND MEDIUM
RETAILERS
The scope of this research is restricted to B2B,
P2B and B2P transactions of formal (i.e. officially
registered as a business) micro, small and medium
retailers (MSMRs), which are defined as those
up to 100 employees. Both grocery (modern and
traditional) and non-grocery retailers are included.
Modern grocery retailing includes hypermarkets,
supermarkets, discounters, forecourt retailers, and
convenience stores. Traditional grocery retailing
includes independent small grocers, food/drink/
tobacco specialists and other grocery retailers.
Annex 1 has the Glossary with definitions of
different types of retailers.
While very relevant for including individuals
who are outside the regulated financial system,
the informal retail sector is excluded because it
is challenging to come up with a measure of the
informal retail sector within a country as well as a
measure that is comparable across countries. At the
same time, it is difficult to define the extent of the
informal sector even within a country.
2. Methodology
P2B PAYMENTS, B2P PAYMENTS,
AND B2B PAYMENTS TO IMMEDIATE
SUPPLIERS
P2B payments in this study include all payment
transactions made by consumers/persons to MSMRs
in return for products or services. B2P payment
flows, on the other hand, are payments by MSMRs
to persons, which are wages and additional benefits.
The study measures B2B payments as those by
MSMRs to immediate suppliers, i.e. the first leg in
the supply chain. The full extent of B2B payments,
however, is much larger and depends on the length
of the supply/distribution chain, including all
payment flows through the chain in either direction.
Figure 3 plots an example of a supply chain where
the product is distributed along the various layers
of the chain by various agents, e.g. distributors,
wholesalers, etc. from the actual producer to the
retailer. However, not all retailer supply chains are
the same.
The complexity and differences in measuring supply
chain length depend on the type of the product,
the degree of integration of the supply chain itself
and the degree of concentration and fragmentation
of the retailer markets/suppliers, in addition to
5
 Figure 3 – Retailer Supply Chain – An Example

Input / Source Production / Distribution Channel Consumption

Trade

Independent
Direct / Wholesalers /
Farmer Wholesaler Retailers

Importer /
Supplier 1 Agent Retailer 1
End
Consumer

Supplier 2 Manufacturer Distributors

Supplier 3 Wholesaler Retailer 2

various country-specific factors such as country
size, geographical factors, availability of basic
transportation infrastructure, etc. Some retailers
may buy from wholesalers, and some directly from
the producers or the farmers. There may be more
than one distributor for some goods. The total
value and volume of B2B payments depend on the
number of legs in the distribution chain.
The scope of this study is therefore restricted to the
payments by MSMRs to their immediate suppliers
because the complexity of supply chains make it
impossible for a study like this one to attempt
to estimate the B2B payments along the chain.
Analyses at sector or product level (e.g. groceries,
agriculture, etc.) provide sufficient level of detail to
estimate the length of the supply chain as well as
the value and volume of payment flows along the
chain. Box 1 provides an overview of an analysis
that estimated B2B payments along the retail
supply chain in Indonesia based on a recent internal
study by the World Bank Group as an example.
This particular study uses detailed country-level
data available from the national statistical authority
including input/output tables, household and firm
surveys, national income accounts together with
market research and analysis (including firm level
surveys) conducted specifically for this purpose
to estimate the B2B payments along the supply
chain. However, not all countries have that level of
existing data to permit similar analyses.
PAYMENT METHODS
Payment methods analyzed in this study are: (1)
Electronic payments which include electronic fund
transfers, card payments, and mobile money; and
(2) Paper-based payments which include cash and
checks. See the glossary in Annex 1 for definitions.
GROCERY VS. NON-GROCERY RETAILERS
The type of products sold by the retail outlets may
influence the payment method used by consumers
to pay for purchases as well as by the retailers to
pay their suppliers. Essentially, big ticket items such
as clothing and apparel, as opposed to small ticket
items such as foodstuffs can make a difference in the
choice of payment method. For safety reasons or for
consumption smoothing purposes especially where
credit or deferred payments terms may be provided,
consumers may prefer to pay for big ticket items
electronically. Similarly, retailers may prefer the use
of electronic payment methods or may be dictated
by the suppliers to use electronic payment methods
for big ticket items. To capture such differences, the
methodology in this paper introduces a split between
grocery and non-grocery retailers.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
6
 Box 1 –The Value Of B2B Payments In The Traditional Retail Sector In Indonesia

Background: The World Bank Group conducted a study in Indonesia to support development of electronic
payment services that meet the needs of the traditional retail sector and its business partners.* The study
provides background information and analysis about the size and economic significance of this sector, the
end-to-end requirements of supply chain payments and current payment services and challenges in Indonesia,
and the analysis highlights areas of the payments systems that would benefit from industry coordination.
Estimates of market size were based on a variety of data sources, including detailed data from the local
statistical authority (BPS) on GDP and components, 2005 input/output table, household expenditure
surveys and enterprise surveys. These data sources are complemented by market surveys and analyses of
branded consumer goods and retail sectors.

Figure B1.1 – Estimating The Value Of Payment Flows From Traditional Retailers To
Wholesaler And Distributors

Food and Packaged Goods Companies and Sellers

12
US$ US$
11
US$B
6.8 6.8 B
18 B
Large Distributors
US$
15 B
6 10
US$
US$B
6.8
15 B
Distributors

5 9
US$

US$ 130 B
US$B
6.8
23 B
Wholesalers

US$
4
US$ 8
US$
6.8 B US$B
6.8 B 6.8
13.5B
US$ Retailer Wholesalers
6.8 B
3
US$ 2
US$ 7
US$
US$ US$B
12.5 B 6.8 B 6.8 B 6.8
6.6 B
Whole-
US$ US$ salers
5B 3B
1
US$
US$B
6.8
7B
Large Retailers Small Retailers Small Retailers
Hyper Markets (Avg. Revenue > (USD 200K > (Avg. Revenue > Σ=US$
Mini-Markets USD 200K) Avg. Revenue > USD 24K) USD 24K)
& Supremarkets 46 B
US$15 B Sales US$20 B Sales US$11 B Sales

Findings: According to the 2006 enterprise survey by BPS, 43% of medium and 55% of large retailers and
wholesalers noted they used only cash, and the remaining used some combination of cash and credit terms
in payments. Based on the 2005 input/output tables, the sales of food and consumer goods via retailers
amounts to at least USD 92 billion. Using a conservative assumption of 50/50 split of sales value between
modern and traditional channels, the annual turnover of traditional retailers are estimated to be USD 46
billion. On this basis, B2B payments may amount to about USD 130 billion, which is about 2.8 times the
annual turnover of traditional retailers (Figure B1.1).
* Indonesia market research was undertaken by the IFC Indonesia Digital Financial Inclusion project, funded by the State
Secretariat for Economic Affairs (SECO).

2. Methodology
7
 2.2 ESTIMATION
The aim of this study is to estimate the value and
volume of cash vs. electronic P2B, B2B and B2P
payments by formal MSMRs globally. While there
exists some data regarding the size of electronic
payments in a number of countries, data on paper-
based payment transactions are limited. This type
of data is not available for a sufficient number of
countries to facilitate a global estimation either.
Additionally, data on electronic transactions are not
necessarily granular enough to provide information
on different types of payment flows (e.g. B2B or
P2B) or on MSMRs.
To overcome these challenges, this study is based
on the following three-step methodology:
1. Preliminary analysis: Statistical cluster
analysis to group 168 countries into six clusters
(Annex 5 provides a list of all countries included
in the analysis). The underlying idea is to create
typologies and therefore focus on a smaller
number of countries in the second stage rather
than having a global scope.
2. Primary research: Primary research in one
representative country per cluster (two from
cluster six as cluster six is large compared to the
other five clusters) to enhance existing data. Trade
interviews and pulse surveys were conducted
with retailers, distributors, wholesalers, trade
associations, financial institutions, and/or
government agencies.
3. Simulations: Simulations based on primary
research countries to forecast market size (value
and volume) in each of the 150+ countries
included in the analysis. Each cluster is modeled
based on the additional data collected through
primary research in the country that is chosen
from that cluster. Country-level estimates for all
other countries are based on the primary research
countries within respective clusters. Global and
regional estimates are simply aggregations of
relevant country-level estimates.
The rest of this section provides an overview of the
methodology. Further technical details and model
specifications for each step are provided in Annex 4.
The cluster analysis in step one was conducted
based on indicators on the retail sector and financial
Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
8
access as well as economic and demographic
country-specific factors such as population and real
per capita GDP. As a result, 168 countries in the
sample was categorized into six groups of varying
sizes, with group one including more developed
countries to group six including less developed
countries. Seven countries were selected as a result
of step one: one country from each group, except
for group six—the largest group—from which two
countries were selected: France, Lithuania, Turkey,
Colombia, Morocco, Kenya and Pakistan. Annex 4
provides a list of economies in each group.
In step two, primary research was conducted in
these seven countries in the form of face-to-face
pulse interviews with MSMRs, trade interviews
with wholesalers, industry associations, financial
institutions, telecoms, and/or government agencies.
The interviews are not based on representative
samples, but were conducted to complement the
existing research of Euromonitor International
in these seven countries which form the basis of
the Euromonitor Passport databases on the retail
sector. The discussion guides with questions
asked during these interviews are enclosed in
Annex 5. Using the findings of primary research
together with the data from Euromonitor Passport
databases, estimates of the value and volume of
P2B, B2B and B2P payments by MSMRs were
constructed for the seven countries in addition to
estimates of other variables of interest such as the
frequency of supplier payments, the method of
payments, etc. Furthermore, these interviews were
also instrumental in collecting anecdotal evidence
on preferred payment methods, reasons for cash
use, etc.
Finally, in step three, simulations were used to
extrapolate the data on seven countries to 168. This
step is different from a standard regression and
prediction analysis where estimation sample size
is large and forecast sample is small: estimation
sample is seven countries and forecast sample is
161. The details of the simulation methodology
are provided in Annex 4.3. Once the 168 country-
level estimates were formed on the basis of these
simulations, regional and global estimates of the
value and volume of P2B, B2B and B2P payments
by MSMRs were constructed by aggregating these
country-level estimates.
Step one of the methodology is to fill the data
gaps in the retail payment landscape to facilitate
the estimation of global figures. For this purpose,
primary research has been conducted in seven
selected countries: Colombia, France, Kenya,
Lithuania, Morocco, Pakistan and Turkey. In
addition to enabling the estimation of global size
of cash vs. electronic B2B, B2P, and P2B payments
for MSMRs, the data collected through this primary
research exercise provides interesting and deeper
insights for these seven countries.
Figure 4 – Summary Information On Primary Data Collections
Country-Specific Research
Trade Interviews
A Detailed, 30-60 Minute Conversation
With Trade Source
182 Interviews
Sources:
 Government organisations
A total of 767 trade interviews and pulse surveys
were done in these seven countries to collect data
on retail payments. These surveys are done with
MSMRs, suppliers, trade associations, financial
institutions, etc. Figure 4 provides a visual
summary of these surveys. The data collected
through these surveys provide estimates on the
value and volume of P2B, B2B and B2P payments
by MSMRs in each of these seven countries, along
with the payment method.
Pulse Surveys
A Short, 10-20 Minute Conversation Conducted
During A Store Visit
585 Interviews
Sources:
 MSMR retailers

 Retail associations  Suppliers

 Local banks and financial institutions

 Non-bank financial service providers In combination with Euromonitor Passport Databases

Output: Output:
 Dynamics of the retail sector in the country  Number of MSMRs and distributors/wholesalers

(formal versus informal, domestic versus Number and value of digital versus cash
international, independent versus chained) B2B transactions
 Policy, financial, regulatory and cultural factors  Number and value of digital versus cash

impacting integration of MSMR into the formal C2B transactions

financial system Number and value of digital versus cash
 Qualitative insights on barriers to financial inclusion  B2P transactions (wages, tips and others)

and/or any successful cases

Top-Down Consensus Bottom-Up
Triangulation
Validation

Global
Global Stakeholder Engagement
Engagement

3. Country Research
9
 Figure 5 summarizes the findings in the seven 5 and 6 compared). This seems to apply to all
countries for the value share of electronic P2B countries, to both grocery and non-grocery retailers,
payments. In general, consumers tend to use cash and to all retailer sizes. Additionally, insights
more widely for groceries as opposed to non- from pulse surveys indicate that for non-grocery
groceries which are mostly larger ticket items. purchases, there is a gradually increasing interest
Colombia, Kenya, Morocco and Pakistan rely more in using credit cards in Pakistan and in Morocco
on cash payments across all MSMR payment flows. for P2B retail payments. Box 2 provides some
Turkey’s national strategy to become a cashless anecdotal evidence on the preferred P2B payment
society is pushing card payments over cash, but methods by retailers and consumers (as perceived
there is still heavy cash use, more than 50 percent by retailers) and information on transaction account
of all P2B payments at MSMRs, both in terms of and POS terminal ownership.
value and volume and regardless of the size of the
Figures 7 and 8 show the value and volume share of
MSMRs or the type of product, are made in cash.
electronic MSMR B2B payments, respectively, with
In France, checks are still used but their use is
a breakdown by retailer size. As in the case for P2B,
declining with more and more people starting to use
these figures show that less frequent transactions of
electronic payments.
larger value are done electronically.
For MSMR P2B payments, the volume share of
Anecdotal evidence collected during pulse surveys
electronic payments is lower than the value share,
and trade interviews suggest that in Kenya suppliers
indicating that mostly a smaller number of higher
accept mobile money. However, medium-sized
value transactions are paid for electronically, while
retailers in Kenya use checks for B2B payments,
many low-ticket purchases are paid in cash (Figures

Figure 5 – Value Share Of Electronic MSMR P2B Payments, By Retailer Size

Grocery Non-Grocery
Turkey
39% 46%
47% 49%
42% 45%
30% 42%
Pakistan
9% 17%
16% 19%
5% 15%
1% 7%
Morocco
6% 31%
19% 37%
7% 24%
1% 18%
Kenya
13% 15%
14% 17%
10% 10%
7% 8%
Lithuania
45% 54%
49% 60%
49% 55%
25% 46%
France
61% 66%
72% 74%
47% 68%
42% 58%
Colombia
8% 26%
10% 33%
8% 32%
7% 12%
80% 60% 40% 20% 0% 0% 20% 40% 60% 80%
MSM Retailers Medium Small Micro
Note: MSM = micro, small and medium

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
10
Figure 6 – Volume Share Of Electronic MSMR P2B Payments, By Retailer Size
Grocery Non-Grocery
Turkey
31% 41%
39% 43%
37% 41%
27% 39%
Pakistan
4% 10%
11% 14%
4% 11%
0% 6%
Morocco
2% 22%
10% 31%
4% 20%
1% 16%
Kenya
14% 12%
14% 15%
16% 9%
11% 8%
Lithuania
28% 42%
37% 53%
31% 40%
14% 37%
France
50% 62%
70% 67%
42% 68%
38% 57%
Colombia
7% 17%
6% 27%
6% 26%
7% 8%
80% 60% 40% 20% 0% 0% 20% 40% 60% 80%
MSM Retailers Medium Small Micro

Box 2 – Anecdotal Evidence On Preferred Payment Methods For P2B MSMR Payments
The pulse interviews also provide some anecdotal evidence on the preferred payment methods by retailers
and consumers (as perceived by retailers), along with information on POS terminal ownership and transaction
account ownership for business purposes. Table B2.1 below provides summary information across the seven
countries where interviews were conducted.
Table B2.1 – Account And POS Terminal Ownership By MSMRs And Preferred P2B Payment Methods
Colombia France Kenya Lithuania Morocco Pakistan Turkey
Transaction Most have All have Most have Many did not Almost all Most have All have accounts
account accounts accounts accounts respond. have accounts accounts
Ownership
Business or A mix of All business Mostly business Respondents All business Mostly business Almost all
personal personal and accounts accounts noted the accounts accounts business
business accounts accounts, except
are business for a couple of
accounts micro grocers
POS terminal All have POS Many don’t have Almost all have Only medium Only medium All have POS
ownership terminals POS terminals POS terminals, retailers and retailers and terminals except
except for a few some small some small for a few micro
micro grocers. retailers have retailers have retailers
POS terminals POS terminals
Retailers’ Cash – Cards – Cash – fast, Cash – no fees, Cash (some Cash – Mostly cash (no
preferred convenience, convenience no fees Mobile no need to pay prefer checks immediate fees) but card are
payment method no fees money – safe, taxes. and cards) receipt also accepted
less leakage
Consumers’ Cash Cards - Cash – fast, no Card Cash Cash Card
preferred convenience fees
payment method

3. Country Research
11
 Figure 7 – Value Share Of Electronic MSMR B2B Payments, By Retailer Size
Grocery Non-Grocery
Turkey
59% 67%
75% 82%
63% 64%
42% 43%
Pakistan
10% 17%
21% 23%
3% 4%
0% 7%
Morocco
21% 31%
65% 27%
13% 44%
7% 34%
Kenya
26% 62%
24% 70%
35% 60%
15% 39%
Lithuania
71% 91%
76% 94%
71% 91%
58% 90%
France
84% 86%
100% 98%
65% 99%
55% 68%
Colombia
20% 46%
36% 65%
15% 44%
17% 28%
100% 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100%
MSM Retailers Medium Small Micro

reducing the volume and value share of electronic trend in recent years have been to use electronic fund
payments for B2B purposes. In Lithuania, suppliers transfers more and more instead of cash.
prefer electronic fund transfers, especially for non-
Figure 9 provides the survey results for B2P payments,
groceries that are usually sourced from outside the
i.e. payments of wages and salaries by retailers to their
country. In Morocco, suppliers prefer electronic
employees. In Turkey, wage payments are to be made
fund transfers over checks and the value share of
electronically as required by law for all businesses with
check payments is declining. In France, almost all
more than 10 employees, and therefore all the medium
the transactions (in terms of value) are effected
retailers and the majority of small retailers make their
electronically, especially by medium retailers and
wage payments electronically, generally by electronic
also by non-grocery small retailers. In Pakistan,
fund transfers to employee accounts or sometimes by
there is very little use of electronic B2B payments,
pre-paid cards. In Pakistan where there is very low
regardless of the value of the transaction, and
account ownership (only 13% of adults in Pakistan
especially by micro and small retailers. Cash is the
have a formal account according to the 2014 Global
dominant payment method as it is considered “safe”
Findex data), cash payment of wages and salaries is
by almost all the retailers and suppliers interviewed.
the common method. Nonetheless, in Pakistan, as well
In Colombia, both suppliers and retailers noted that
as in Colombia, the use of electronic B2P payments
the use of electronic payments for B2B transactions
by small and medium retailers is increasing as retailing
is on the rise. Suppliers in Turkey noted that the
gradually shifts from traditional to modern.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
12
Figure 8 – Volume Share Of Electronic MSMR B2B Payments, By Retailer Size
Grocery Non-Grocery
Turkey
40% 53%
62% 75%
52% 58%
35% 37%
Pakistan
2% 7%
15% 15%
1% 3%
0% 3%
Morocco
9% 49%
63% 69%
13% 59%
7% 38%
Kenya
23% 31%
21% 19%
35% 43%
14% 32%
Lithuania
62% 88%
69% 93%
66% 87%
52% 88%
France
63% 77%
100% 95%
65% 98%
55% 69%
Colombia
17% 33%
32% 62%
14% 42%
17% 26%
100% 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100%
MSM Retailers Medium Small Micro

Figure 9 – Value Share Of Electronic MSMR B2P Payments, By Retailer Size

Grocery Non-Grocery
Turkey
74% 96%
100% 100%
96% 100%
33% 55%
Pakistan
6% 10%
9% 12%
5% 8%
3% 2%
Morocco
19% 19%
28% 22%
20% 16%
15% 9%
Kenya
17% 31%
19% 35%
14% 30%
6% 20%
Lithuania
86% 87%
100% 100%
90% 95%
55% 61%
France
80% 77%
100% 97%
60% 78%
54% 55%
Colombia
21% 43%
47% 60%
35% 45%
18% 25%
150% 100% 50% 0% 0% 20% 40% 60% 80% 100% 120%
MSM Retailers Medium Small Micro

3. Country Research
13
 Annex 6 includes further details on the findings from
the surveys in each of the seven countries. Box 2
provides a summary of the role of gender based on the
surveys conducted in these seven countries. The data
is not sufficiently rich to allow for deeper analyses
related to gender gap in terms of electronic payment
acceptance and usage by MSMRs, and therefore, Box
3 presents some anecdotal evidence that commonly
came up in the interviews.

Box 3 – The Role Of Gender

The research across the primary countries indicated that male ownership of retail outlets remains high, but
female ownership is gaining ground. Female ownership is generally very low across medium sized retailers, but
does not seem important across grocery vs. non-grocery stores.
Female ownership made up the following % of total stores visited across the primary countries:

Country Female Owned (%) Total Stores Visited

France 38% 74
Lithuania 52% 60
Turkey 29% 68
Morocco 19% 85
Colombia 32% 98
Kenya 32% 110
Pakistan 6% 90

Most popular goods sold across the grocery retailers owned by women are food and beverage goods. Amongst
non-grocery; apparel, jewelry and health and beauty products are the most common products sold.
Female micro retailers in Morocco and Colombia prefer cash payments as suppliers and staff are paid with cash,
and bank account ownership is low. Most female micro store owners in Kenya also accept mobile payments
along with cash.
Female small retailers (grocery and non-grocery) are indifferent between cash and credit card payments. Credit
card acceptance in women-owned small retail outlets is more common in Morocco, Turkey and Colombia. The
majority of these retailers own bank accounts and use a variety of financial services offered by banks.

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
14
This section provides an overview of the estimated
share of electronic payments across different
payment flow types for MSMRs. Global results are
based on aggregations of country-level estimates,
which are based on simulations using data from
seven primary research countries: Colombia, France,
Kenya, Lithuania, Morocco, Pakistan and Turkey.
4.1 PERSON-TO-BUSINESS
PAYMENTS FOR MSMRs
According to the estimation results, developing
regions exhibit a higher percentage of paper-based
payment transactions (cash and checks) compared
to developed markets. The trend is also more
prominent with micro retailers where many self-
employed firms or mom-and-pop stores tend to shy
away from electronic transactions such as debit or
credit cards due to extra costs including fees and
service charges, lack of awareness, difficulty in
accessing financial services and other challenges.
Figure 10 provides consolidated results globally
and per region. The global value of MSMR P2B
payments is estimated at USD 18.8 trillion. This
figure is consistent with other similar studies. For
example, the Economist Intelligence Unit (EIU)
estimates the 2014 value of total retail sales at
USD 17.5 trillion for 58 countries. A new report by
Visa (2016) estimates that 43 percent of consumer
payments globally are made in cash, which amount
4. Global Size of Digital vs Cash Transactions by MSMRs
to USD 21 trillion. According to eMarketer, global
retail sales was an estimated USD 24 trillion in
2015. A recent report by Citigroup (2016) estimates
the global consumer retail payments as USD 23
trillion as of 2014, and forecasts it to reach USD 32
trillion by 2020. And Deloitte (2015) estimates the
retail sales of the largest 250 retailers in globally at
USD 4.5 trillion.
The share of electronic payments in total MSMR
P2B payment value varies largely across countries.
While electronic payments are estimated to
constitute 37 percent of MSMR P2B payments
value globally, this share is as high as 64 percent
in high-income OECD economies. Sub-Saharan
African economies and South Asian economies
have the lowest share by 16 percent and 14 percent,
respectively.
Table 1 shows the estimated electronic payment value
and percentage of overall MSM retail value across
the regions and retailer type for P2B payments.
The findings show, perhaps not surprisingly, that
within each region it is more common to use
electronic payments amongst small and medium
retailers compared to micro retailers. Electronic
payment use increases with the increase in size of
the retailer. During the interviews, small and medium
retailers cited convenience and safety as reasons for
accepting electronic payments. There is a higher use
of electronic payments amongst non-grocery retailers
15
 Figure 10 – Share of MSMR P2B Electronic Payments by Value by Region
Source: Team estimates based on trade interviews, pulse surveys and literature review
than grocery retailers, due to the higher value nature
of goods sold at these retailers. The use of cash for
P2B payments in micro retailers is less common
in developed economies. Electronic payment use
increases with the increase in size of the retailer.
In developing regions, especially in South Asia and
Sub-Saharan Africa, the value share of electronic
P2B payments is very low amongst micro retailers.
Micro retailers still prefer cash payments as their
main customers are mostly lower income consumers,
make more frequent smaller-value purchases and
do not always have access to regulated financial
services. The costs associated with owning/leasing
a POS terminal is still considered a deterrent in
accepting electronic payments.
4.2 BUSINESS-TO-BUSINESS
PAYMENTS FROM MSMRs TO
SUPPLIERS
The findings of the study indicate a higher use
of electronic payment instruments for MSMR
B2B payments compared to P2B payments. B2B
payments are also larger in value per transaction and
retailers are constrained by supplier requirements
in terms of payment terms and conditions.
Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
16
The global size of MSMR B2B payments at the first
leg of the supply chain, i.e. payments by the MSMRs
to their immediate suppliers, is estimated to be
USD 13.3 trillion (Figure 11). As discussed earlier,
the value of all B2B payments along the MSMR
supply chain is expected to be much larger than this
amount, possibly by a multiple of 8-10, depending
on the length of the chain, which itself depends on
many factors ranging from the type of the product
to country-level geographical characteristics. This
figure (USD 13.3 trillion) is comparable to cost of
goods sold in a store-based retail model (Figure
12), where cost of goods sold is on average 70-75
percent of sales, which itself is comparable to the
P2B figure estimated above (USD 18.8 trillion).
The estimate here is on the lower end, the estimated
B2B payment value is approximately 71 percent of
the P2B payment value estimate.
There is a large variation across regions in the
estimated value of the B2B payments by MSMRs as
well as the share of electronic payments. Figure 11
and Table 2 provide a regional perspective. Globally,
an estimated 53 percent of supplier payments, i.e.
USD 7.1 trillion, is made electronically. While
the use of electronic payment methods is more
common in B2B payments in comparison to P2B
Table 1 – P2B Electronic Payment Value (USD million, Electronic %), by Region & Size of
Retailer
Non- Non- Non-
Grocery Grocery Grocery grocery grocery grocery Total MSM
Micro Small Medium Micro Small Medium Retailers
Retailer/ (USD USD (USD (USD (USD (USD (USD
Region million/%) million/%) million/%) million/%) million/%) million/%) million/%)
High Income: 328,112 533,084 915,476 560,436 829,974 839,302 4,006,483
P=Person,
OECD B=Business, G=Government
36%) (50%) (68%) (57%) (68%) (74%) (64%)
Europe & 55,254 78,198 98,969 61,039 155,862 166,041 615,363
Central Asia (16%) (23%) (33%) (29%) (41%) (49%) (37%)
East Asia & 116,083 65,185 256,640 103,145 270,123 284,104 1,095,280
Pacific (12%) (18%) (29%) (24%) (35%) (43%) (28%)
Latin America & 51,421 66,187 91,047 47,615 144,742 134,731 535,743
Caribbean (11%) (19%) (28%) (23%) (31%) (37%) (28%)
Middle East & 10,280 15,893 48,204 12,513 36,107 56,089 179,087
North Africa (11%) (22%) (32%) (25%) (34%) (43%) (23%)
South Asia 14,812 26,897 104,449 13,149 52,968 94,243 306,519
(4%) (8%) (18%) (12%) (18%) (24%) (14%)
Sub-Saharan 3,562 9,696 66,966 6,086 21,250 42,542 150,103
Africa (6%) (10)% (17%) (11%) (16%) (25%) (16%)
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure 11 – Share of MSMR B2B Electronic Payments by Value per Region

Source: Team estimates based on trade interviews, pulse surveys and literature review

4. Global Size of Digital vs Cash Transactions by MSMRs

17
 payments, it is still very low, especially in South
Asia (26 percent of value) and Sub-Saharan Africa
(31 percent of value). Additionally, the value share
of electronic B2B payments is estimated to increase
with retailer size, and non-grocery retailers use
electronic payments more commonly on average,
across the regions, than grocery retailers.
4.3 BUSINESS-TO-PERSON
PAYMENTS BY MSMRs: PAYMENTS
OF SALARIES
The estimated global value of B2P payments, i.e.
salaries and wages, by MSMRs is USD 2 trillion,
which is consistent with the store-based retail cost
structure displayed in Figure 10 above. About half of
this is made electronically, however, there are large
variations across the regions (Figure 13 and Table 3).
The findings show that developed economies have
a higher use of electronic B2P payments, mostly via
credit transfers. Ease of payment, convenience and
ease of record keeping are amongst the advantages
cited during the interviews.
In developing regions, especially South Asia
and Sub-Saharan Africa, the share of electronic
B2P payments remain low (22 percent and 23
percent, respectively). Cash payments are favored

Figure 12 – Links between the cost structure of store-based retail and payment flows

Typical Store-Base
Retail Cost Structure

Sales 100% P2B

Cost of Goods Sold 70-75%
Gross Profit 25-30%
Operating Expenses 18-22% B2B
Salary Expenses 10-12%
Other Expenses 8-10%
P2P
Net Profit 5-10%

Source: Euromonitor International

Table 2 – B2B Electronic Payment Value (USD million, Electronic %) by Region by Size of Retailer
Non- Non- Non-
Grocery Grocery Grocery grocery grocery grocery Total MSM
Micro Small Medium Micro Small Medium Retailers
Retailer/ (USD USD (USD (USD (USD (USD (USD
Region million/%) million/%) million/%) million/%) million/%) million/%) million/%)
P=Person, B=Business, G=Government
High Income: 328,112 533,084 915,476 560,436 829,974 839,302 4,006,483
OECD 36%) (50%) (68%) (57%) (68%) (74%) (64%)
Europe & 55,254 78,198 98,969 61,039 155,862 166,041 615,363
Central Asia (16%) (23%) (33%) (29%) (41%) (49%) (37%)
East Asia & 116,083 65,185 256,640 103,145 270,123 284,104 1,095,280
Pacific (12%) (18%) (29%) (24%) (35%) (43%) (28%)
Latin America & 51,421 66,187 91,047 47,615 144,742 134,731 535,743
Caribbean (11%) (19%) (28%) (23%) (31%) (37%) (28%)
Middle East & 10,280 15,893 48,204 12,513 36,107 56,089 179,087
North Africa (11%) (22%) (32%) (25%) (34%) (43%) (23%)
South Asia 14,812 26,897 104,449 13,149 52,968 94,243 306,519
(4%) (8%) (18%) (12%) (18%) (24%) (14%)
Sub-Saharan 3,562 9,696 66,966 6,086 21,250 42,542 150,103
Africa (6%) (10)% (17%) (11%) (16%) (25%) (16%)
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
18
especially amongst micro retailers as employee for temporary or contract staff. Table 3 also shows
financial literacy is low and payment in cash carries that as the size of the retailer increases, the value
a lower cost for the retailer. Check payments are share of B2P electronic payments (mainly through
made in some cases amongst micro, small, retailers electronic fund transfers) increases.

Figure 13 – Share of MSMR B2P Electronic Payments by Value per Region

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table 3 – B2P Electronic Payment Value (USD million, Electronic %) by Region by Size of Retailer
Non- Non- Non-
Grocery Grocery Grocery grocery grocery grocery Total MSM
Micro Small Medium Micro Small Medium Retailers
Retailer/ (USD USD (USD (USD (USD (USD (USD
Region million/%) million/%) million/%) million/%) million/%) million/%) million/%)
High Income: 328,112 533,084 915,476 560,436 829,974 839,302 4,006,483
OECD 36%) (50%) (68%) (57%) (68%) (74%) (64%)
Europe & 55,254 78,198 98,969 61,039 155,862 166,041 615,363
Central Asia (16%) (23%) (33%) (29%) (41%) (49%) (37%)
East Asia & 116,083 65,185 256,640 103,145 270,123 284,104 1,095,280
Pacific (12%) (18%) (29%) (24%) (35%) (43%) (28%)
Latin America & 51,421 66,187 91,047 47,615 144,742 134,731 535,743
Caribbean (11%) (19%) (28%) (23%) (31%) (37%) (28%)
Middle East & 10,280 15,893 48,204 12,513 36,107 56,089 179,087
North Africa (11%) (22%) (32%) (25%) (34%) (43%) (23%)
South Asia 14,812 26,897 104,449 13,149 52,968 94,243 306,519
(4%) (8%) (18%) (12%) (18%) (24%) (14%)
Sub-Saharan 3,562 9,696 66,966 6,086 21,250 42,542 150,103
Africa (6%) (10)% (17%) (11%) (16%) (25%) (16%)
Source: Team estimates based on trade interviews, pulse surveys and literature review

4. Global Size of Digital vs Cash Transactions by MSMRs

19
 exe s
A nn

Annexes
A1. Glossary 22
A2. Euromonitor Passport Databases 24
A3. List of Economies Used in the Analyses 25
A4. Methodology – Detailed Descriptions 26
A4.1. Cluster Analysis: Details on Methodology 26
A4.2. Primary Research: Details on Methodology 28
A4.3. Modeling and Simulations: Details on Methodology 31
A5. Discussion Guides and Questionnaires 34
A5.1. Trade Interviews 34
A5.2. Pulse Interviews 35
A6. Country Research Findings 39
1. Colombia 39
2. France 47
3. Kenya 55
4. Lithuania 63
5. Morocco 70
6. Pakistan 78
7. Turkey 86

Annexes
21
 A1. Glossary

Term Definition Source

Retailing Retailing refers to the sale of new and used goods to the general public Euromonitor International
for personal or household consumption. It excludes specialist retailers
of motor vehicles, motorcycles, vehicle parts and fuel. It also excludes
foodservice, rental and hire and wholesale industries (cash and carry).
Retailing is the aggregation of store-based retailing and non-store retailing.
Traditional Grocery Traditional grocery retailing is the aggregation of those channels that are Euromonitor International
Retailers invariably non-chained and are, therefore, owned by families and/or run on
an individual basis. Traditional grocery retailing is the aggregation of three
channels: Independent small grocers, food/drink/tobacco specialists and
other grocery retailers. While there can be modern (e.g. chained) food/drink/
tobacco specialists or other grocery retailers, due to the store's presence in
the channel, these stores are still considered as traditional.
Modern Grocery Modern grocery retailing is the aggregation of those grocery channels that Euromonitor International
Retailers have emerged due to the growth of chained retail. Modern grocery retailing is
the aggregation of five channels: hypermarkets, supermarkets, discounters,
forecourt retailers and convenience stores.
Non-Grocery Retailers Retail outlets selling predominantly non-grocery consumer goods. Excludes Euromonitor International
retailers selling predominantly food, beverages and tobacco, as well as fuel,
automotives and parts.
Non-grocery retailers is the aggregation of:
• Apparel and footwear specialist retailers
• Electronics and appliance specialist retailers
• Health & beauty specialist retailers
• Home and garden specialist retailers
• Leisure and personal goods specialist retailers
• Other non-grocery retailers
Service Retailers This is the aggregation of foodservice retailers (restaurants, cafes, bars and Euromonitor International
other) and other miscellaneous service retailers (automotive repair, electrician Note: The Global Sizing
and plumber services, insurance services, legal services and other service component of the project
orientated enterprises) only covers goods retailers.
Retailer Size
Micro Retailers Retailers that sell goods to consumers which employ between 1-5 persons Euromonitor International
Note: These definitions
Small Retailers Retailers that sell goods to consumers which employ between 6-25 persons are based on the 2014 IFC
Medium Retailers Retailers that sell goods to consumers which employ between 26-100 persons MSME country indicators
report findings in conjunction
with OECD and EU
countries company sizing
classifications/definitions
and adapted for this study.
Payment Flows
Business To Business Includes all payment transactions occurring between 2 or more businesses. In Euromonitor International
(B2B) Transactions this study, B2B payments represent retailer payments to immediate suppliers.
Consumer To Business Includes all payment transactions made by consumers/persons to businesses Euromonitor International
(C2B) Or Person in return for products or services.
To Business (P2b)
Transactions
Business To Consumer Includes all payment transactions from businesses to their employees. These Euromonitor International
(B2C) Or Business include wages and tips.
To Person (B2P)
Transactions

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
22
 Payment Transaction Types
Paper Payment Paper payment transactions is the aggregation of both cash and other Euromonitor International
Transactions paper payment transactions (such as checks). Note: Payment
Transaction Type
Cash Transactions Bank notes or coins that can be used in exchange of goods and services.
definitions are mapped
Non-Cash Paper Includes payment transactions made through checks (personal, teller, against Euromonitor
Payment Transactions certified, cashier's), money orders and travelers checks definitions. M-commerce
in Euromonitor's Passport
Electronic Payments This is the aggregation of electronic payment instruments: payment database corresponds
cards, electronic fund transfers, and electronic money. to "Mobile payment
Electronic Fund These are direct credit transfers and direct debit transfers, and they are transactions" for this study.
Transfers typically used for remote payments. The transaction processing and
funds settlement of EFT payment instruments is generally conducted in
between payment service providers (PSP) under well-codified rules and
procedures (“payment schemes”).
Direct Debit Transfer A payment order or a sequence of payment orders made for the purpose
of collecting funds from the payer and placing at the disposal of the payee.
Direct debit transfers are typically categorized as electronic-fund transfer
payment instruments, the authorization (or mandate) forming the
contractual basis for the (series of) direct debit transfer(s) is however often
still paper-based.
Direct Credit Transfer A payment order or possibly a sequence of payment orders (“standing
order”) made for the purpose of placing funds at the disposal of the
beneficiary.
While direct credit transfers are typically categorized as electronic-fund
transfer payment instruments, they can be a “hybrid payment instrument”,
if they are initiated on paper forms.
Card Payments These include credit card payments, charge card payments and debit card
payments, and typically involve usage of a physical plastic card by a payer
to discharge the payment obligation to the payee. For the purpose of this
study card-based e-money (general purpose prepaid cards), gift and store
cards have also been subsumed under card payments.
Debit Card Payment card where the funds are debited in full for every transaction
from the underlying transaction account.
Credit Card A type of payment card, indicating that the bearer has been granted a line
of credit. It enables the bearer to make purchases and/or withdraw cash
up to a prearranged ceiling. The credit granted can be settled in full by the
end of a specified period or can be settled in part, with the balance taken
as extended credit. A special type of credit card is a charge card. A charge
card is a type of payment card indicating that the bearer has been granted
a line of credit. It enables the bearer to make purchases but does not offer
extended credit. Moreover, the full amount of the debt incurred must be
settled at the end of a specified period.
Mobile Payment Payment transaction involving the exchange of funds for either goods or
Transactions services conducted via a mobile phone or tablet. The definition refers to
payments for purchases not person-to-person payments. Mobile payment
transactions can either be based on payment cards, electronic fund
transfers, or e-money (in the latter case referred to as mobile money).
Mobile Money E-money product where the record of funds is stored on the mobile phone
or a central computer system, and can be drawn down through specific
payment instructions issued from the bearers’ mobile phone. It is also
known as m-money.

Annexes: A1. Glossary

23
 A2.
The Passport database data on consumer finance,
retail, industrials, and numerous other categories
of packaged consumer goods is used in this
research. Key Euromonitor databases used in this
project include:
• Passport: Consumer Finance: Euromonitor’s
Passport consumer finance database originates
from annual on-the-ground research in 46 core
markets. Indicators in this database include
estimates of P2B retail transactions value made
electronically and by paper.
• Passport: Retail: Euromonitor’s Passport retail
database has data on 80 countries. Estimates
for each country are updated annually, ensuring
comparability across countries. Indicators in
this database include total retail market size,
total number of outlets, and market shares of
the main players. Data are broken down into
Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
24
Euromonitor
Passport Databases
grocery, non-grocery and over 18 subcategories
of specialist retailers. This is further segmented
into traditional and modern retailers for all 80
markets.
• Passport: Industrial: Euromonitor’s This
database is built up using input/output tables for
18 core and secondary markets. Included in this
database for each industry is a breakdown by
number of firms in each employment category.
The database also includes analysis of the buyers
and suppliers for up to 177 industries including
retail and wholesale providing a picture of the
industry’s supply chain.
• Passport: Countries and Consumers:
Euromonitor’s Countries and Consumer database
includes secondary data taken from hundreds of
sources globally. This data is standardized to
allow comparisons to be made.
 A3. List Of Economies
Used In The Analyses

Afghanistan Ecuador Lesotho Romania

Albania Egypt, arab Rep. Liberia Russian Federation
Algeria El Salvador Libya Rwanda
Angola Equatorial Guinea Liechtenstein Saudi Arabia
Argentina Eritrea Lithuania Senegal
Armenia Estonia Luxembourg Serbia
Australia Ethiopia Macedonia, FYR Sierra Leone
Austria Fiji Madagascar Singapore
Azerbaijan Finland Malawi Slovak Republic
Bahamas, The France Malaysia Slovenia
Bahrain Gabon Mali Somalia
Bangladesh Gambia, The Malta South Africa
Belarus Georgia Mauritania South Korea
Belgium Germany Mauritius South Sudan
Benin Ghana Mexico Spain
Bermuda Greece Moldova Sri Lanka
Bhutan Guatemala Monaco Sudan
Bolivia Guinea Mongolia Swaziland
Bosnia and Herzegovina Haiti Montenegro Sweden
Botswana Honduras Morocco Switzerland
Brazil Hong Kong SAR, China Mozambique Syrian Arab Republic
Brunei Hungary Myanmar Taiwan, China
Bulgaria Iceland Namibia Tajikistan
Burkina Faso India Nepal Tanzania
Burundi Indonesia Netherlands Thailand
Cambodia Iran, Islamic Rep. New Zealand Togo
Cameroon Iraq Nicaragua Trinidad and Tobago
Canada Ireland Niger Tunisia
Central African Republic Israel Nigeria Turkey
Chad Italy North Korea Turkmenistan
Chile Jamaica Norway Uganda
China Japan Oman Ukraine
Colombia Jordan Pakistan United Arab Emirates
Congo, Dem. Rep. Kazakhstan Panama United Kingdom
Congo, Rep. Kenya Paraguay United States
Costa Rica Korea, Dem. People’s Rep. Peru Uruguay
Cöte d'Ivoire Korea, Rep. Philippines Uzbekistan
Croatia Kosovo Poland Venezuela, RB
Cuba Kuwait Portugal Vietnam
Cyprus Kyrgyzstan Puerto Rico Yemen, Rep.
Czech Republic Lao, PDR Qatar Zambia
Denmark Latvia Reunion Zimbabwe
Dominican Republic Lebanon

Annexes: A3. List Of Economies Used In The Analyses

25
 A4.
A4.1 CLUSTER ANALYSIS: DETAILS
ON METHODOLOGY
This annex summarizes how the cluster analysis
was performed. The variables and the rationale for
using them are described, as well as the clustering
methodology and output is presented.
VARIABLES INCLUDED IN THE CLUSTER
ANALYSIS
Five variables are included in the analysis. The
variables are selected to account for variation across
countries in terms of the retail sector and financial
inclusion. The definitions of these variables along
with the sources are listed below.15
1. Retail sales per capita: (USD , nominal,
converted using 2014 exchange rates, source:
Euromonitor)
• Sales per capita of new and used goods to
the general public for personal or household
consumption.
• Excludes specialist retailers of motor
vehicles, motorcycles, vehicle parts,
fuel; and foodservice, rental and hire and
wholesale industries (Cash and Carry).
Sales value excluding or including VAT/
Sales Tax.
• Retailing is the aggregation of store-based
and non-store retailing. Retailing excludes
the informal retail sector. Informal retailing
is retail trade which is not declared to the
tax authorities, and encompasses (a) sales
generated by unregistered and unlicensed
retailers, i.e. retailers operating illegally,
and (b) any proportion of sales generated
by a registered and licensed retailer which
is not declared to the tax authorities.
Unregistered and unlicensed retailers
operate predominantly (although not
exclusively) as street hawkers or operate
open market stalls, as these channels are
harder for the authorities to monitor than
Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
26
Methodology –
Detailed Descriptions
permanent outlets. Activities in the “black
market”, i.e. those refer to trade in illegal,
counterfeit or stolen merchandise, are
included within our definition of informal
retailing. Activities in the “grey market”,
i.e. those refer to trade in legal merchandise
that is sold through unauthorized channels–
for example cigarettes bought legally in
another country, legally imported, but sold
at lower prices than in authorized channels–
will be included as informal retailing if no
tax is paid on sale by the retailer. However
if the retailer pays tax–for example on
cigarettes bought legally in another country
but sold at a lower price than standard–the
sale is included within formal retailing.
• In relation to click and collect purchases
(i.e. where purchases are made over the
internet but picked up at store) where the
sales data is attributed depends on where
the payment is made: If payment is made
in store, then the sale is included in store-
based sales. If payment is made over the
internet, then the sale is included in internet
retailing.
• Retail sales per capita provides an indication
of the income that the population spends on
retail purchases.
2. Share of modern grocery retailers in grocery
retailing: (%, based on local currency prices at
current prices, source: Euromonitor)
• Modern grocery retailing is the aggregation
of those grocery channels that have
emerged alongside the growth of chained
retail: Hypermarkets, Supermarkets,
Discounters, Forecourt Retailers and
Convenience Stores. While there can be
traditional (i.e. non-chained) supermarkets
or forecourt retailers, e.g., due to the store's
presence in the channel, these stores are
still considered as modern in Euromonitor
Passport Databases.
 • This variable provides an indication of the
retail sector development of a country.
3. Urban population: (% of total population,
source: UN)
• Urban population is defined as population
of areas defined as urban in each country
and reported to the UN. The infrastructure,
types of houses and dwellings in
agglomerations, density, landscapes, etc.,
are very different between the countries,
and thus it is impossible to have a uniform
definition. Urban population by city
refers to population of “city proper”, or a
"locality with legally fixed boundaries and
an administratively recognized urban status
that is usually characterized by some form
of local government”.
• Higher urbanization, particularly in
developing countries, is expected to
facilitate ownership of a bank account and
use of non-paper payments.
4. Share of paper payments in consumer
payment transactions: (%, source:
Euromonitor)
• Consumer payment transactions is
the sum of card payment transactions,
cash transactions, other paper payment
transactions and electronic transactions
(excluding commercial). Paper payment
transactions contains both cash and other
paper payment transactions such as checks
(personal, teller, certified, cashier's), money
orders and travelers’ checks. Electronic
transactions include electronic fund
transfers, and examples of electronic fund
transfers include direct debit and direct
credit transfers.
• Measures financial system development
and consumer cultural preferences over
paper vs. electronic payments
5. Adults with a formal account at a financial
institution, poorest 40%: (%, source: World
Bank Global Findex)
• Denotes the percentage of respondents in
the bottom 40 percent of income earners,
aged 15+, with an account (self or together
Annexes: A4. Methodology – Detailed Descriptions
with someone else) at a bank, credit union,
another financial institution (e.g., cooperative,
microfinance institution), or the post office
(if applicable) including respondents who
reported having a debit card.  
CLUSTER METHODOLOGY
K-Means Clustering:
The objective of this method is to seek items in the
same cluster that would be as similar as possible and
different clusters would be as dissimilar as possible.
This method aims to partition the countries into k
clusters in which each observation belongs to the cluster
with the nearest mean (i.e. cluster center or mean),
serving as a prototype of the cluster. The methodology
used employs an iterative algorithm to classify an
observation into a cluster by minimizing the squared
distance of each observation from the cluster centers.
Using the variables above for 168 developed and
developing economies, the countries are grouped into
six clusters. Small island countries were not included
in the analysis due to low spend and low population.
Table A4.1 lists the countries in each cluster.
Country Selection:
The next step is to choose one country per cluster
to conduct the primary research in. The selection
criteria used for this purpose are:
1. Whether the country is researched across
Euromonitor’s Retail and Consumer Finance
Passport databases as opposed to modeled, i.e.
forecasted. This ensures a solid starting point in
terms of data availability.
2. Geographical location in order to have a
representative selection across cluster groupings
3. Whether the country had good data availability
across the variables to be used for the purposes
of cluster analysis and also for the modeling
stage to follow.
4. Potential for success in collecting data during
primary research to be used during the modeling
phase.
5. Countries too big in geographic size and overall
population to complete the research in a timely
manner within the project timeline are excluded
(e.g. Brazil, China, India, Nigeria).
27
 Table A4.1 – List of Economies in Each Cluster
Cluster 1 Cluster 2 Cluster 3 Cluster 4
Australia Ireland Austria Japan Argentina Montenegro Azerbaijan Libya
Belgium Liechtenstein Bahamas, The Latvia Brazil Oman Belarus Macedonia, FYR
Bermuda Luxembourg Bahrain Lithuania Bulgaria Poland China Mexico
Russian
Canada Monaco Brunei Portugal Chile Colombia Reunion
Federation
Denmark Netherlands Croatia Puerto Rico Costa Rica Saudi Arabia Ecuador South Africa
Equatorial
Finland New Zealand Cyprus Qatar Hungary Serbia Thailand
Guinea
France Norway Czech Republic Singapore Kuwait Slovak Republic Gabon Turkmenistan
Trinidad and
Germany Sweden Estonia Slovenia Malaysia Kazakhstan Uruguay
Tobago
Hong Kong Switzerland Greece Korea, Rep. Malta Turkey
SAR, China
Iceland United Kingdom Israel Spain Venezuela
United States Italy Taiwan
United Arab
Emirates
Cluster 5 Cluster 6
Congo, Dem. Kyrgyz
Albania Fiji Morocco Afghanistan Myanmar South Sudan
Rep. Republic
Algeria Georgia Namibia Bangladesh Cöte d'Ivoire Laos Nepal Sri Lanka
Angola Guatemala Panama Benin Eritrea Lesotho Nicaragua Sudan
Armenia Indonesia Paraguay Bhutan Ethiopia Liberia Niger Swaziland
Iran, Islamic Syrian Arab
Bolivia Peru Burkina Faso Gambia Madagascar Nigeria
Rep. Republic
Bosnia and Korea, Dem.
Iraq Philippines Burundi Ghana Malawi Tajikistan
Herzegovina People’s rep.
Botswana Jamaica Romania Cambodia Guinea Mali Pakistan Tanzania
Cuba Jordan Tunisia Cameroon Haiti Mauritania Rwanda Togo
Dominican Central
Kosovo Ukraine Honduras Moldova Senegal Uganda
Republic African Rep.
Egypt, Arab Lebanon Uzbekistan Chad India Mongolia Sierra Leone Yemen
Rep.
El Salvador Mauritius Vietnam Congo, Rep. Kenya Mozambique Somalia Zambia
Zimbabwe
Note: Economies in emphasis are those selected for primary research.

6. Countries where the majority of the population
is foreign nationals (e.g. UAE) were excluded.
7. Euromonitor having good research capabilities
within the countries selected in order for the
primary research to be completed on time with
high quality data (see Appendix A2 for the
existing Euromionitor databases).
Please note that based on the k-means clustering
technique used and described above, the ideal
countries to be selected are the cluster centers, e.g.
six countries, one in each cluster that constitute
the means. In practice, no actual observation in the
center will be exactly at the center of the clusters.
Therefore, selected countries are those that are the
closest to the cluster centers.
A4.2 PRIMARY RESEARCH
METHODOLOGY
Primary research was conducted in seven
countries—Colombia, France, Kenya, Lithuania,
Morocco, Pakistan, and Turkey—in August 2015
through in-person trade interviews and pulse
surveys to complement the existing research done
and data collected by Euromonitor International for
the Euromonitor Passport Databases.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
28
Trade interviews were structured as detailed
interviews of 30-60 minutes length by government
organizations, retail associations, local banks and
financial institutions, and non-bank financial service
providers. These provide a top-down perspective of
Figure A4.1 – Example Trade Interview Discussion Topics
the retail payments market. Pulse surveys are more
informal, shorter—20 minutes—conversations
conducted during a store visit with the retailers
and the suppliers. These provide a bottom-up
perspective of the retail payments market.

From the Supplier Distributor/Wholesaler Interviews

 Usage of cash as a payment instrument
Perspective,  Usage of electronic payments in their business

Gain a Deep Knowledge  Servicing of specific types of MSMR

 Purchase orders received per month by MSMR type

of the Behaviour  Average transaction value by MSMR type and change over time

of MSMRs  Preferred payment method

Trade Association Interviews

Overview of the  Development of the retail infrastructure

Retailing  Clarificationsof the number of outlets by MSMR type

 Prevalence of electronic payments in MSM retail and expected future development

Environment  Barriers to facilitate increasing use of electronic banking amongst businesses

Banks and Financial Institutions Interviews

Detailed Insights  Involvement in facilitation of the use of electronic payments in retailing

on the Payments

Partnerships with government to develop the electronic financial system
 Marketing of electronic payment types to businesses/consumers

Landscape  New electronic payment methods offered


Barriers to financial inclusion

Figure A4.2 – Example Pulse Interview Questions and Topics

General Retailer Understanding

 Number of branches
Getting a Clear  Number of employees

Understanding  Location of store (urban/rural) and place name

of the Retailing  Retailer type

 Days open per month

Environment  Main products sold


Consumer demographic (including repeat customer rate)

C2B Payment Questions

 Number of customers per day
Measuring Daily  Average transaction value

Customer Metrics  Payment types accepted

and Payment  % breakdown of payment types in volume and value

 Preferred payment methods and change over time

Behaviour 
Credit facility offered

Availability of a PoS terminal

B2P/B2B Payment Questions

 Number of employee transactions


Average value per employee transaction
Understanding  Method used to pay employee in volume and value and change over time

the Back Office  Number of regular suppliers

Financial Processes 
Frequency of payments to suppliers
 Average transaction value of payments to suppliers

 Credit facility offered

 Preferred payment methods and change over time

Annexes: A4. Methodology – Detailed Descriptions

29
 Information from both sources are then consolidated
to produce estimates at the country-level for the
value and volume of B2B, P2B and B2P payments
by MSMRs for grocery and non-grocery retailers
separately, by the size of the retailer as well as the
aggregate. Figures A4.1and A4.2 provide details on
trade interviews and pulse surveys, respectively.
A total of 767 interviews were conducted in July-
August 2015 in the seven selected countries, 182
of which were trade interviews and 585 were pulse
surveys. Table A4.2 provides the breakdown of
these interviews by country and by retailer size.
Figure A4.3 below presents an example of the
approach based on Turkey. Existing retail payments
data from Euromonitor Passport database suggests
that 40 percent of all retail payments are electronic.
This amounts to USD 181 billion in 2015. Based
on data from the Small and Medium Enterprises
Development Association and Turkish Retailers
Association, there are over 654K retail outlets
in Turkey with average sales value per outlet per
year of USD 344K. According to the Interbank
Card Center, 40 percent of all payments are made
by cards. Pulse surveys for the primary research
conducted for this study suggests that 75 percent
of the value of all MSMR payments are made
electronically. This is also supported by trade
interviews. These information are used together
with existing data on disposable income, MSMR
sales, GDP to MSMR market value ratio of 3.5,
credit card and debit card use, and retail payments
revenues to finally come up with the estimate of
electronic payments by MSMRs of USD 97 billion,
which is estimated to be 43 percent of all MSMR
payments in Turkey.

Table A4.2 – Details on Interviews

Retailer Payment
Retailer Type Size Flow France Colombia Pakistan Morocco Lithuania Turkey Kenya
C2B 16 17 22 15 13 12 17
Micro B2B 14 17 21 15 11 8 17
B2P 17 17 22 12 13 5 22
C2B 10 15 15 16 8 11 14
Grocery MSMR Small B2B 8 15 15 16 4 8 14
B2P 10 15 15 16 8 11 14
C2B 4 15 13 11 9 9 15
Medium B2B 3 15 13 11 5 7 12
B2P 4 15 13 11 9 9 17
C2B 23 16 8 15 17 14 29
Micro B2B 18 16 15 15 15 10 29
B2P 19 16 8 13 17 11 29
C2B 16 19 16 15 7 16 18
Non-grocery Small B2B 9 19 14 15 5 9 18
MSMR
B2P 15 19 16 15 7 16 18
C2B 5 16 16 13 6 6 9
Medium B2B 3 16 14 13 4 6 8
B2P 5 16 16 13 6 6 9
Total overall MSM retailer pulse interviews 74 98 90 85 60 68 110
Total overall MSM retailer C2B entries 74 98 90 85 60 68 102
Total overall MSM retailer B2B entries 55 98 92 85 44 48 98
Total overall MSM retailer B2P entries 70 98 90 80 60 58 109
Total distributor/supplier trade interviews 14 10 20 13 13 14 36
Total other sources for trade interviews 8 5 14 6 5 6 18

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
30
Figure A4.3 –Primary Research Process: Turkey Example
Global
Digital Payments inStakeholder Engagement
MSM Retailers (43%, US$97 Billion)
Approach 1: Euromonitor Passport
40.4% Digital Payments for the Whole Retailing Sector
(US$181 Billion in 2015)
Source: Euromonitor International, 2015
Approach 2: Number of Retailers
654,163 retailer outlets equating to average sales
value per outlet per annum = $344 k
Source: Euromonitor International, 2015
Approach 3: Statistics Offices
654,163 retailer outlets equating to average sales
value per outlet per annum = $344 k
Source: Euromonitor International, 2015
Approach 4: Pulse Surveys
Pulse interviews # = 68
Electronic value payment = 75% across MSM retailers
Source: weighted average (based on confidence ratings) of Pulse
surveys with MSM Retailers in Turkey. Most pulse surveys conducted
were with modern retailers in urban environments
Further validation checks are done by using other
existing data on grocery / non-grocery for the whole
retail industry, consumer expenditures, sales per
employee and wages per employee among others.
A4.3 Modeling and Simulations for
Global Sizing
HOW DOES THE MODEL FIT WITH THE
CLUSTERING EXERCISE?
In terms of financial and economic development,
there is a high degree of heterogeneity across the 168
countries in the sample. Cluster analysis as described
in section A4.1 is employed to overcome part of
the heterogeneity. The aim of this cluster analysis
is to create groupings that are as homogeneous as
possible within, but still heterogeneous across. The
challenge is to find the best number of clusters that
achieves this objective. Six clusters are identified
as a result of this analysis and 168 countries are
Annexes: A4. Methodology – Detailed Descriptions
Approach 5: Trade Interviews
27 Interviews Supporting Our Estimates
(US$181 Billion in 2015)
Euromonitor collects quantitative insights via trade interviews across
various consumer payment landscape sources.
Sources: Financial institutions, telecommunications, suppliers, trade
associations, and national statistics offices
Approach 6: Per Capita Comparison, 2015
Disposable income per capita = US$17,970
MSM retail sales per capita = US$2,939
16.3% of disposable income is spent at MSM retailers
Source: Economic and Consumers Passport database
Approach 7: Total GDP to MSM Retailers
Total Market Value Ratio
US$798.7 Million : US$225 Million = 3.5x
Compared Total GDP to All MSM Retail market value
Source: Economic and Consumers Passport database
Approach 8: World Bank and other third party reports
Credit card used past year (+15yrs old) = 29%
Debit card used past year (+15yrs old) = 43%
Source: Global Findex Data, 2014
Retail payments revenues Eastern Europe via
credit cards = 36% of total revenues
Source: The Boston Consulting Group Global Payments, 2015
grouped into these clusters. Out of the six clusters,
seven countries are selected based on the selection
criteria noted in A4: one country from each of
clusters 1-5, and two countries from cluster 6,
which is the largest cluster. Choosing two countries
from cluster 6 would enable accounting for any
remaining within cluster heterogeneity in cluster 6.
Primary research (trade interviews with retailers,
wholesalers, distributors, and main actors in
the retail and financial sector such as industry
associations and financial institutions) was then
done during August 2015 in these seven countries,
and the data collected through this research are used
to model and predict the value and volume of cash
B2B, B2P, and P2B transactions in the remaining
161 countries. The modeling/simulations procedure
is based on selecting a model for each cluster that
yield the most accurate predictions for that cluster.
This is done to ensure that the resulting predictions
for a country to not be very financially sophisticated
when it sits in low financial development basket.
31
 DESCRIPTION OF THE MODEL
Most classical statistical methods work well when
applied to data sets which are characterised by a
large number of observations. Since this research
project aims to predict 161 data points using 7
observations for each variable of interest, enhanced
regression analysis based methods are used. This
annex explains the methodology for the prediction
of a variable of interest. In this particular context
we characterize a model by its outcome variable
(y) and its predictive indicators (X’s), implying that
a different combination of predictors makes up a
different model:
yi=a0+a1X1i+a2 X2i+εi,
Suppose that in this context, yi denotes the number
of medium grocery retailers of country i. X1i and
X2i are two predictors such as disposable income,
personal consumption expenditures, population
density, etc. and εi is the error term. Generally,
there might be a number of potential predictors
(X), provided that the sample is big enough. In
current settings, the sample size is seven, so only
two predictors at a time are included and the three
coefficients (a0, a1, a2) for each model are estimated.
There are a total of 61 y variables to predict, and a
total of 198 different predictors (X variables). Thus,
the total number of different pairwise combinations
of the predictors is quite large and estimation is very
challenging.16 Table A4.3 below lists the variables
to be predicted.
As a solution, all predictors are grouped into the
following seven categories: education, financial,
development, demographics, retail, business, and
telecom. In the simulations, pairwise combinations
made up of two variables from the same group are
not used. That is, if the group is, say, ‘Financial’,
two predictors from this group would not be used
in combination in one model. This grouping and
the resulting number of combinations makes the
analysis more manageable and efficient as there
is no need to estimate models using variables that
contain very similar information.17
Once these models are estimated, the best fitting
predictor pair needs to be selected. Unfortunately,
any statistical testing, as well as tests of significance,
in this modelling exercise would be flawed, since
the parameter estimates suffer from omitted
variable bias and the sample is small. Nevertheless,
Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
32
all models are checked to see if the signs of the
estimated coefficients make sense economically
and statistically. For example, it is expected that the
share of paper cash payments would go down as
the annual disposable income per capita of country
goes up. Therefore, if an estimated model predicted
a converse relationship, that particular model will
be excluded from the analysis.
As the objective of this step in the methodology is
prediction, models need to be evaluated in terms
of in-sample and out-of-sample predictive power.
A common measure for in-sample prediction is the
coefficient of determination, R2, however, as the
sample size is small (seven observations), it is not
appropriate to use this measure. Measuring out-of-
sample fit—which is normally done my splitting
the sample in half, using one half for estimation,
predicting the values for the other half based on
the estimates, and comparing predictions with
actuals—would also be problematic, since it is not
reasonable to split a sample as small as one with
seven observations in half.
The solution, in this case, is to use a variant of jackknife
(or leave-one-out cross validation) procedure, which
drops one observation, re-estimates the model and
checks the model fit for the observation left out of
sample. This is repeated for each data point in the
sample, i.e. a total of seven times, and the prediction
errors are averages to get the (inverse) mean absolute
percent error (MAPE) measure.18
To find the balance between in-sample fit and out-
of-sample fit, top 30 best performing models based
on R2 are used to predict an outcome variable.
Then, these 30 models are evaluated for the out-
of-sample fit using the jackknife variant described
above to calculate the (inverse) MAPE of each of
these 30 models. The predictions from these 30
models for one outcome variable are then averaged
using inverse MAPE as the weights to construct the
final prediction for that outcome variable, thereby
relying on out-of-sample predictions of the best-
fitting 30 models for each of the 61 variables to be
predicted.19 This enables incorporating the effects
of a larger number of factors in predicting an
outcome variable, which would otherwise not be
possible because of the small sample size. That is,
only two predictors would have been used in each
model otherwise, and the resulting prediction error
would have been larger.
Table A4.3 – List of Variables To Be Predicted
Share of B2B paper payment transactions Grocery Medium
Share of B2B paper payment transactions Grocery Micro
Share of B2B paper payment transactions Grocery Small
Share of B2B paper payment transactions Non-grocery Medium
Share of B2B paper payment transactions Non-grocery Micro
Share of B2B paper payment transactions Non-grocery Small
Share of B2P paper payment transactions Grocery Medium
Share of B2P paper payment transactions Grocery Micro
Share of B2P paper payment transactions Grocery Small
Share of B2P paper payment transactions Non-grocery Medium
Share of B2P paper payment transactions Non-grocery Micro
Share of B2P paper payment transactions Non-grocery Small
Share of P2B paper payment transactions Grocery Medium
Share of P2B paper payment transactions Grocery Micro
Share of P2B paper payment transactions Grocery Small
Share of P2B paper payment transactions Non-grocery Medium
Share of P2B paper payment transactions Non-grocery Micro
Share of P2B paper payment transactions Non-grocery Small
Number of Retailers Grocery Medium per capita
Number of Retailers Grocery Micro per capita
Number of Retailers Grocery Small per capita
Number of Retailers Non-grocery Medium per capita
Number of Retailers Non-grocery Micro per capita
Number of Retailers Non-grocery Small per capita
Number of Distributors/suppliers per capita
Average Number of P2B Transactions Grocery Micro
Average Number of P2B Transactions Grocery Small
Average Number of P2B Transactions Grocery Medium
Average Number of P2B Transactions Non-grocery Micro
Average Number of P2B Transactions Non-grocery Small
Average Number of P2B Transactions Non-grocery Medium
Annexes: A4. Methodology – Detailed Descriptions
Average P2B Transaction Value (USD) Grocery Micro
Average P2B Transaction Value (USD) Grocery Small
Average P2B Transaction Value (USD) Grocery Medium
Average P2B Transaction Value (USD) Non-grocery Micro
Average P2B Transaction Value (USD) Non-grocery Small
Average P2B Transaction Value (USD) Non-grocery Medium
Average Number of B2B Transactions Grocery Micro
Average Number of B2B Transactions Grocery Small
Average Number of B2B Transactions Grocery Medium
Average Number of B2B Transactions Non-grocery Micro
Average Number of B2B Transactions Non-grocery Small
Average Number of B2B Transactions Non-grocery Medium
Average B2B Transaction Value (USD) Grocery Micro
Average B2B Transaction Value (USD) Grocery Small
Average B2B Transaction Value (USD) Grocery Medium
Average B2B Transaction Value (USD) Non-grocery Micro
Average B2B Transaction Value (USD) Non-grocery Small
Average B2B Transaction Value (USD) Non-grocery Medium
Average Number of B2P Transactions Grocery Micro
Average Number of B2P Transactions Grocery Small
Average Number of B2P Transactions Grocery Medium
Average Number of B2P Transactions Non-grocery Micro
Average Number of B2P Transactions Non-grocery Small
Average Number of B2P Transactions Non-grocery Medium
Average B2P Transaction Value (USD) Grocery Micro
Average B2P Transaction Value (USD) Grocery Small
Average B2P Transaction Value (USD) Grocery Medium
Average B2P Transaction Value (USD) Non-grocery Micro
Average B2P Transaction Value (USD) Non-grocery Small
Average B2P Transaction Value (USD) Non-grocery Medium
33
 A5. Discussion Guides
And Questionnaires

A5.1 TRADE INTERVIEWS

FOR CHAMBERS OF COMMERCE, TRADE ASSOCIATIONS, AND OTHER SIMILAR
SOURCES
1. Is the local retail infrastructure becoming more modernised or is it still predominately made up of
smaller informal traditional retailers?
2. How many retailer outlets do you estimate are there in total in the country? That is, traditional and
modern retailers in total, 2014/2015?
3. What is your estimation of number of retailer outlets, split by grocery and non-grocery, (2014/2015)
broken down by size: micro (1-5 employees), small (6-25 employees), and medium (26-100 employees)?
(Number of outlets or % breakdown)
4. Is electronic/digital banking activity increasing amongst businesses/retailers across various sectors/
industries? If yes, how? If not, why not?
5. What are some of the barriers to facilitate increasing use of electronic banking (non-cashless society)
in the country amongst businesses?

FOR BANKS AND FINANCIAL INSTITUTIONS,

1. Are banks/ financial institutions trying to increase/support the use of electronic banking across retailers
and other business in the country?
2. If yes to (1) then how? What are the different types of products that are being developed to aid in
financial inclusion?
3. Has there been any development in the market in the past 2 to 3 years that has made a large impact on
the payments landscape, specifically related to payment within the retailer landscape?
4. Are local banks/ financial players actively marketing more electronic type banking products/ services
amongst the mass population/ lower income segments?
5. Have you offered any new electronic payment type products/services to support more electronic banking
amongst consumers/businesses over the past year?
6. Who are amongst the largest market players/companies/corporates in the country that could potentially
facilitate the shift to using more electronic type banking?
7. Does your bank/institution work with the government to facilitate change i.e. to modernize retailers or
increase the use of more electronic payments (use less cash payments)?
8. What do you think are some of the barriers for retailers to be financially included?

FOR TELECOMMUNICATION COMPANIES AND MOBILE SERVICE PROVIDERS

1. Do you think consumers are interested in using mobile phones to make payments for goods and services?
2. Do you think there has there has been an increase in the use of mobile devices (mobile phones/ tablets)
to make payments by consumers/ businesses when paying for goods and services over the past year
across these devices? If so, how? If not, why?

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
34
3. Do you think that local telecommunication infrastructure is sufficiently developed to support electronic
payments/ banking in the future across mobile devices i.e. networks upgraded/ improved to support/
facilitate mobile banking activities? If so, how? If not, why?

A5.2 PULSE INTERVIEWS

QUESTIONS FOR RETAILERS
Retailer Characteristics
1. Is the owner AND/OR manager female?
2. How long has the store been in service?
3. How many branches of this store are there?
4. What is the number of employees in this store?
5. a. If (3) is more than 1, what is the average number of employees in the other branches?
6. a. How many days do you open per month? Do you open all day long? How many hours?
7. What are the main products sold in your store(s)?
8. Who buys from your store (e.g. people from the neighborhood, tourists, low income, high income)?
9. What percentage of those customers are repeat visitors (i.e. customers coming back to buy daily or on
a weekly basis)?

P2B Payments Questions

1. On average, how many customers do you handle per day?
2. What is the average transaction size per day (i.e. how much on average do customers pay every time
they visit your store)? Range options will be customized for each country researched
3. What types of payments do you accept? (list the alternatives available based on the country researched)
4. How do customers pay for their products? [Get a percentage breakdown of payment instruments, this
should add up to 100% for number as well as value of transactions]

Number of Transactions Per Day Value of Transactions Per Day

[Can Be Number of Customers]
Cash (%)
Check (%)
Card (%)
Mobile Money (%)
Electronic Fund Transfer (%)
Other (%) [Describe]

5. Which payment method do customers prefer out of the above? Why?

6. How has this changed in the last 2-3 years (2014)? (Are the customers using certain payment types
more often than previously?)

Annexes: A5. Discussion Guides And Questionnaires

35
 7. Do you keep a tab for customers (e.g. accept when customers say “put it on my tab”)?
a. How long does the credit line extend on average?
b. How do consumers pay that?
c. How do you collect it?
d. Is there a maximum amount, a cap beyond which you stop selling without payment?
8. Which payment method do you prefer out of the above? Why?
9. Do you have a POS machine (card machine)? Why not?
10. Why don’t you accept certain types of payment instruments?
11. [If accept cards] What has been your experience? How soon do you have access to the funds?
12. How do you handle cash? For example, if you have a bank account, does your bank charge you a fee for
providing change, sorting money, etc.?
13. [If have a bank account] Have you talked to your bank AND/OR been approached by your bank about
accepting card transactions?

B2P Payments Questions

1. Do you have a bank account which you use for your store? Why not (bank is too far, it’s expensive, I
don’t know how)?
2. Is it a personal or business (corporate account for companies) bank account?
3. How do you pay your employees? [Get a percentage breakdown]
4. Why (bank is too far, it’s expensive, I don’t know how, I don’t have internet connection)?

Number of Transactions Per Day Value of Transactions Per Day

[Can Be Number of Customers]
Cash (%)
Check (%)
Card (%)
Mobile Money (%)
Electronic Fund Transfer (%)
Other (%) [Describe]

5. How has this changed since last 2-3 years? (Are you using certain payment types more often than
previously?)

B2B Payments Questions

1. How many suppliers do you rely on, on a weekly basis?
2. When do you pay your suppliers (weekly, monthly, on every order)?
3. How frequently do you pay suppliers per month (how many payments per month for all suppliers)?
4. What is the average value of supplier payment transactions? Range options will be customized for each
country researched

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
36
5. How do you pay your suppliers? [Get a breakdown for each type]

Number of Transactions Per Day Value of Transactions Per Day

[Can Be Number of Customers]
Cash (%)
Check (%)
Card (%)
Mobile Money (%)
Electronic Fund Transfer (%)
Other (%) [Describe]

6. How has this changed since last 2-3 years? (Are you using certain payment types more often than
previously?)
7. Does the supplier offer a line of credit to you?
a. How long does the credit line extend on average?
b. How do you pay that?
8. Why do you choose those payment methods? Is it according to the preference of the supplier?
9. Do you have any problems with your payments to the suppliers? E.g. payment declined, you’re
overcharged (if so, how do you get your money back?)

Other Funding-Related Questions

1. If you need more funds for the store, what is your main source (bank, family and friends, others)?
2. If not sourced from a bank, why not?
3. If the retailer has a bank account, what bank services do you use (transferring money, payroll, credit
cards, loans)?

Other
1. Can you provide the names of some of your main suppliers/wholesalers (used to identify players for
B2B interviews)?
2. What kind of products do they provide?

KEY QUESTIONS FOR DISTRIBUTORS/WHOLESALERS

General Questions
1. What kind of products do you provide retailers?
2. Do you purchase from farmers?
3. Do farmers mostly deal with cash?
a. If yes, does this limit the range of farmers you buy from?
4. Are retailers your only customers, or do individuals and other distributors/wholesalers?
5. How many retailers do you cater to (used to estimate size and scope)?
6. Do you have a bank account which you use for your business? If no, why not (bank is too far, it’s
expensive, etc.)?

Annexes: A5. Discussion Guides and Questionnaires

37
 7. Is it a personal or business (corporate banking for companies) bank account?

B2B Payments-Related Questions

1. How many purchase orders are received per month from retailers (micro, small, medium)?

Number of purchase orders per month from micro grocery retailers

Number of purchase orders per month from small grocery retailers
Number of purchase orders per month from medium grocery retailers
Number of purchase orders per month from micro non-grocery retailers
Number of purchase orders per month from small non-grocery retailers
Number of purchase orders per month from medium non-grocery
retailers

2. How frequently do retailers pay for transactions per month (micro, small, medium)? [Table below]
3. What are the value ranges of these purchase orders per retailer size (micro, small, medium)? [Table
below]

Micro Retailers Small Retailers Medium Retailers

Number of purchase orders per month
Number of transactions per month
Value of each transaction

4. How do retailers usually pay for their transactions?

Number of Transactions Per Day Value of Transactions Per Day

[Can Be Number of Customers]
Cash (%)
Check (%)
Card (%)
Mobile Money (%)
Electronic Fund Transfer (%)
Other (%) [Describe]

5. How has this changed since last 2-3 years? (Are the retailers using certain payment types more often
than previously?)
6. Do you provide a line of credit payment to retailers?
a. How long does the credit line extend on average?
b. How do retailers pay that?
7. What is your preferred method of payment? Why?
8. What percentage of the retailers that you deal with are female owned?

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
38
 A6. Country-Level
Findings

1. COLOMBIA
OVERVIEW
Table A6.1.1 – Selected Country Indicators: Colombia
Country Income Category: Upper Middle Income % Adults (% Age 15+) With An Account (2014): 39%
Population (2014): 48 Million Mobile Cellular Subscriptions/100 People (2014): 113
Gdp Per Capita (Current USD 2014): USD 7904 # ATMs Per 100,000 Adults (2014): 40.6
Total Retail Sales Value (2014) USD 68,138 M # POS Terminals Per 100,000 Adults (2014): 685
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.1.2 – Number of Micro, Small and Medium Retailer Outlets: Colombia
Retailers by Size Grocery Retailers Non-Grocery Retailers Total MSMR Outlets
Micro (0-5 Employees) 280,202 147,779 427,981
Small (6-25 Employees) 3,608 35,061 38,669
Medium (26-100 Employees) 1,825 8,876 10,701
Total MSM Retailers 285,635 191,716 477,351
Other Retailers (>100 Employees) 3 192 195
Total Retailers 285,638 191,908 477,546
Number of Distributors - - 69,740
Source: Euromonitor International - Passport - Retailing 2015, Departamento Administrativo Nacional de Estadística (DANE), Colombia
Chamber of Commerce.

Table A6.1.3 – Consumer Payment Methods: Colombia

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 85.0% 83.8%
Cash Payments 83.6% 82.8%
Other Paper Types 1.3% 1.1%
Total Electronic Payments 15.0% 16.2%
Card Payment Transactions (Excl. Commercial) 14.7% 15.8%
Electronic Fund Transfers 0.3% 0.4%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.1.4 – Main Findings: Colombia

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 14,453 18% 10%
B2B 18,582 33% 21%
B2P 2,711 33% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

39
 MSMR RESEARCH FINDINGS – COLOMBIA

Table A6.1.5 – Information on Interview Responses Across MSMRs: Colombia

Retailer Size Number of Interview Responses Number of Interviews Responses
Payment Source /Retailer Type Grocery Non-Grocery
P2B Micro 17 16
Small 15 19
Medium 15 16
B2B Micro 17 16
Small 15 19
Medium 15 16
B2P Micro 17 16
Small 15 19
Medium 15 16
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments Micro and small retailers find cash easier to deal
with, as they also pay their employees and suppliers
Grocery retailers: Cash is mainly used to pay
in cash. In particular, micro grocery retailers
across micro retailers, especially in grocery stores.
consider that cash is safer than any other payment
Card ownership remains very low among low-
method and they can avoid dealing with banks that
income consumers and micro and small businesses
often charge fees for account maintenance and
often do not have POS terminals, because banks
transactions such as money transfers.
request a minimum number of card transactions
monthly and also due to the high fees charged for Check usage remains low, as retailers fear that
card transactions (around USD 0.6 per transaction), they may not be honored and thus are not usually
which makes them nonviable for small payments. accepted, unless they are from a reputable company
Furthermore, at micro grocery retailers, consumer or from a loyal and trusted customer.
purchases are usually small in value and frequent
(Figure A6.1.1, Table A6.1.6 and Table A6.1.7).

Table A6.1.1 – Grocery P2B Payments by Payment Type, Value and Volume Share (%)

Value Share (%) Volume Share (%)

100% 1% 100% 6%
7% 8% 9% 8% 7% 6% 7% 9%
6% 2% 1% 16% 6% 1%
1%
80% 1% 80%

60% 60%
93% 86% 89% 91% 93% 88% 93% 93% 90%
40% 81% 40%

20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs
Electronic Fund Transfer Cards Check Cash

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
40
Table A6.1.6 – Sales of Grocery MSMRs: Colombia
Average Number
Number of Annual of Baskets
Grocery Number Annual Sales Sales per Total Annual Sold per Average
Retailers of Transactions Retailer Sales (P2B) Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 280,202 29,220 101,672 28,488,759 85 3.5
Small 3,608 47,600 416,493 1,502,708 140 8.7
Medium 1,825 219,733 3,123,034 5,699,537 634 14.2
Total Grocery MSMRs 285,635 30,669 124,953 35,691,004 89 3.6
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.1.7 – Grocery MSMRs and P2B Payments: Summary for Colombia
Retailer Type Store Info
Grocery - Micro • Low- and middle- income
consumers are the key clients
• On average 65 percent of
customers return to the stores
• Most outlets are independent
and the owner works at the
store and is helped by family
members or employs a couple
of salespeople
Grocery - Small • Mainly used by middle-income
consumers
• On average 68 percent of
customers return to the stores
• Most retailers are independent.
The owner may work at the
store or simply supervise the
business
Grocery - Medium • Mainly middle- and high-
income consumers
• On average 72 percent of
customers return to the stores
• Mainly chained retail stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• All types of fresh food and
basic packaged food and
drinks
• Average value per day is
USD 3.5 per basket and
sells about 85 baskets
per day
• All types of fresh food and
basic packaged food and
drinks
• Average value per day is
USD 8.7 per basket and
sells about 140 baskets
per day
• All types of fresh food
and a large selection of
packaged food and drinks
• Average value per day is
USD 14.2 per basket and
sell about 634 baskets
per day
Payment Method Details
• Cash dominates (92 percent of value), as
the number of baskets and the average
transaction value is low and charges for
accepting cards high
• Cash is convenient as suppliers and
employees are usually paid in cash
• Checks are distrusted and hardly ever
accepted; declining trend
• Cash dominates (86 percent of value).
• Stores situated in wealthier neighborhoods
or being run by younger owners may have
POS terminals.
• Cash payments are preferred by retailers
as card fees are high and suppliers and
employees are paid in cash
• Card (8 percent of value) use is increasing
• The majority of stores have POS terminals
for card payments
• Cash is the main payment method (89
percent of value). Card payments (9% of
value) are increasingly popular among
younger customers. Checks (2 percent of
value) are not popular.

Table A6.1.8 – Sales of Non-Grocery MSMRs: Colombia

Average Number
Number Annual Total of Baskets
Non-Grocery Number of Sales Sales per Annual Sold per Average
Retailers of Transactions Retailer Sales (P2B) Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 147,779 13,856 95,796 14,156,714 42 6.9
Small 35,061 30,221 440,574 15,447,011 91 14.6
Medium 8,876 84,345 1,767,574 15,688,780 246 21.0
Total Non-Grocery MSMRs 191,716 20,112 236,248 45,292,505 60 9.0
Source: Team estimates based on trade interviews, pulse surveys and literature review

Non-grocery retailers: Cash dominates P2B
payments in non-grocery MSMRs as well. Across
all non-grocery MSMRs, 82 percent of all P2B
transactions are made by cash, which constitute 73
percent of transactions value. The second most used
payment method is cards, however the use of cards
at micro non-grocery retailers is much less common
compared to small and medium non-grocery retailers
(Table A6.1.8, Figure A6.1.2 and Table A6.1.9).

Annexes: A6. Country-Level Findings

41
 Figure A6.1.2 – Non-Grocery P2B Payments by Payment Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 1% 3% 3% 2% 1% 100% 1% 3% 2% 2%
10% 7% 9%
16% 2% 15% 1%
2% 23% 23% 25% 1%
80% 28% 29% 1% 80%
2% 1% 2%
1% 2%
60% 60%

87% 90% 90%

40% 81% 40% 82%
67% 73% 73% 71%
65%
20% 20%

0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cards Check Cash

Table A6.1.9 – Non-Grocery MSMRs – Summary: Colombia

Retailer Type Store Info
Grocery - Micro • Mainly middle-income
consumers, but serves low-
and high-income clients, too
• On average 67 percent of
customers return to the stores
• Most outlets are independent.
The owner works at the
store and is helped by family
members or employs one more
person
Grocery - Small • Mainly used by middle- and
high-income consumers
• On average 59 percent of
customers return to the stores
• Most retailers are independent
or may own other stores
locally. The owner may work at
the store or simply supervise
the business
Grocery - Medium • Mainly middle- and high-
income consumers
• On average 69 percent of
customers return to the stores
• Mainly chained retail stores
Products Sold
• Most common: Apparel/
footwear, consumer
appliances/electronics,
toys, DIY, drugstores/
pharmacies
• Average value per day is
USD 6.9 per basket and
sells about 42 baskets
per day
• Most common: Apparel/
footwear, consumer
appliances/electronics,
toys, DIY, drugstores/
pharmacies
• Average value per day is
USD 14.6 per basket and
sells about 91 baskets
per day
• Most common: Apparel/
footwear, consumer
appliances/electronics, DIY
• Average value per day is
USD 21 per basket and sell
about 246 baskets per day
Payment Method Details
• Cash dominates (87 percent of value),
particularly for small transactions and low-
income consumers
• Cash is convenient as suppliers and
employees are usually paid in cash
• Checks are distrusted and only accepted
from trusted clients
• Electronic fund transfers may be accepted
for higher value or installment payments
• Cash dominates (67 percent of value), but
card payments are sizeable (28 percent of
value) and increasingly popular, especially
for high- value items, as consumers feel
safer not carrying large amounts of money
with them.
• Electronic fund transfers may also be
accepted for higher-value purchases or
installment payments
• Cash is main payment used to pay for
items
• The majority of stores have POS terminals
for card payments
• Card payment method (29 percent), is
considered safer by middle- and high-
income consumers
• Electronic fund transfers and cards benefit
from the growing popularity of online
shopping

Changes in the last 2-3 years in P2B
payment patterns
On the demand side, lack of financial literacy and
low incomes limit the use of electronic payments at
micro retailers for P2B payments. At the same time,
high transaction costs discourage the acceptance of
electronic payment methods by micro retailers.
Small retailers mostly prefer cash. As the store
size gets larger, the acceptance rate of electronic
payments rises as gets more affordable for these
retailers to have POS devices.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
42
Card and electronic fund transfer usage in P2B
payments also increased due to the growing
popularity of online shopping, as large retailers and
young entrepreneurs have begun to take their store-
based businesses online.
Anecdotal evidence from trade interviews and
pulse surveys suggest that in addition to transaction
fees acting as deterrents, micro grocery retailers
think cash is safer, cards are expensive to handle
and checks are not even acceptable. Checks require
a high degree of trust between the retailer and the
client. On the other hand, medium retailers consider
cards as the most secure payment instrument
because they do not want to deal with cash in the
store. Micro retailers do not see the benefit of using
POS devices due to additional costs. In addition,
their customers also prefer to deal in cash.
Store cards recently started to become popular among
Colombians. These cards offer access to discounts,
credit and have low requirements, making them
accessible to a large proportion of the population.
Business to Business Payments (B2B)
The research findings suggest that cash accounts
for 53 percent of total B2B payments by value used
by MSMRs to pay their suppliers. Electronic fund
transfers and checks represent 33 percent and 13
percent, respectively.
Grocery retailers: Among grocery retailers, cash
use is 70 percent by value, driven by higher cash use
among micro grocery retailers. The use of electronic
payments for supplier payments increases with the
size of the retailer. Small and medium retailers
work with large suppliers with nationwide presence
and thus using cash for payments is not feasible
Table A6.1.10 – Supplier Payments by Grocery MSMRs: Colombia
Average Number of
Grocery Number Supplier Payment
Retailers of Transactions
by Size Distributors per Retailer
Micro - 378
Small - 450
Medium - 708
Total Grocery MSMRs - 381
Distributors / Suppliers 69,740
Source: Team estimates based on trade interviews, pulse surveys and literature review
Annexes: A6. Country-Level Findings
due to physical distances between the retailers and
suppliers. Furthermore, small and medium grocery
retailers and their suppliers usually prefer electronic
payments such as electronic fund transfers for easy
recordkeeping (Table A6.1.10 and Figure A6.1.3).
On the other hand, micro retailers often operate
with local suppliers that are also small and that
prefer to use cash, as they pay employees and make
other expenses in cash. The use of cash also allows
them to avoid taxes and bank fees to some extent.
Most retailers have a bank account, however in the
case of micro grocery suppliers, for example small
local farmers, they might not have a bank account
and require payment in cash.
In most cases, suppliers to grocery retailers impose
the payment instrument on the retailers. Credit
lines are used by grocery retailers, with payment
options ranging from 10, to 30, 60 or 90 days.
Micro retailers’ payment options are generally
shorter. The frequency of supplier payments can
range from on every order, to weekly or monthly.
Suppliers generally prefer cash as payment from
micro grocery retailers.
Non-grocery retailers: Among non-grocery
retailers, the most common method for making
supplier payments is electronic fund transfers (45
percent of value) followed by cash and checks: 38
percent and 16 percent, respectively (Figure A6.1.4).
Easiness and security of payments were cited as
factors behind the use of electronic fund transfers.
Supplier credit lines are also used by non-grocery
retailers, with payment options ranging from 30-
90 days. The frequency of supplier payments can
range from on every order, to weekly or monthly
(Table A6.1.11 and Figure A6.1.4).
Annual Total Annual Average B2B
Payments to Payments Value per
Suppliers per to Suppliers Transaction
Retailer (USD) (USD ‘000) (USD)
76,677 21,485,051 203
308,907 1,114,538 687
2,160,119 3,942,217 3,051
92,922 26,541,807 244
43
 Figure A6.1.3 – Grocery B2B Payments by Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 100%
90% 17% 15% 20% 90% 17% 14% 17% 21%
36% 33% 32%
80% 7% 11% 80% 7% 12% 7%
11% 8%
70% 70%
60% 13% 60%
50% 31% 50% 34%
40% 76% 74% 40% 76% 74% 76%
70% 71%
30% 30%
53%
20% 20% 34%
33%
10% 10%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Non- MSMRs
MSMRs Grocery
MSMRs
Electronic Fund Transfer Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.1.11 – Supplier Payments by Non-Grocery MSMRs: Colombia

Average
Average Number of Annual Total Annual B2B
Non-Grocery Number Supplier Payment Payments to Payments Value per
Retailers of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer Retailer (USD) (USD ‘000) (USD)
Micro - 149 63,441 9,375,284 427
Small - 230 284,407 9,971,615 1,237
Medium - 359 1,102,993 9,790,040 3,071
Total Non-Grocery MSMRs - 173 151,980 29,136,938 878
Distributors / Suppliers 69,740
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.1.4 – Non-Grocery Payments by Type, Value And Volume Share (%)
Value Share (%) Volume Share (%)
100% 100%
90% 26% 90% 25% 21%
33% 32%
80% 44% 45% 80% 42% 0%
2% 1% 8%
70% 3% 0% 70% 3% 61% 1%
64%
60% 0% 13% 60% 10%
1% 0%
50% 16% 50%
22% 22%
40% 69% 1% 40% 1%
71% 71%
30% 53% 30% 57%
22% 25%
20% 34% 38% 20% 36%
10% 10%
13% 13%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
44
Changes in the last 2-3 years in B2B A very small amount of B2P payments is done by
payment patterns checks. Across medium-sized retailers temporary
staff are paid by check due to ease of making a
Payment methods remain largely unchanged for
payment to such employees. Electronic payments
micro retailers. Those that have increased the
are common among medium retailers (45 percent
proportion of electronic payments have done so
of value in grocery and 60 percent of value in non-
mostly at the request of suppliers. On the other
grocery), mostly electronic fund transfers, who find
hand, electronic fund transfers have become more
this method safer and more convenient to pay their
and more common as a supplier payment instrument
employees. Moreover, more stores are making use
for small and medium retailers as this method is
of bank services such as payroll, POS devices, etc;
perceived to be faster and safer by both retailers and
and bank fees are thus reduced.
suppliers, especially for bulk high-value orders.
Cash is the preferred method for many employees,
Some suppliers of consumer products who sell to
as those on low salaries are often unbanked and
micro and small retailers prefer to receive cash for
cannot afford to pay bank fees for keeping a
supply orders due to the risk of lack of payment if
current account. Furthermore, many low-income
only paid electronically. Suppliers thus carry larger
employees in Colombia are paid twice monthly or
sums of cash, which needs to be deposited. Banks
have allowed them to make periodic deposits via
special windows across banks’ branch networks. Figure A6.1.5 – Grocery B2P Payments by
Type, Value Share (%)
Additional anecdotal evidence from this research
suggests that the supplier payment method depends Value Share (%)
on where the suppliers are located. Local suppliers 100%
are, in general, paid in cash by micro retailers and 18% 21%
larger suppliers located elsewhere are paid by 35% 33%
80% 1%
45%
electronic fund transfers. One small non-grocery 1%
retailer noted that it is convenient and safe to use 60%
2%
electronic fund transfers as opposed to carrying 10%
large sums of cash. A number of medium retailers— 40% 82% 78%
grocery and non-grocery—stated that suppliers 65% 66%
only accept checks or electronic fund transfers. 20% 43%

Business to People (B2P): Payments of

0%
Salaries Micro Small Medium Grocery MSMRs
MSMRs
The main method of B2P payments is cash,
Electronic Fund Transfer Cards Check Cash
which accounts for 66% of total value across all
MSMRs, 78 percent across all grocery MSMRs, Source: Team estimates based on trade interviews, pulse surveys
and 55 percent across all non-grocery MSMRs. The and literature review
remaining is by electronic fund transfers.

Table A6.1.12 – Employee Salary Payments by Grocery Retailers: Colombia

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 2 185 11,761 3,295,353
Small 9 2 182 38,547 139,078
Medium 39 2 230 215,144 392,638
Total Grocery MSM 3 2 185 13,398 3,827,069
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

45
 with a greater frequency and they live from day to
day, thus preferring the liquidity that cash provides
especially among micro and smaller retailers.
Changes in the last 2-3 years in B2P
payment patterns
Electronic fund transfer use has increased around
5 percent over the past few years among medium
retailers to pay employees. The change is less
notable among small retailers and only a few micro
retailers report that there has been a shift away
from cash. Mobile money are not used to pay staff
among retailers. Opportunities to access banking
products is improving among rural consumers due
to increasing awareness, supportive regulation
and developing infrastructure to support new low-
income banking products/services that are offered.
Anecdotal evidence suggests micro grocery retailers
always prefer cash as it is easier; small grocery
retailers also prefer cash and small grocery retailers
think cash is better because of fees associated with
electronic transfers. On the other hand, one medium
non-grocery retailer noted that electronic fund
transfers are easier for financial control purposes,
and also lead to a more efficient way of accounting
for costs when paying staff.

Table A6.1.13 - Employee Salary Payments by Non-Grocery Retailers: Colombia

Average Average Number of Average Total Salary
Number of Salary Payments Monthly Salary Annual Salary Payments
Non-Grocery Employees per Employee per per Employee Payments per Year (USD
Retailers by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 2 2 193 10,199 1,507,266
Small 9 2 197 41,871 1,468,027
Medium 33 2 218 162,161 1,439,319
Total Non-Grocery MSM 5 2 195 23,027 4,414,612
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.1.6 – Non-Grocery B2P

Payments by Type, Value Share (%)
Value Share (%)
100%

25%
80% 33%
45% 43%
60% 1%
60%
2%

40% 5%
75% 66%
55% 55%
20%
35%

0%
Micro Small Medium Non- MSMRs
Grocery
MSMRs
Electronic Fund Transfer Check Cash
Source: Team estimates based on trade interviews, pulse surveys
and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
46
2. FRANCE
OVERVIEW
Table A6.2.1 – Selected Country Indicators: France
Country Income Category: High-income OECD % Adults (% Age 15+) With An Account (2014): 97%
Population (2014): 66.2 Million Mobile Cellular Subscriptions/100 People (2014): 100
Gdp Per Capita (Current USD 2014): USD 42,732.6 # ATMs Per 100,000 Adults (2014): 108.5
Total Retail Sales Value (2014) USD 55,466 M # POS Terminals Per 100,000 Adults (2014): 2172.86
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.2.2 – Number of Micro, Small and Medium Retailer Outlets: France
Retailers by Size Grocery Retailers Non-Grocery Retailers Total MSMR Outlets
Micro (0-5 Employees) 109,384 164,876 274,259
Small (6-25 Employees) 12,324 18,576 30,899
Medium (26-100 Employees) 5,140 7,748 12,889
Total MSM Retailers 126,848 191,200 318,047
Other Retailers (>100 Employees) 1,285 2,887 4,173
Total Retailers 128,133 194,087 322,220
Number of Distributors - - 195,696
Source: Euromonitor International - Passport - Retailing 2015, EuroStat, National Statistical Office: Insee, Banque de France

Table A6.2.3 – Consumer Payment Methods: France

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 37.3% 36.3%
Cash Payments 18.5% 18.2%
Other Paper Types 18.7% 18.1%
Total Electronic Payments 62.7% 63.9%
Card Payment Transactions (Excl. Commercial) 42.5% 42.5%
Electronic Fund Transfers 20.2% 21.4%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.2.4 – Main Findings: France

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 535,407 64% 54%
B2B 369,321 85% 72%
B2P 44,899 78% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

47
 MSMR RESEARCH FINDINGS – FRANCE

Table A6.2.5 – Information on Interview Responses Across MSMRs: France

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 16 23
Small 10 16
Medium 4 5
B2B Micro 14 18
Small 8 9
Medium 3 3
B2P Micro 17 19
Small 10 15
Medium 4 5
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments
Grocery retailers: Primary research findings
indicate higher cash use for P2B transactions at
micro grocery retailers, both in terms of value
and volume (Figure A6.2.1). As the size of retailer
increases, credit card payments become more
common. Not many retailers accept checks. Value
of the average basket and number of baskets sold
per day increases with retailer size across grocery
retailers (Table A6.2.6).
A few grocery micro retailers interviewed did not
have a POS terminal. Their businesses were too
small to accept such payment methods as transaction
fees on credit cards were too high for them with a
very limited number of daily transactions.

Figure A6.2.1 – Grocery P2B Payments by Payment Type, Value and Volume Share (%)

Value Share (%) Volume Share (%)

100% 1% 1% 1% 100% 1%
2% 2% 1% 1%
80% 42% 80% 38% 42%
47% 49%
60% 51%
71% 60% 69%
60% 60% 6%
4% 6%
7% 9%
40% 40% 11%
10%
54% 12% 56% 52%
20% 46% 14% 20% 15% 42% 36%
29% 24%
14% 15%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Other Electronic Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
48
Table A6.2.6 – Sales of Grocery MSMRs: France
Average Number
Number of Annual of Baskets
Grocery Number Annual Sales Sales per Total Annual Sold per Average
Retailers of Transactions Retailer Sales (C2B) Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 109,384 33,216 500,944 54,795,290 108 15.1
Small 12,324 151,618 3,510,284 43,260,740 480 23.2
Medium 5,140 543,834 29,556,196 151,918,846 1,679 54.3
Total Grocery MSMRs 126,848 65,410 1,970,665 249,974,876 207 17.5
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.2.7 – Grocery MSMRs and P2B Payments: Summary for France
Retailer Type Store Info
Grocery - Micro • Customer base includes all
income groups and ages
• On average 72 percent of
customers return to the stores
• Retailers are mainly self-owned
stores with a small staff
complement
Grocery - Small • Customer base includes all
income groups and ages
• On average 74 percent of
customers return to the stores
• Retailers are independent and
or part of a chain of retailers
Grocery - Medium • Customer base includes all
income groups and ages
• On average 85 percent of
customers return to the stores
• Mainly chain stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold Payment Method Details
• Main products sold are • POS terminals are frequently present. Few
food and beverages. Also retailers do not have a POS terminal due
includes small bakeries, to additional costs per transaction.
food and drink stalls • Cash is the preferred payment method by
• Average basket size is retailer, reasons cited include convenience,
USD 15 per and 108 ease of use and lower fees per transaction.
baskets sold on average • Cash is followed by credit cards.
per day • Checks are still used, but rare.
• Mainly food and beverage • All stores have POS terminals
products along with • Cash and credit cards are used commonly.
bakeries and butcheries Credit card transaction value must be
larger than 10 euros to be accepted by
some retailers
• All household groceries • All stores have POS terminals
and necessities • Credit cards are the main payment form.
Cash and checks are less frequently used
as consumers do not carry large sums of
money around

Table A6.2.8 – Sales of Non-Grocery MSMRs: France

Average Number
Number Annual Total of Baskets
Non-Grocery Number of Sales Sales per Annual Sold per Average
Retailers of Transactions Retailer Sales (C2B) Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 164,876 12,624 679,243 111,990,604 45 53.8
Small 18,576 51,569 2,774,640 51,540,659 168 53.8
Medium 7,748 140,184 15,732,607 121,901,270 443 112.2
Total Non-Grocery MSMRs 191,200 21,577 1,492,851 285,432,532 73 56.2
Source: Team estimates based on trade interviews, pulse surveys and literature review

Non-grocery retailers: Survey findings indicate a Checks are still accepted by micro retailers but show
higher share of cash P2B payments at micro non- a strong declining trend amongst small and medium
grocery retailers compared to small and medium non-grocery retailers.
non-grocery retailers (Figure A6.2.2). Non-grocery
Amongst the non-grocery retailers interviewed,
retailing, compared to groceries, has lower cash
most of them owned POS terminals to accept
payment use, mostly due to a higher value of the
electronic payments for higher value purchases.
average basket of goods (Table A6.2.8). Electronic
Ease of use and safety of funds were the two major
payments via credit and debit card is preferred.

Annexes: A6. Country-Level Findings

49
 reasons cited for electronic payments. Micro non-
grocery retailers noted that owning a POS terminal
and thus having the ability to prove substantially
larger number of payment transactions allowed them
to negotiate more favorable bank account fees with
their banks. And in some cases these reduction in
account fees were large enough to offset electronic
transaction fees. For special customers of micro,
small and medium retailers such as other businesses
and public institutions, electronic fund transfer
or bank draft remain the most common payment
method used.

Figure A6.2.2 – Non-Grocery P2B Payments by Payment Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 0% 3% 3% 2% 1% 100% 3% 2% 1% 1%
4% 4% 5% 4% 2% 4% 3% 4% 1%

80% 80%
51%
54% 51%
60% 61% 56%
60% 61% 60% 60% 61%
66%

40% 40% 20% 11%

18% 12% 15%
13% 14% 11% 9%
20% 10% 20% 36%
31% 24%
24% 20% 20% 24% 21% 24%
16%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Other Electronic Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.2 9 – Non-Grocery MSMRs – Summary: France

Retailer Type Store Info
Non-Grocery - Micro • Customer base includes all
income groups and ages
• On average 64 percent of
customers return to the stores
• Independent outlets
Non-Grocery - Small • Customer base includes all
income groups and ages
• On average 44 percent of
customers return to the stores
• Chain and independent stores
Non-Grocery - • Customer base includes all
Medium income groups and ages
• On average 66 percent of
customers return to the stores
• Chain and independent
retailers
Products Sold
• Main products sold are
apparel, shoes, toys,
and health and beauty
products
• DIY hardware, electronics,
home furniture and
pharmaceutical goods
• Apparel, DIY hardware and
garden and home furniture
Payment Method Details
• Majority own bank accounts
• Majority have POS terminals
• Most of the time cash is preferred.
• Majority own bank accounts
• Majority have POS terminals
• Cash payments are accepted
• Retailers discourage use of checks
• Majority own bank accounts
• All stores have POS terminals
• Cash is used less frequently
• Main payment method is credit cards.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
50
Changes in the last 2-3 years in P2B
payment patterns
According to the trade interviews and pulse surveys,
the anecdotal evidence suggests the following:
• The usage of checks has declined in France
because MSMRs prefer more secure payment
methods such as credit cards or even cash.
Retailers increased restrictions on check usage
by lowering the maximum amount for which
a check can be written, by thorough ID checks
or by banning the use of checks, mainly in
response to the rise of void checks over the last
couple of years.
• French consumers prefer electronic payment
methods for P2B payments. It is considered
the safest and the quickest way of making and
receiving payments. Credit card payments and
electronic fund transfers are widely used to
avoid carrying large sums of cash.
• However, cash still plays an important role in
P2B transactions when micro and small retailers
are involved, especially showing prominence in
grocery retailing. More than half of the value
and volume of P2B transactions involving micro
and small grocery retailers are still paper-based.
• Credit card usage has increased on average by 10
percent over the last three years among MSMRs,
primarily due to customers who find this payment
method more convenient than any others.
• Some micro grocery retailers noted during the
interviews that they prefer cash because there are
fees associated with credit cards. In order for a
further shift from cash to credit cards to happen,
the fee structure needs to be more favorable for
both the consumers and the retailers.
• Some small grocery retailers prefer cards over
cash because coins are hard to reconcile, count,
and they need to be roll-ready for deposit. Small
non-grocery retailers also prefer cards over cash
because they are more secure and there is less
room for error.
• Medium non-grocery retailers prefer credit
cards due to security.
Business to Business (B2B) – Supplier
Payments
Grocery retailers: Overall, the most common
payment method used by grocery retailers to make
supplier payments is electronic payments based on
value and volume (Figure A6.2.3). These payment
methods are easier, safe and secure. Electronic fund
transfer use decreases as the size of retailer increases in
favor of other electronic payment types such as bank
drafts and bills of exchange. Banks offer to arrange
monthly payments to suppliers on behalf of retailers at
a pre-set date, and they guarantee the payment.
Many retailers that were interviewed for this study
cited supplier preference as the reason for the choice
of payment type. Micro and small and retailers on
a few occasions chose their preference of payment
method. Medium-sized grocery retailers mainly
use other electronic payments and electronic fund
transfers as these are hassle free and guaranteed.
Checks are common among micro and small grocery
retailers for supplier payments for whom it remains
an old habit. According to interviewees that noted
using checks for B2B payments, this method suits
both suppliers and retailers. There was minimal use
of cash to make supplier payments among grocery
MSMRs.

Table A6.2.10 – Supplier Payments by Grocery MSMRs: France

Average Number of Annual Total Annual Average B2B
Grocery Number Supplier Payment Payments to Payments Value per
Retailers of Transactions Suppliers per to Suppliers Transaction
by Size Distributors per Retailer Retailer (USD) (USD ‘000) (USD)
Micro 109,384 98 373,979 40,907,352 3,827
Small 12,324 171 2,617,685 32,260,356 15,308
Medium 5,140 440 21,379,014 109,888,134 48,589
Total Grocery MSMRs 126,848 119 1,443,112 183,055,842 12,157
Distributors / Suppliers 195,696 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

51
 Figure A6.2.3 – Grocery B2B Payments by Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 100%
12% 12%
38% 28% 29%
80% 38% 44% 80%

43% 65% 43%

60% 60%
93% 93% 35%
28% 28% 43%
40% 40%
41%
39% 19% 39%
20% 31% 20% 30% 32%
23%
14% 13%
0% 6% 4% 7% 2% 2% 0% 6% 5% 7% 5% 4%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Other Electronic Electronic Fund Transfer Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.2.11 – Supplier Payments by Non-Grocery MSMRs: Colombia

Average
Average Number of Annual Total Annual B2B
Non-Grocery Number Supplier Payment Payments to Payments Value per
Retailers of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer Retailer (USD) (USD ‘000) (USD)
Micro 164,876 149 456,591 75,280,687 3,058
Small 18,576 276 1,788,309 33,218,951 6,479
Medium 7,748 544 10,024,933 77,676,388 18,428
Total Non-Grocery MSMRs 191,200 178 973,726 186,176,026 5,482
Distributors / Suppliers 195,696 - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.2.4 – Non-Grocery B2B Payments by Payment Type, Value And Volume Share (%)
Value Share (%) Volume Share (%)
100% 100%
8% 8%
23% 30% 29%
80% 33% 33% 80% 33% 32%
12%
44%

60% 60%
35% 90% 36% 88% 47% 43%
63%
40% 40%
66% 41% 66%

20% 27% 20% 26%

20% 23%
12% 13%
0% 5% 1% 2% 2% 2% 0% 5% 2% 5% 4% 4%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Other Electronic Electronic Fund Transfer Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
52
Frequency of supplier payment varies across Business to People (B2P)
retailers: from every order to weekly, monthly
Grocery retailers: Among grocery MSMRs,
or bi-monthly. The number of supplier payment
electronic fund transfers is the most common
transactions increases with the retailer size, and
payment method followed by checks for wage
ranges from eight to 37 from micro-to-medium
payments (Figure A6.2.5). Cash is not used at all.
grocery retailers. Credit facilities are regularly used
Small grocery retailers who employ contracted
by all sizes of retailers. Credit lines have a duration
or temporary employees sometimes favor paying
of 30, 60 and 90 days until the payment.
by check.
Non-grocery retailers: Among non-grocery
The number of employees per retailer is positively
retailers, electronic payments are the most common
associated with the value of salaries per month, and
(Figure A6.2.4). Electronic fund transfers are the
the number of B2P transactions per month (Table
most popular option followed by other electronic
A6.2.12). Medium grocery retailer chains employ
payment types. Interviewees noted ease of use and
a large number of people across their supermarket
security of the payment as reasons.
and hypermarket format stores. Electronic fund
Cash is minimally used by non-grocery retailers for transfers are used the majority of the time.
supplier payments. Checks are commonly used by Electronic fund transfers are more centralized,
micro non-grocery retailers, and the use of checks
decreases with the retailer size. Small non-grocery Figure A6.2.5 – B2P Payments by Grocery
retailers tend to favor electronic payments for MSMRs, Value Share (%)
almost all transactions. Credit lines are also used Value Share (%)
by non-grocery retailers, with payment options 100%
ranging from 30-90 days. The frequency of supplier
payments can range from every order, to weekly or 80%
monthly (Table A6.2.11).
54% 60%
Changes in the last 2-3 years in B2B 60%
80% 78%
payment patterns 100%
40%
Based on the findings from the interviews, the
payment methods used by MSMRs for supplier 20% 46%
40%
payments have not changed much over the last two 22%
20%
to three years. Anecdotal evidence suggests that 0% 0%
micro grocery retailers may prefer cash as there are Micro Small Medium Grocery MSMRs
no fees. Medium grocery retailers have been paying MSMRs
suppliers electronically for a number of years. Small
Electronic Fund Transfer Check
non-grocery retailers noted that electronic fund
transfers have become more common for supplier Source: Team estimates based on trade interviews, pulse surveys
and literature review
payments as opposed to cash, which was common
a few years back.

Table A6.2.12 - B2P Payments by Grocery MSMRs: France

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 1,483 46,710 5,109,290
Small 11 1 1,632 215,361 2,654,107
Medium 86 1 1,774 1,825,916 9,385,207
Total Grocery MSMRs 7 1 1,509 135,190 17,148,604

Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

53
 direct and convenient, and they involve less paper
work. The bigger the retailer the more electronic
fund transfers are used as the preferred payment
type for employee payments from retailers.
Non-grocery retailers: The findings show that
electronic fund transfers are the most popular
payment type for B2P payments followed by checks
among non-grocery MSMRs (Figure A6.2.6). Some
medium non-grocery retailers used checks to pay
staff, as opposed to medium grocery retailers who
use only electronic fund transfers. Cash was not used
to pay employees at all by non-grocery MSMRs.
Ease of keeping payment records and more security
for bulk payments for higher numbers of employees
were cited as reasons for choosing electronic fund
transfers and checks.

Table A6.2.13 – B2P Payments by Non-Grocery MSMRs: France

Average Average Number of Average Total Salary
Number of Salary Payments Monthly Salary Annual Salary Payments
Non-Grocery Employees per Employee per per Employee Payments per Year (USD
Retailers by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 2 1 2,386 67,801 11,178,703
Small 9 1 2,422 269,297 5,002,366
Medium 52 1 2,402 1,493,191 11,569,724
Total Non-Grocery 5 1 2,390 145,140 27,750,793
MSMRs
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.2.6 – B2P Payments by Non-

Grocery MSMRs, Value Share (%)
Value Share (%)
100%

80%
55%
60% 78% 77% 78%
97%
40%

20% 45%
23% 22%
22%
0% 3%
Micro Small Medium Grocery MSMRs
MSMRs

Electronic Fund Transfer Check

Source: Team estimates based on trade interviews, pulse surveys
and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
54
3. KENYA
OVERVIEW
Table A6.3.1 – Selected Country Indicators: Kenya
Country Income Category: Lower Middle Income % adults (% age 15+) with an account (2014): 75%
Population (2014): 44.9 Million Mobile cellular subscriptions/100 people (2014): 74
GDP Per Capita (Current USD 2014): USD 1,358 # ATMs per 100,000 adults (2014): 10.2
Total Retail Sales Value (2014) USD 11,473 M # POS terminals per 100,000 adults (2014): n/a
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.3.2 – Number of Micro, Small and Medium Retailer Outlets: Kenya
Retailers by Size Grocery Retailers Non-Grocery Retailers Total MSMR Outlets
Micro (0-5 Employees) 47,740 13,160 60,900
Small (6-25 Employees) 29,439 10,487 39,926
Medium (26-100 Employees) 17,053 7,800 24,853
Total MSM Retailers 94,232 31,447 125679
Other Retailers (>100 Employees) 7,622 3,784 11,405
Total Retailers 101,853 35,231 137,084
Number of Distributors - - 578,000
Source: Euromonitor International - Passport - Retailing 2015, Kenya National Bureau of Statistics (KNBS), National Chamber of Commerce
and Industry (NCCI)

Table A6.3.3 – Consumer Payment Methods: Kenya

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 96.8% 96.6%
Cash Payments 95.6% 95.4%
Other Paper Types 1.2% 1.2%
Total Electronic Payments 3.2% 3.4%
Card Payment Transactions (Excl. Commercial) 0.4% 0.4%
Electronic Fund Transfers 2.8% 3.0%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.3.4 – Main Findings: Kenya

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 4,956 14% 14%
B2B 6,699 27% 25%
B2P 555 17% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

55
 MSMR RESEARCH FINDINGS – KENYA

Table A6.3.5 – Information on Interview Responses Across MSMRs: Kenya

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 17 29
Small 14 18
Medium 15 9
B2B Micro 17 29
Small 14 18
Medium 12 8
B2P Micro 22 29
Small 14 18
Medium 17 9
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments Anecdotal evidence collected during the interviews
suggest that most consumers are not aware of other
Grocery retailers: The findings indicate that cash
payment products such as credit cards. Essentially,
is the main payment method across micro, small
cash dominates in rural traditional stores because
and medium grocery retailers (Figure A6.3.1).
the majority of rural residents are unbanked and
Small and medium grocery retailers also accept
are dependent on agricultural produce for their
checks from consumers.
subsistence. The only means of payment known to
Cash is used especially in rural areas and in them is cash.
traditional stores in both urban and rural areas.

Figure A6.3.1 – Grocery P2B Payments by Payment Type, Value and Volume Share (%)

Value Share (%) Volume Share (%)

100% 5% 5% 5% 5% 100%
6% 1% 3% 3% 8%
4% 11% 9% 8% 9% 9%
7% 6% 1% 2% 1% 1%
3%
2% 6% 5% 5% 4% 4%
80% 8% 7% 7% 80% 1% 6% 4% 4%

60% 60%
93% 89% 89%
40% 77% 80% 79% 40% 83% 79% 81% 82%

20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Mobile Money Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
56
Table A6.3.6 – Sales of Grocery MSMRs: Kenya
Average Number Annual Number of
Grocery Number of Annual Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions per Retailer Sales (P2B) per Retailer Basket
by Size Retailers Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 47,740 24,886 15,615 745,446 74 0.6
Small 29,439 76,374 123,310 3,630,108 218 1.6
Medium 17,053 326,315 1,094,733 18,668,757 910 3.4
Total Grocery MSMRs 94,232 95,522 244,550 23,044,311 270 1.4
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.3.7 – Grocery MSMRs Summary: Kenya

Retailer Type Store Info
Grocery - Micro • Customers are mainly from
low- and middle- income
groups
• Retailers are mainly traditional
small grocers, convenience and
food and drink stores
• On average 70 percent of
customers return to the stores
Grocery - Small • Customers are mainly from
middle-income group
• Retailers are mainly
convenience stores and
forecourt retailers
• On average 73 percent of
customers return to the stores
Grocery - Medium • Customers are mainly from
middle- and high-income
groups
• Retailers are mainly
supermarkets and convenience
stores
• On average 73 percent of
customers return to the stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day is 74
with an average basket
value of USD 0.6
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day is 218
with an average basket
value of USD 1.6
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day
is 910 with an average
basket value of USD 3.4
Payment Method Details
• POS terminals not often present in stores.
Reasons cited include lack of demand
from customers, cost, and danger of card
fraud
• Cash is the preferred payment method
due to ease and speed of transactions,
reliability, and lack of charges
• POS terminals present in around 60
percent of stores
• Cash is the preferred payment method
due to its flexibility, ease of transaction,
universal acceptance, habit, and the lack
of charges
• With a few exceptions, POS terminals are
present in all stores
• Cash and mobile money are equally
popular with customers, while retailers
have a preference for mobile money.
Reasons include safety, convenience,
reliability, speed and accessibility

Table A6.3.8 – Sales of Non-Grocery MSMRs: Kenya

Average Annual Total Number of
Non-Grocery Number Number of Sales Sales per Annual Baskets Sold Average
Retailers of Transactions Retailer Sales (C2B) per Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 13,160 6,910 42,351 557,342 20 6.1
Small 10,487 17,604 279,577 2,931,905 54 15.9
Medium 7,800 30,093 1,174,154 9,158,498 87 39.0
Total Non-Grocery MSMRs 31,447 16,226 402,192 12,647,746 48 17.5
Source: Team estimates based on trade interviews, pulse surveys and literature review

Non-grocery retailers: Cash is the dominant P2B
payment type in value and volume terms across
the various sized retailers (Figure A6.3.2). Cash is
perceived to be quicker, cheaper and easier for micro
retailers who mostly pay suppliers in cash too. Checks
are accepted by non-grocery retailers of all sizes.
The use of electronic payments is more common in
small and medium non-grocery retailers compared to
grocery retailers of the same size. This seems to be
due to non-grocery products in general being big ticket
items than grocery products. Some retailers noted ease
of use and convenience of electronic payments for
higher valued goods. Mobile money payments are also
accepted by non-grocery retailers of all sizes.
Higher valued transactions take place amongst
non-grocery retailers than grocery retailers (Tables
A6.3.6-A6.3.9).

Annexes: A6. Country-Level Findings

57
 Figure A6.3.2 – Non-Grocery P2B Payments by Payment Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 5% 3% 4% 100% 7% 7%
1% 2% 4% 5% 1% 1% 8% 7% 9%
2% 6% 5% 4% 1% 1% 4% 2% 1%
2% 5% 6% 6% 3% 2% 4%
8% 6% 7% 1% 6% 4%
80% 7% 5% 80% 7% 6%
7%

60% 60%

89% 91% 85%

40% 82% 76% 78% 79% 40% 78% 83% 82%

20% 20%

0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Mobile Money Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.3.9 – Non-Grocery MSMRs Summary

Retailer Type Store Info
Non-Grocery - Micro • Customers are mainly from
low- and middle-income
groups
• Retailers are mainly traditional
small grocers, convenience and
food and drink stores
• On average 70 percent of
customers return to the stores
Non-Grocery - Small • Customers are mainly from
middle-income group
• Retailers are mainly
convenience stores and
forecourt retailers
• On average 73 percent of
customers return to the stores
Non-Grocery - • Customers are mainly from
Medium middle- and high-income
groups
• Retailers are mainly
supermarkets and convenience
stores
• On average 73 percent of
customers return to the stores
Products Sold
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day is 74
with an average basket
value of USD 0.6
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day is 218
with an average basket
value of USD 1.6
• Main products sold are
food and drinks, and
general merchandise
• Average number of
baskets sold per day
is 910 with an average
basket value of USD 3.4
Payment Method Details
• POS terminals not often present in stores.
Reasons cited include lack of demand
from customers, cost, and danger of card
fraud
• Cash is the preferred payment method
due to ease and speed of transactions,
reliability, and lack of fees
• POS terminals present in around 60
percent of stores.
• Cash is the preferred payment method
due to its flexibility, ease of transaction,
universal acceptance, habit, and the lack
of fees
• With a few exceptions, POS terminals are
present in all stores
• Cash and mobile money are equally
popular with customers, while retailers
have a preference for mobile money.
• Reasons include safety, convenience,
reliability, speed and accessibility

Changes in the last 2-3 years across MSM
retailers’ payment types
The survey findings suggest that both grocery and
non-grocery MSM retailers have observed a slow
but steady shift towards mobile money. In urban
areas, card usage has increased, although cash still
dominates and is the preferred payment method for
many customers. In urban areas such as Nairobi
and Mombasa, the increase in card payments is
associated with the fast development of modern
stores, increasing incomes and urbanization among
middle-income consumers.
The research indicated that mobile money payments
are increasingly considered to be more convenient
than cash payments by customers. In addition,
mobile money is perceived to be safer as there is a
lower risk of theft. Mobile technology has become
more reliable as well as rising awareness owing to

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
58
telecoms operators' promotional campaigns have
also been quoted as supporting factors for the
increased use of mobile money.
Many retailers noted that customers still find it easy to
carry out their payment transactions in cash and believe
that all other payment types carry additional charges.
Business-to-Business (B2B) Payments
Twenty-seven percent of all supplier payments in
value and 25 percent in volume are made electronically
by the MSMRs in Kenya (Figure A6.3.3).
Grocery retailers: Paper payments are the most
common method used to pay suppliers, both in value
and in volume (Figure A6.3.3). Cash dominates
supplier payments made by micro grocery retailers,
and accounts for the largest share of B2B payments
of small grocery retailers, while checks are the most
common payment method used by medium grocery
retailers to pay suppliers. Small grocery retailers
also use electronic fund transfers commonly, and
so do the medium grocery retailers. Other types of
electronic payments are of limited use.
The number of B2B transactions made by grocery
retailers in a year is larger for larger retailers, as
well as the average transaction value.
The majority of grocery retailers are not granted credit
lines by suppliers. Where credit lines are being granted,
they mainly range from one week to one month/30
days for micro and small grocery retailers. For medium
grocery retailers, credit lines are somewhat more
common and range from 15 to 120 days.
In general, regardless of the retailer size, payment
method is determined by supplier preferences.
Convenience, speed and safety of payment methods
are key factors, as are the fees involved. In some
Table A6.3.10 – Supplier Payments by Grocery MSMRs: Kenya
Average Number of
Grocery Number Supplier Payment
Retailers of Transactions
by Size Distributors per Retailer
Micro - 127
Small - 160
Medium - 190
Total Grocery MSMRs - 149
Distributors/Suppliers 578,000 - -
Source: Team estimates based on trade interviews, pulse surveys and literature review
Annexes: A6. Country-Level Findings
cases, the payment method depends on the type and/
or quantity of goods ordered, with checks preferred
for larger order values.
Non-grocery retailers: Figure A6.3.4 summarizes the
findings of the research for non-grocery retailers. The
most common payment method for supplier payments
by non-grocery MSMRs are cash and check. Micro
non-grocery retailers use cash, checks and electronic
payments in the same proportion on average, i.e. the
share of each in supplier payments (both in value and
in volume) is about one thirds. For small and medium
non-grocery retailers paper payments mainly consist
of checks, which are considered safer than cash,
especially for larger sums.
Electronic fund transfers are of greater importance
for small non-grocery retailers, followed by micro
non-grocery retailers, but play a significantly
smaller role for medium non-grocery retailers in
paying their suppliers, for whom mobile money
payments are more important than for the other two
retailer sizes. In addition, electronic fund transfers
tend to be more popular in urban areas, according
to interview respondents, as they are quicker and
convenient to use for larger transaction amounts.
Mobile banking and agency banking have made
electronic fund transfers more popular.
Similar to their grocery counterparts, for non-
grocery retailers, in most cases, the payment type
is determined by supplier preferences regardless
of the size of the retailer. Convenience, speed and
safety of payment methods and associated charges
are key factors again.
On average, larger non-grocery retailers make more
B2B transactions per year. At the same time, value
of these transactions, on average, is larger as the
size of the retailer is bigger (Table A6.3.11).
Annual Total Annual Average B2B
Payments to Payments Value per
Suppliers per to Suppliers Transaction
Retailer (USD) (USD ‘000) (USD)
11,790 562,858 93
90,581 2,666,594 565
782,917 13,351,276 4,121
175,957 16,580,728 1,184
- -
59
 Figure A6.3.3 – Grocery B2B Payments by Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 4% 5% 5% 100% 3% 5% 4%
7% 6% 6% 4%
90% 8% 90% 8% 17%
18% 20% 20% 18% 20%
80% 12% 31% 80% 12% 31% 1%
1% 1% 1% 1%
70% 70%
60% 60% 32%
38%
50% 30% 50% 31%
69% 60% 71%
40% 61% 40%
73% 74%
30% 30%
20% 20% 45%
35% 34% 37%
10% 10%
14% 12%
0% 7% 0% 8%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Mobile Money Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.3.11 – Supplier Payments by Non-Grocery MSMRs

Average Number of Annual Total Annual Average B2B
Non-Grocery Number Supplier Payment Payments to Payments Value per
Retailers of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer Retailer (USD) (USD ‘000) (USD)
Micro - 116 28,055 369,205 241
Small - 152 180,770 1,895,722 1,189
Medium - 254 724,395 5,650,336 2,858
Total Non-Grocery MSMRs - 162 251,701 7,915,263 1,552
Distributors/Suppliers 578,000 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.3.4 – Non-Grocery B2B Payments by Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 1% 2% 6% 100% 1% 1% 3% 4%
10% 8% 7%
28% 10% 20%
29% 14% 21% 20% 2% 25%
80% 41% 80% 41%
2% 1% 1%
3% 2% 3% 2%
60% 60%
38%
34% 34%
61% 73% 55%
40% 66% 61% 40%
49% 54%
20% 20% 37%
32% 34%
8% 7% 8% 12% 8% 14%
0% 0% 4%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Mobile Money Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
60
Supplier credit: The majority of grocery retailers Business-to-Person (B2P) Payments
are not granted credit lines by suppliers. Where
Grocery retailers: The findings indicate that the
credit lines are being granted, they mainly range
majority of the salaries and wages are paid in cash
from one week to 30 days for micro and small
by the MSMRs in Kenya. The use of electronic
grocery retailers. For medium grocery retailers,
payment methods or checks is only around 7
credit lines are somewhat more common and range
percent of the value of all salaries paid by micro
from 15 to 120 days.
grocery retailers, which, on average, have 3
Credit lines are mainly given to small and medium employees and pay wages twice a month (Table
non-grocery retailers and less frequently to micro non- A6.3.12 and Figure A6.3.5). Cash is also the most
grocery retailers. They mainly range from 30-90 days. common payment method for wages for small and
Changes in the last 2-3 years across MSM medium grocery retailers. An estimated 17 percent
retailers’ payment types in value of all salaries paid by grocery MSMRs are
paid electronically.
Many retailers that were interviewed noted a
growing preference for mobile money due to the During the interviews, grocery retailers noted
wide availability of mobile money agents, easy ease and speed as the reasons for preferring cash
access to funds, low charges, reliability, safety and
that mobile money is not as time consuming as Figure A6.3.5 – B2P Payments by Grocery
electronic fund transfers. MSMRs, Value Share (%)
Small grocery retailers reported that suppliers are Value Share (%)
100% 2%
increasingly interested in traceable transactions 4% 3% 2% 2% 2%
1% 11% 17% 15% 15%
such as electronic fund transfers or checks, partly 2%
80% 2% 2% 2%
driven by regulations, and that a growing number
of suppliers now accept electronic fund transfers. 60%
Similarly, non-grocery retailers reported a 93%
84%
preference for cashless payments. Regulations and 40% 79% 81% 80%
the rising importance of imported goods in some
20%
business sectors support the shift towards electronic
payments. Electronic fund transfers and checks are
0%
considered slow as the funds are not immediately Micro Small Medium Grocery MSMRs
available for the payee. Some retailers noted the MSMRs
advantage of electronic fund transfers for supplier Mobile Money Electronic Fund Transfer Check Cash
payments as a credit facility extended by the bank
to the retailers to make supplier payments.
Source: Team estimates based on trade interviews, pulse surveys
and literature review

Table A6.3.12 – B2P Payments by Grocery MSMRs: France

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 2 52 3,076 146,834
Small 11 2 74 20,084 591,253
Medium 48 2 74 90,640 1,545,706
Total Grocery MSMRs 13 2 63 24,236 2,283,793
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

61
 B2P payments. At the same time, some retailers
mentioned that their employees do not have bank
accounts or do not have mobile money accounts.
Non-grocery retailers: The findings are very
similar for wage payments by non-grocery MSMRs.
Cash is the main payment method for retailers of
all sizes. The micro non-grocery retailers that were
interviewed noted, in particular, that cash payments
involve no additional costs. In addition, employees
also prefer cash payments. Electronic payments, if
used, mainly consist of electronic fund transfers and
do not involve mobile money accounts in general.
Advantages of electronic fund transfers quoted
in the interviews include ease of use, traceability,
safety and reliability, convenience and a low risk of
fraud (Table A6.3.13 and Figure A6.3.6).

Table A6.3.13 – B2P Payments by Non-Grocery MSMRs: France

Average Average Number of Average Total Salary
Non-Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 85 4,287 56,416
Small 16 2 96 33,061 346,708
Medium 35 1 106 64,229 500,989
Total Non-Grocery 15 2 94 28,750 904,113
MSMRs
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.3.6 – B2P Payments by Non-

Grocery MSMRs, Value Share (%)
Value Share (%)
100% 1% 3% 3% 3% 2%
8%
3% 13% 19% 16% 15%
80% 3% 3% 2%
3%

60%

88%
40% 81% 75% 78% 80%

20%

0%
Micro Small Medium Non- MSMRs
Grocery
MSMRs
Mobile Money Electronic Fund Transfer Check Cash

Source: Team estimates based on trade interviews, pulse surveys

and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
62
4. LITHUANIA
OVERVIEW20

Table A6.4.1 – Selected Country Indicators: Lithuania

Country Income Category: High-Income Non-OECD % Adults (% Age 15+) with an Account (2014): 78%
Population (2014): 2.9 Million Mobile Cellular Subscriptions/100 People (2014): 147
GDP Per Capita (Current USD 2014): USD 16,507 # ATMs per 100,000 Adults (2014): 50.8
Total Retail Sales Value (2014) USD 7,142 m # POS Terminals per 100,000 Adults (2014): -
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.4.2 – Number of Micro, Small and Medium Retailer Outlets: Lithuania
Retailers by Size Grocery Retailers Non-Grocery Retailers Total MSMR Outlets
Micro (0-5 Employees) 3,453 4,043 7,496
Small (6-25 Employees) 1,980 1,675 3,654
Medium (26-100 Employees) 305 242 239
Total MSM Retailers 5,737 5,960 11,697
Other Retailers (>100 Employees) 68 171 239
Total Retailers 5,805 6,131 11,936
Number of Distributors - - 9,544
Source: Euromonitor International - Passport - Retailing 2015

Table A6.4.3 – Consumer Payment Methods: Lithuania

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 49% 47%
Cash Payments 49% 47%
Other Paper Types 0% 0%
Total Electronic Payments 51% 53%
Card Payment Transactions (Excl. Commercial) 51% 53%
Electronic Fund Transfers 0% 0%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.4.4 – Main Findings: Lithuania

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 4,199 48% 32%
B2B 4,988 78% 68%
B2P 682 87% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

63
 MSMR RESEARCH FINDINGS – LITHUANIA

Table A6.4.5 – Information on Interview Responses Across MSMRs: Lithuania

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 13 17
Small 8 7
Medium 9 6
B2B Micro 11 15
Small 4 5
Medium 5 4
B2P Micro 13 17
Small 8 7
Medium 9 6
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments
Grocery retailers: The findings indicate that cash
is the most popular form of payment in grocery
outlets, with an overall value share of 52 percent of
all payments to MSMRs (Figure A6.4.1). This peaks
among the smallest outlets, with micro retailers
recording 75 percent of the value of transactions in
cash, while in small and medium grocery outlets,
the split between cash and electronic is almost 50-
50. In terms of volume of transactions, the share
of cash payments is even higher: 86 percent for
micro retailers, 69 percent for small retailers, and
63 percent for medium retailers.21
This finding is partly attributable to the
demographics of the consumer base of smaller
grocery stores: older generation and retired who are
typically conservative, lack trust in new systems and
are not up to date with technology. While pensions
are paid in bank accounts, the retirees take cash
out of their accounts for most types of payments.
For medium-sized grocery retailers however, the
consumer base is younger and middle class, and is
not as committed to using cash.

Figure A6.4.1 – Grocery P2B Payments by Payment Type, Value and Volume Share (%)

Value Share (%) Volume Share (%)

100% 2% 3% 2% 4% 100% 2% 3% 1% 3%
90% 90% 12%
23% 31% 27%
80% 80% 34% 29%
49% 46% 43% 44%
70% 70%
60% 60%
50% 50%
40% 40% 86%
75% 69% 72% 68%
30% 30% 63%
51% 51% 55% 52%
20% 20%
10% 10%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cards Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
64
Table A6.4.6 – Sales of Grocery MSMRs: Lithuania
Average Annual Number of
Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions per Retailer Sales (C2B) per Retailer Basket
by Size Retailers Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 3,453 28,100 291,548 1,006,643 88 10.4
Small 1,980 71,087 1,170,068 2,316,237 208 16.5
Medium 305 327,600 6,562,174 1,999,617 910 20.0
Total Grocery MSMRs 5,737 58,840 927,743 5,322,497 173 13.0
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.4.7 – Grocery MSMRs Summary: Lithuania

Retailer Type Store Info
Grocery - Micro • Customer base includes all
income groups, but skewed
towards lower incomes
• On average 78 percent of
customers return to the stores
• Mainly independent stores,
with 1-4 employees
Grocery - Small • Customer base includes
mainly low and middle income
households
• On average 73 percent of
customers return to the stores
• Some stores are independent
but majority is chain stores
Grocery - Medium • Customer base includes
mainly middle to high income
households
• On average 77 percent of
customers return to the stores
• Some stores are independent
but majority is chain stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• Most stores in this group
are general grocery or food
stores, but there are also
specialists, for example,
daily goods such as meat,
dairy, fruit and bakery.
• The vast majority are
generalised food/grocery
stores, but there is some
presence of specialists,
notably in fish, spices/tea,
and organics
• Most stores in this group
are general grocery
stores, but there are also
specialists, for example,
confectionery, beverages,
beer, oil and spices, and
organic foods
Payment Method Details
• Very few have POS terminals, citing lack of
demand and high cost
• Payments are mainly in cash due to older
clientele
• Just over half have POS terminals and find
using them more convenient
• Others (and some with POS terminals)
note that their customer base prefers to
pay in cash
• POS terminals are more common, but not
present in all outlets
• Many note that customers prefer the ease
of cards, while they themselves prefer cash
because of transactions fees

Table A6.4.8 – Sales of Non-Grocery MSMRs: Lithuania

Average Annual Number of
Non-Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions Retailer Sales (C2B) per Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 4,043 13,197 220,909 893,090 41 16.7
Small 1,675 31,790 909,931 1,524,028 99 28.6
Medium 242 129,200 4,002,391 969,986 425 31.0
Total Non-Grocery MSM 5,960 23,139 568,304 3,387,104 73 20.7
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Another factor is the preference by micro and small
grocery retailers for cash transactions. During
the trade interviews, the majority of the retailers
acknowledged the convenience of card payments.
However, they also find obtaining and maintaining
POS terminals costly, and do not wish to pay a
transaction fee along with possible additional fees
(such as withdrawal fees) and taxes.
Electronic payments are almost entirely dominated
by card payments, with some direct debits in
medium grocery stores. Grocery stores that receive
electronic payments are usually part of a chain with
a centralized system, where card payments are
preferred by the overall organization.

Annexes: A6. Country-Level Findings

65
 Figure A6.4.2 – Non-Grocery P2B Payments by Payment Type, Value and Volume Share (%)
Value Share (%) Volume Share (%)
100% 4% 100% 6% 3%
6% 9% 11% 9% 9% 10% 8%

80% 80% 31% 29%

39% 44% 31% 34%
46% 45% 43%
49%
60% 60%

40% 40%
64% 68%
55% 52% 60% 59%
20% 45% 40% 46% 20% 47%

0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cards Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.4.9 – Non-Grocery MSMRs Summary

Retailer Type Store Info
Non-Grocery - Micro • Customer base includes all
income groups
• On average 57 percent of
customers return to the stores
• Mix of independent, small
chains and large chains
Non-Grocery - Small • Customer base includes
mainly middle- to high-income
consumers
• On average 51 percent of
customers return to the stores
• Mix of independent and chain
stores
Non-Grocery - • Customer base includes
Medium mainly middle- to high-income
consumers
• On average 57 percent of
customers return to the stores
• All chains
Products Sold
• Vast range of specialists,
from general women’s
products, to toys, to pet
care, to chandeliers
• Wide range of specialists
including electronics,
computers, pets, footwear
and glass, and some
general stores
• Some general stores, plus
specialists in wooden
flooring, cosmetics,
flowers and jewellery
Payment Method Details
• Many offer the option of card payments,
but prefer cash
• Majority have POS terminals
• Some claim that offering cash only allows
them to keep their prices low.
• Some higher-end stores deal primarily in
electronic fund transfers
• Most accept card payments
• Those operating on a small value
transaction basis generally operate
on cash, while at the other end of the
spectrum, high-value businesses largely
use electronic fund transfers

Non-grocery retailers: Usage of cash is not as base, the disincentives to invest in POS terminals
common in non-grocery stores MSMRs, but still and avoiding fees.
considerable. On average, across all non-grocery
Research findings indicate that the customer base
MSMRs, 46 percent of transactions in value terms
of the traditional small scale non-grocery stores
are in cash (Figure A6.4.2). This partly reflects
has a higher proportion of customers in young age
the higher average basket values for non-grocery
groups and higher-income groups compared to
compared to grocery; while the average basket
grocery retailers of the same size. Hence, customers
through a grocery micro retailer stands at USD 10,
mostly prefer to use their cards for payments. In
a non-grocery micro retailer has an average basket
non-grocery, a large part of the small and medium
value of USD 16.7 (Table A6.4.6 and A6.4.8). As
retailers belong to chains and have POS terminals
with grocery retailers, the main drivers behind the
across the chain, with centralized financial control.
high levels of cash usage are the older customer
In micro retailers however, POS terminals are, as

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
66
in grocery, less common due to the high costs and
customer preference for cash.
Business-to-Business (B2B) Payments
Grocery retailers: The findings indicate that
the majority of supplier payments are carried out
electronically. Electronic payments account for 71
percent of all payments for supplier payments by
grocery MSMRs. The use of electronic payments
increases with scale: medium retailers pay 76
percent of their transactions by electronic means
compared to 58 percent for micro retailers (Figure
A6.4.3). This reflects the differences between the
size and frequency of payments in the different
business models; micro retailers have much lower
average transaction values than the larger retailers.
While medium retailers actually have smaller
average transaction values than small retailers, they
also have a much greater number of transactions
per month (Table 4.10), and most medium retailers
find it simpler and more convenient to automate
these payments by using electronic methods.
When small and medium retailers may be part of a
chain, supplier payments are in general centralized
and performed electronically, with large amounts
purchased on a daily, weekly or monthly basis.
Retailers and suppliers interviewed for this study
indicated that electronic payments (which are all
in the form of electronic fund transfers) are also
in many cases stipulated by the supplier as part of
their terms, particularly for larger suppliers. They
see electronic payments as convenient, secure and
reliable. Many suppliers offer retailers credit lines
which vary from one week to six months, or when
goods are sold, and payments are generally made on

Figure A6.4.3 – Grocery B2B Payments by Retailer (Value and Volume)

Value Share (%) Volume Share (%)
100% 100%

80% 80%
58% 52%
66% 62%
71% 71% 69% 68%
60% 76% 78% 60%

40% 40%

48%
20% 42% 20% 38%
29% 29% 34% 31% 32%
24% 22%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.4.10 – Supplier Payments within Grocery Retailers

Average Number of Annual Total Annual Average B2B
Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 194 229,452 792,239 1,182
Small - 225 916,330 1,813,944 4,073
Medium - 1,968 5,077,298 1,547,147 2,580
Total Grocery MSM - 299 723,950 4,153,330 2,421
Retailers
Distributors/Suppliers 9,544
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

67
 Figure A6.4.4 – Non-Grocery B2B Payments by Type, Value and Volume Share
Value Share (%) Volume Share (%)
100% 100%
90% 90%
80% 80%
70% 70%
68%
60% 78% 60%
90% 91% 94% 91% 88% 87% 93% 88%
50% 50%
40% 40%
30% 30%
20% 20%
32%
10% 22% 10%
10% 9% 6% 9% 13% 13% 8% 12%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.4.11 – Supplier Payments by Non-Grocery MSMRs

Average Number of Annual Total Annual Average B2B
Non-Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 86 150,719 609,325 1,761
Small - 115 607,830 1,018,044 5,276
Medium - 255 2,576,582 624,439 10,104
Total Non-Grocery MSM - 101 377,818 2,251,808 3,748
Retailers
Distributors/Suppliers 9,544 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

a monthly or weekly basis. For all sizes of retailers,
only low value and low volume transactions are
made by cash. Micro retailers prefer cash because
of the transactions fees banks charge.
Non-grocery retailers: the dominance of electronic
payments is even more pronounced, with an
estimated 91% of payments, on average, regardless
of size.
Business-to-People (B2P) Payments
Grocery Retailers: The research findings show
that the payment method used for salaries depends
on the size of the retailer. Among micro retailers,
the majority of transactions are cash, at 45 percent.
At the same time, all medium grocery retailers,
make all salary payments electronically (Figure
A6.4.5). Small retailers also commonly use
electronic payments: 90 percent of the total value.
All electronic B2P payments are in the format of
electronic fund transfers.
The preference for cash salary payments by micro
retailers is due to their major income flow being
in cash, making this the most accessible method
to pay out salaries. Micro retailers may also be
motivated to use cash payments in order to avoid
taxes; in some cases this saving also allows them
to pay higher salaries to their employees. For small
and medium retailers however, the convenience
of electronic fund transfers makes this method
preferable; many belong to geographically diverse
chains and therefore benefit from a centralized
salary payments.

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
68
Non-grocery retailers: Small and medium non- to a lesser extent than among grocery micro retailers
grocery retailers conduct all of their wage payments – 39 percent of micro retailers in non-grocery pay
by electronic fund transfers, while cash payments their employees by cash compared to 45 percent in
are still quite common for micro retailers - although grocery retailers (Figures A6.4.5 and A6.4.6).

Table A6.4.12 – Employee Salary Payments within Grocery Retailers

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 674 28,472 98,306
Small 11 1 715 95,409 188,869
Medium 66 1 687 541,512 165,009
Total Grocery MSM 9 1 689 78,818 452,184
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.4.5 – Grocery B2P Payments by Figure A6.4.6 – Non-Grocery B2P

Retailer (Value) Payments by Type (Value Share)
Value Share (%) Value Share (%)
100% 100%

80% 80%
55% 61%
60% 60%
90% 86% 87% 87% 87%
100% 95% 100%
40% 40%

20% 45% 20% 39%

10% 14% 13% 13% 13%

0% 0% 5%
Micro Small Medium Grocery MSMRs Micro Small Medium Non- MSMRs
MSMRs Grocery
MSMRs
Electronic Fund Transfer Cash Electronic Fund Transfer Cash
Source: Team estimates based on trade interviews, pulse surveys Source: Team estimates based on trade interviews, pulse surveys
and literature review and literature review

Table A6.4.13 – B2P Payments by Non-Grocery MSMRs: France

Average Average Number of Average Total Salary
Non-Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 691 22,573 91,257
Small 11 1 694 92,811 155,448
Medium 43 1 708 368,333 89,266
Total Non-Grocery 7 1 693 56,371 335,971
MSMRs
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

69
 5. MOROCCO
OVERVIEW

Table A6.5.1 – Selected Country Indicators

Country Income Category: Lower Middle Income % Adults (% Age 15+) With An Account (2014): 59%
Population (2014): 33.9 Million Mobile Cellular Subscriptions/100 People (2014): 132
Gdp Per Capita (Current Usd 2014): USD 1,265.4 # Atms Per 100,000 Adults (2014): 25.8
Total Retail Sales Value (2014) USD 50,668 M # Pos Terminals Per 100,000 Adults (2014): 138.6
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.5.2 – Number of Micro, Small and Medium Retailer Outlets (2014)
Retailers by Size Grocery Retailers Non-Grocery Retailers Total Outlets
Micro (0-5 Employees) 208,220 31,811 240,032
Small (6-25 Employees) 17,352 9,254 26,606
Medium (26-100 Employees) 4,338 8,097 12,435
Total Msm Retailers 229,910 49,163 279,073
Other Retailers (>100 Employees) 1,446 8,676 10,122
Total Retailers 231,356 57,839 289,195
Number Of Distributors - - 315,000
Source: Euromonitor International - Passport - Retailing 2015, Centre Regional D’investissment Kenitra (CRIK) Morocco

Table A6.5.3 – Consumer Payment Methods

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 68.4% 67.2%
Cash Payments 68.3% 67.1%
Other Paper Types 0.1% 0.1%
Total Electronic Payments 31.6% 32.7%
Card Payment Transactions (excl. Commercial) 31.4% 32.3%
Electronic Fund Transfers 0.2% 0.4%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.5.4 – Main Findings

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 7,311 14% 4%
B2B 12,236 33% 11%
B2P 1,461 23% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
70
MSMR RESEARCH FINDINGS – MOROCCO

Table A6.5.5 – Information on interview responses across MSMRs: Morocco

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 15 15
Small 16 15
Medium 11 13
B2B Micro 15 15
Small 16 15
Medium 11 13
B2P Micro 12 13
Small 16 15
Medium 11 13
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments interviews, middle-income consumers seem to

mainly use micro and small grocery retailers for
Grocery retailers: The findings of the surveys
top-ups in between visiting larger stores, therefore
in Morocco indicate that cash payments are the
the total value of each purchase is low (Table
most important payment type in value and volume
A6.5.6). Thus there is little or no demand for card
terms (Figure A6.5.1) regardless of the size of the
payments, and hence a majority of micro and small
retailers. Checks play a very limited role due to
grocery retailers do not offer this as an option.
fraud and lack of funds.
There are supply-side constraints to offering
The customer base for the micro and small grocery
electronic payments as an option as well. Although
retailers in Morocco in general consist of low and
the majority of POS terminals are offered free of
middle-income consumers. The majority of low
charge by a number of providers, the maintenance
income consumers do not have payment cards and
costs are high for many retailers in comparison
their only payment method is cash. Based on the
to their benefits. One particular issue that came

Figure A6.5.1 – Grocery C2B Payments by Type (Value & Volume Share)

Value Share (%) Volume Share (%)

100% 1% 100% 1% 2%
7% 6% 0% 4% 10% 4%
3% 14% 2% 2% 3%
18% 6%
80% 10% 80% 26%
24%
60% 60%
99% 99% 94% 96%
90% 88% 93%
40% 76% 40%
58% 64%
20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

71
 Table A6.5.6 – Sales of Grocery MSM Retailers: Morocco
Average Annual Number of
Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions per Retailer Sales (C2B) per Retailer Basket
by Size Retailers Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 208,220 38,891 104,299 21,717,206 109 2.7
Small 17,352 85,033 306,747 5,322,576 238 3.6
Medium 4,338 175,121 1,948,229 8,451,273 495 11.1
Total Grocery MSM 229,910 44,944 154,369 35,491,055 126 2.9
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.5.7 – Grocery MSM Retailers Summary: Morocco

Retailer Type Store Info
Grocery - Micro • Customers are mainly from
low- and middle-income
groups
• Retailers are mainly traditional
small grocers, and food and
drink stores
• On average 65 percent of
customers return to the stores
Grocery - Small • Customers are mainly from
low- and middle-income
groups
• Retailers are mainly traditional
small grocers and forecourt
retailers
• On average 51 percent of
customers return to the stores
Grocery - Medium • Customers are mainly from
middle- and high-income
groups
• Retailers are mainly
supermarkets and
hypermarkets
• On average 67 percent of
customers return to the stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• Main products sold are
food and drinks
• Average number of
baskets sold per day
is 109 with an average
basket value of USD 2.7
• Main products sold are
food and drinks
• Average number of
baskets sold per day
is 238 with an average
basket value of USD 3.6
• Main products sold are
food and drinks
• Average number of
baskets sold per day
is 495 with an average
basket value of USD 11.1
Payment Method Details
• POS terminals are often not present
in stores. Reasons cited include lack of
demand from customers and the business
being too slow for it
• Cash is the preferred payment method
due to ease and speed of transactions,
lack of additional charges, suitability for
small transaction values, and funds being
immediately available for the retailer
• POS terminals are often not present in
stores owing to lack of customer demand,
costs involved and fears they would slow
the business down. Present mainly in
stores catering to a younger customer
group or tourists
• Cash is the preferred payment method
due to customer preferences, suitability
for low transaction values, speed of
transactions, lack of additional charges
and the retailer receiving the money
immediately
• With a few exceptions, POS terminals are
present in all stores and are considered a
required standard
• Cash is the preferred payment method in
the majority of cases because of its ease
and speed and the minimum transaction
value in place for card payments

Table A6.5.8 – Sales of Non-Grocery MSMRs: Morocco

Average Annual Number of
Non-Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions Retailer Sales (C2B) per Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 31,811 16,804 88,133 2,803,624 49 5.2
Small 8,676 22,672 371,236 3,220,786 65 16.4
Medium 8,676 50,909 1,199,958 10,410,651 144 23.6
Total Non-Grocery MSM 49,163 23,858 334,296 16,435,061 69 10.4
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
72
up during the research is that providers require
retailers to install a dedicated phone line for the
POS terminal. The standard fees for a working
phone line alone range from USD 70 to USD 90 a
month. In addition, retailers are charged fees around
3-5 percent on every card payment transaction.
More importantly, smaller merchants need cash to
pay their suppliers. This makes accepting electronic
payments from customers costly.
Non-grocery Retailers: Cash the main form
of payments accepted by non-grocery retailers
regardless of size (Figure A6.5.2). Checks are also
used, especially at small and medium non-grocery
retailers. As big banks offer incentives through
customer loyalty programs, cards are used as the
main form of electronic supplier payments by the
MSMRs. Very few retailers use electronic fund
transfers.

Figure A6.5.2 – Non-Grocery P2B Payments by Retailer (Value & Volume Share)
Value Share (%) Volume Share (%)
100% 1% 1% 1% 100% 1% 4%
18% 14% 16% 19% 3%
23% 22%
30% 31%
80% 8%
36% 10% 80% 7%
18% 14%
18%
60% 18% 60% 22%
20%
93%
40% 76% 40% 77%
73%
62% 64%
58%
51% 47%
20% 43% 20%

0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.5.9 – Non-Grocery MSMRs P2B Payments Summary

Retailer Type Store Info
Non-Grocery - Micro • Customers are mainly from
middle- and high-income
groups
• Retailers are mainly apparel
and footwear specialists
• On average 40 percent of
customers return to the stores
Non-Grocery - Small • Customers are mainly from
middle- and high-income
groups
• Retailers are mainly apparel
and footwear specialists
• On average 59 percent of
customers return to the stores
Non-Grocery - • Customers are mainly from
Medium middle- and high-income
groups
• Retailers are mainly apparel
and footwear specialists
• On average 48 percent of
customers return to the stores
Products Sold
• Main products sold are
apparel and footwear
• Average number of
baskets sold per day is 49
with an average basket
value of USD 5.2
• Main products sold are
apparel and footwear
• Average number of
baskets sold per day is 65
with an average basket
value of USD 16.4
• Main products sold are
apparel and footwear
• Average number of
baskets sold per day is 144
with an average basket
value of USD 23.6
Payment Method Details
• POS terminals are present in around 50%
of stores. Reasons cited include lack of
awareness and knowledge about how to
use, lack of need, costs, and risks
• Cash is the preferred payment method
due to ease, lack of additional charges, and
it being a trusted payment method
• POS terminals are present in around two
thirds of stores
• Cash is the preferred payment method for
smaller transaction values due to ease of
transaction and the lack of charges. For
higher transaction values, cards and, to a
lesser degree, checks are preferred
• POS terminals are present in the majority
of stores
• Card payments are most popular. Reasons
include ease of use and popularity with
young customers which are an important
customer target group

Annexes: A6. Country-Level Findings

73
 Business to Business (B2B) Payments
Grocery retailers: The findings show that paper
payments constitute the bulk of supplier payments
by grocery MSMRs (Figure 5.3). For micro and
small grocery retailers these are mainly in the form
of cash, while medium retailers do not use cash at
all for supplier payments, but use checks. Micro
and small grocery retailers interviewed during the
research stated that they find cash payments quick,
efficient and easy, with no additional costs attached.
Medium grocery retailers noted a preference for
checks due to ease of use and traceability. All
retailers noted that supplier preferences play a key
role for the choice of payment method.
A large proportion of medium grocery retailers pay
their suppliers via electronic payments: electronic fund
transfers and guaranteed bank payments. There is a law
that any payment, if large enough, should be traceable,
which is possible when payment is via electronic
fund transfer or check. Electronic fund transfers are
preferred because of the low fraud risk and the transfer
speed. Where micro and small grocery retailers use
electronic payment methods, these are in general in the
form of electronic fund transfers.
Many micro and small grocery retailers pay their
suppliers on a daily basis or for each individual
order, while a smaller number make weekly or
monthly supplier payments. In contrast, medium
grocery retailers pay their suppliers monthly or
even at 3- or 6-month intervals.
For micro and small grocery retailers, supplier
payments can be several times a day, for example
for dairy products or soft drinks that are delivered
on a daily basis. The frequency of these payments

Figure A6.5.3 – Grocery B2B Payments by Retailer (Value and Volume)

Value Share (%) Volume Share (%)
100% 2% 1% 100%
7% 8% 7% 8% 8% 11%
13% 13%
7% 19% 7% 8%
10% 31% 9% 9%
80% 80%
14%
57% 55%
60% 18% 60%

40% 87% 40% 87% 84%

77% 78% 80%
65%
50%
20% 35% 20% 37%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Other Electronic Electronic Fund Transfer Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.5.10 – Supplier Payments within Grocery Retailers

Average Number of Annual Total Annual Average B2B
Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 245 80,001 16,657,749 327
Small - 275 229,961 3,990,215 838
Medium - 308 1,427,740 6,193,431 4,641
Total Grocery MSM - 248 116,747 26,841,395 470
Retailers
Distributors/suppliers 315,000 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
74
do not match with the availability of funds after an
electronic fund transfer, and card payments would
reduce cash in hand. Suppliers, therefore, prefer
cash payments in order to meet their own payment
requirements to other suppliers, manufacturers and
farmers along the supply chain.
The majority of micro and small grocery retailers do
not use credit lines. Where they do, they are usually
for 1-2 weeks or until the next delivery. Credit lines
are more common with medium grocery retailers,
where they can range from 1-6 months.
Non-grocery retailers: Electronic fund transfers
are commonly used for supplier payments by non-
grocery retailers (Figure A6.5.4). Only micro non-
grocery retailers use paper payments more than half
the time, both in cash and in checks. Small non-
grocery retailers also use cash in supplier payments
to a certain extent as well as checks, but medium
non-grocery retailers do not use cash at all. They
instead use checks or electronic fund transfers.
Supplier preferences play a key role for the choice
of payment method. The popularity of electronic
fund transfers comes from ease of use, safety and
speed and the fact that they are traceable. They
have also been described as most suitable to pay
overseas suppliers, which is important, for example,
for apparel and footwear retailers that import goods
from France, Italy and other foreign countries.
Most micro non-grocery retailers make supplier
payments on a weekly basis or after each delivery,
but monthly payments are also fairly common.
Monthly, or even 3- or 6-monthly payments are

Table A6.5.11 – Supplier Payments by Non-Grocery MSMRs: Morocco

Average Number of Annual Total Annual Average B2B
Non-Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 76 58,849 1,872,073 774
Small - 78 239,571 2,078,481 3,056
Medium - 103 756,250 6,561,113 7,315
Total Non-Grocery MSM - 81 213,812 10,511,667 2,631
Retailers
Distributors/Suppliers 315,000
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.5.4 – Non-Grocery B2B Payments by Retailer (Value & Volume Share)
Value Share (%) Volume Share (%)
100% 1% 2% 1% 100% 1% 1% 1%
11%
31% 9%
80% 38% 80% 37%
48%
59% 62% 58%
70% 69%
60% 18% 60%
26% 25%
40% 40% 27% 80%
24% 25%
28% 50%
20% 36% 20% 36%
30% 31%
25%
16% 16%
9%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Other Electronic Electronic Fund Transfer Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

75
 more common with small non-grocery retailers,
and are the norm for medium non-grocery retailers.
Around half of micro and small non-grocery
retailers and two thirds of medium non-grocery
retailers use credit lines. In the majority of cases,
these are available for periods of between one and
three months.
Business-to-People (B2P) Payments
Grocery Retailers: Paper payments dominate B2P
payments by grocery MSMRs. This is in general
in cash, but in rare instances, checks are used by
small and medium grocery retailers. Electronic
fund transfers are also used by about 20 percent of
grocery MSMRs to pay salaries (Figure A6.5.5).
Grocery MSMRs use cash in paying salaries because
employees prefer cash. And employees prefer cash
because they may not have an account, funds may
not be immediately available with checks, and/or
there are no additional fees to pay if they receive
salaries in cash.
Non-grocery retailers: The B2P payment methods
by non-grocery MSMRs are very similar to those
by grocery MSMRs (Figure A6.5.6), however,
electronic fund transfers are used more compared to
cash. Still, cash is the major form of B2P payment,
for similar reasons: employees prefer receiving
wages in cash because they may not have an
account, funds may not be immediately available,
and/or there are no additional fees.

Table A6.5.12 – Employee Salary Payments by Grocery MSMRs: Morocco

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 210 11,603 2,416,071
Small 9 1 214 32,707 567,529
Medium 61 1 268 196,275 851,428
Total Grocery MSM 5 1 211 16,681 3,835,029
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.5.5 – Grocery B2P Payments by Figure A6.5.6 – Non-Grocery B2P

Retailer (Value Share) Payments by Retailer (Value Share)
Value Share (%) Value Share (%)
100% 100%
15% 20% 19% 20%
28% 23% 23%
30% 35% 31%
80% 1% 80%
1% 1%
1% 1% 1%
60% 60% 2%

40% 85% 79% 81% 40% 80%

71% 76% 76%
69% 63% 67%
20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Non- MSMRs
MSMRs Grocery
MSMRs
Electronic Fund Transfer Check Cash Electronic Fund Transfer Check Cash
Source: Team estimates based on trade interviews, pulse surveys Source: Team estimates based on trade interviews, pulse surveys
and literature review and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
76
Table A6.5.13 – Employee Salary Payments by Non-Grocery MSMRs: Morocco
Average Average Number of Average Total Salary
Non-Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 4 1 298 14,215 452,190
Small 9 1 352 54,403 471,993
Medium 38 1 367 169,589 1,471,332
Total Non-Grocery MSM 11 1 320 48,726 2,395,515
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

77
 6. PAKISTAN
OVERVIEW

Table A6.6.1 – Selected Country Indicators

Country Income Category: Lower Middle Income % Adults (% Age 15+) With An Account (2014): 13%
Population (2014): 185 Million Mobile Cellular Subscriptions/100 People (2014): 73
GDP Per Capita (Current USD 2014): USD 1,316.6 # Atms Per 100,000 Adults (2014): 7.3
Total Retail Sales Value (2014) USD 37,623 M # Pos Terminals Per 100,000 Adults (2014): -
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.6.2 – Number of Micro, Small and Medium Retailer Outlets (2014)
Retailers by Size Grocery Retailers Non-Grocery Retailers Total Outlets
Micro (0-5 Employees) 362,374 72,475 434,848
Small (6-25 Employees) 84,554 30,198 114,752
Medium (26-100 Employees) 18,119 24,158 42,277
Total MSM Retailers 465,046 126,831 591,877
Other Retailers (>100 Employees) 6,040 6,040 12,079
Total Retailers 471,086 132,870 603,956
Number of Distributors n/a n/a 171,000
Source: Euromonitor International - Passport - Retailing 2015, Small and Medium Enterprises Development Authority Pakistan (SMEDA),
Lahore Chamber Of Commerce and Industry (LCCI), Karachi Chamber of Commerce, Trade Development Authority of Pakistan (TDAP)

Table A6.6.3 – Consumer Payment Methods

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 81.1% 77.1%
Cash Payments 78.5% 74.5%
Other Paper Types 2.7% 2.6%
Total Electronic Payments 18.9% 22.9%
Card Payment Transactions (excl. Commercial) 6.3% 7.1%
Electronic Fund Transfers 12.5% 15.8%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.6.4 – Main Findings

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 12,913 13% 4%
B2B 8,771 13% 3%
B2P 849 7% n/a
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
78
MSMR RESEARCH FINDINGS – PAKISTAN

Table A6.6.5 – Information on Interview Responses Across MSMRs: Pakistan

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 22 8
Small 15 16
Medium 13 16
B2B Micro 21 15
Small 15 14
Medium 13 14
B2P Micro 22 8
Small 15 16
Medium 13 16
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments to use. Check usage is not common at grocery
outlets. Consumers use card payments at small and
Grocery retailers: Cash is the main form of
medium grocery outlets. Anecdotal evidence from
payment used by consumers at MSMRs in Pakistan
the interviews suggest that there is lack of trust in
(Figure A6.6.1). There is some use of cards, very
and awareness of electronic payments, especially
infrequently and only for relatively big ticket
in terms of the security and safety of funds via
items. Cash is seen as more convenient, and easier
electronic payments.

Figure A6.6.1 – Grocery P2B Payments by Type (Value & Volume Share)

Value Share (%) Volume Share (%)

100% 1% 5% 2% 1% 1% 100% 4% 1% 3% 4%
15% 9% 11% 10% 1%
90% 90%
3%
80% 80%
70% 70%
60% 60%
50% 99% 95% 50% 100% 96% 96% 95%
91% 84% 89%
40% 84% 40%
30% 30%
20% 20%
10% 10%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

79
 Table A6.6.6 – Sales of Grocery MSMRs: Pakistan
Average Annual Number of
Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions per Retailer Sales (C2B) per Retailer Basket
by Size Retailers Retailer 2015 (USD 2015) (USD ‘000) per Day Size (USD)
Micro 362,374 24,177 31,477 11,406,413 67 1.3
Small 84,554 53,925 239,456 20,246,897 151 4.4
Medium 18,119 183,910 1,460,692 26,465,809 516 7.9
Total Grocery MSM 465,046 35,809 124,975 58,119,120 100 2.1
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.6.7 – Grocery MSMRs Summary: Pakistan

Retailer Type Store Info
Grocery - Micro • Customer base includes all
income groups
• On average 77 percent of
customers return to the stores
• Stores are self-owned or
owned within a family
• No female-owned stores noted
during the interviews
Grocery - Small • Customer base includes all
income groups
• On average 71 percent of
customers return to the stores
• Mixed type of stores
visited from supermarkets,
to convenience stores
discounters and traditional
stores
Grocery - Medium • Customer base includes all
income groups
• On average 44 percent of
customers return to the stores
• Mainly supermarket- type
stores were observed.
• Mainly independently owned
• No female-owned stores noted
during the interviews
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• Main products include
grocery products, dairy
and bakery goods
• Main products sold are
grocery type goods, mainly
food and beverages. Also
includes small bakeries
• All types of household
groceries and other
necessities
Payment Method Details
• Mostly no use of POS terminals due to
higher fees per transaction. Only one
retailer had a POS terminal
• Cash is main payment method; easy to
use, convenient and simple. Low fees per
transaction
• Retailers make use of business bank
accounts to make deposits
• Main source of funding is family, due to
banks having too many documentation
processes to get a loan
• Mixed use of POS terminals
• Cash and card payments accepted.
Increasing acceptance of card usage
among retailers
• Loan source of funds mainly family
and friends, as they do not want banks
involved as interest is much higher to pay
back
• Increase in POS terminals among retailers
with growth in usage of card payments
• Reduced use of cash in favour of check,
card and electronic fund transfers.
Increase in value per transactions and
number of baskets requires additional
payment options for consumers

Table A6.6.8 – Sales of Non-Grocery MSMRs: Pakistan

Average Annual Number of
Non-Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions Retailer Sales (C2B) per Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 72,475 12,273 49,311 3,573,820 37 4.0
Small 30,198 25,573 348,548 10,525,394 76 13.6
Medium 24,158 42,525 1,257,013 30,367,220 135 29.6
Total Non-Grocery MSM 126,831 21,202 350,597 44,466,434 65 11.2
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

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Non-grocery retailers: Cash is the main form of Changes in the last 2-3 years across MSMR
payment at non-grocery retailers as well regardless P2B payments
of size (Figure A6.6.2). A small number of non-
There have not been any major changes in P2B
grocery outlets accept checks, more so than grocery
payments for micro retailers, as they accept cash as
retailers. Micro retailers prefer cash use as it is
their main source of transactions and they are very
costly to own a POS terminal. There is a higher
keen to maintain the state due to several factors such
ownership of POS terminals among small and
medium retailers.
Figure A6.6.2 – Non-Grocery P2B Payments by Retailer (Value & Volume Share)
Value Share (%) Volume Share (%)
100% 1% 1% 2% 1% 100% 1% 1% 3% 1% 4%
6% 3% 5% 1%
90% 15% 14% 11% 90% 3% 10% 11% 9% 1%
3% 15% 2%
2% 3% 5%
80% 7% 80% 9%
9%
70% 70%
60% 60%
50% 50% 95%
90% 92% 88%
40% 83% 84% 40% 85%
72% 76% 77%
30% 30%
20% 20%
10% 10%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Mobile Money Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.6.9 – Non-Grocery MSMRs P2B Payments Summary

Retailer Type Store Info
Non-Grocery - Micro • Customer base includes all
income groups
• On average 56 percent of
customers return to the stores
• Majority of independently-
owned stores
• Majority of stores are small
traditional grocers
Non-Grocery - Small • Customer base includes all
income groups
• On average 51 percent of
customers return to the stores
• A few female-owned stores
present
• Mixed non-grocery specialist
retailers observed
Non-Grocery - • Customer base includes all
Medium income groups
• On average 39 percent of
customers return to the stores
• Mixed type of non-grocery
stores, from chained to
independently owned were
observed
• A few female-owned stores
present
Products Sold
• Goods vary between
tobacco, men’s and
women’s clothing,
stationery and mobile
phones and accessories
• DIY hardware products,
apparel, gift and health
and beauty products
• Durable household
goods, DIY hardware
and apparel
Payment Method Details
• Mainly cash and some checks are accepted
for payment
• Electronic payments are more widely used
than micro grocery retailers, and in the form
of cards. Transaction values are higher in this
segment than micro grocery retailers.
• A few micro non-grocery retailers accept
mobile money payments
• Majority of stores have POS terminals for
card payments
• Cash payments are used, which is
convenient and easy to use
• Cards growing in use, as owners begin to
understand the advantages of secure and
safer payments for higher- valued purchases
• A few small non-grocery retailers accept
mobile money payments.
• POS terminals are very relevant across
retailers
• Less cash, more checks cards and electronic
fund transfers are used than other smaller-
sized non-grocery retailers
• Electronic payment types are growing, as
fees and bank products are becoming more
accepted among business owners due to
increased understanding and marketing by
the banks to business owners

Annexes: A6. Country-Level Findings

81
 as lack of awareness, low financial literacy and low
customer income levels and demand. The majority
of the small and medium retailers interviewed
pointed out that the use of credit cards has become
more common over the last 2-3 years.
Business-to-Business (B2B) Payments
Grocery retailers: The majority of supplier
payments are paper based, mainly cash followed
by checks (Figure A6.6.3). Within paper payments,
cash use reduces in favor of checks as retailer size
increases. Electronic payments via electronic fund
transfers and credit cards are used by small and
medium retailers when paying suppliers. Micro
grocery retailers do not use any electronic payment
methods at all.
During the interviews, supplier preference was
stated as the reason for the chosen payment method.
However, sometimes a combination of retailer
preference and supplier preference was observed.
Smaller suppliers accept most payment types but
they prefer the quicker payment option. Large-
scale suppliers accept checks and electronic fund
transfers. Large-scale suppliers prefer to have as
much of a paper trail of the funds’ movement as
possible. Reduced bank fees, e.g. for transfers, has
recently induced a shift from checks to electronic
fund transfers.
The frequency of supplier transactions varies per
size of grocery retailer along with the number of
supplier transactions made (Table A6.6.10). The

Figure A6.6.3 – B2B Payments by Grocery MSMRs by Retailer (Value & Volume Share)
Value Share (%) Volume Share (%)
100% 3% 100% 1% 1% 2%
7% 11% 14% 8% 1% 1%
90% 16% 15% 3% 90%
2% 7% 26%
80% 6% 80% 31%
44% 43%
70% 43% 70%
60% 48% 60%
55% 61%
50% 50%
40% 84% 40% 87%
72% 66%
30% 30% 56%
53% 47%
20% 39% 20%
10% 24% 10% 24%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.6.10 – Supplier Payments by Grocery MSMRs: Pakistan

Average Number of Annual Total Annual Average B2B
Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 242 22,862 8,284,743 95
Small - 359 183,130 15,484,306 510
Medium - 847 992,975 17,991,396 1,172
Total Grocery MSM - 287 89,799 41,760,445 313
Retailers
Distributors/Suppliers 171,000 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

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82
frequency of supplier payments for micro grocery
retailers is mainly daily and weekly. Across small
and medium grocery retailers it ranges from daily to
weekly or monthly. A multiple number of suppliers
are used on average among grocery retailers, due to
the variability of grocery goods supplied.
Non-Grocery retailers: Supplier payments by
non-grocery MSMRs are also mainly paper-
based. While cash is relatively less used compared
to grocery retailers, checks are more common
(Figure A6.6.4). Medium non-grocery retailers
make about 21 percent of all supplier payments (in
value) by electronic fund transfers. The medium
retailers interviewed noted that it was the suppliers’
preference to use electronic fund transfers.
Credit line options for delaying payment are not that
popular but the options that were noted varied from
one week to 90 days. The frequency of supplier
payments can range from on every order, to daily,
weekly or monthly.
Changes in the last 2-3 years across MSM
retailers’ payment types
The findings of the surveys indicate that there
have been some changes in the supplier payments
landscape in Pakistan in the last 2-3 years. A number
of the larger suppliers have made some changes in
their respective systems, including a switch from
all transactions made by checks to electronic fund
transfers.

Table A6.6.11 – B2B Payments by Non-Grocery MSMRs: Pakistan

Average Number of Annual Total Annual Average B2B
Non-Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 132 30,809 2,232,885 233
Small - 389 202,861 6,125,943 521
Medium - 442 749,928 18,116,953 1,696
Total Non-Grocery MSM - 252 208,749 26,475,781 827
Retailers
Distributors/Suppliers 171,000 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.6.4 – Supplier Payments by Non-Grocery MSMRs by Retailer (Value & Volume
Share)
Value Share (%) Volume Share (%)
100% 3% 1% 1% 100% 3% 3% 1% 2%
7% 11% 7% 1%
16% 14%
21% 2%
80% 80% 34% 31%
33% 42% 47%
51%
48%
60% 60%
56%
71%
63%
40% 40%
60% 63% 66%
54% 51%
20% 39% 20% 42%
27%
14% 14%
0% 0%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Other Electronic Electronic Fund Transfer Cards Check Cash
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

83
 Suppliers in general stated that they prefer cash
from micro retailers as there is less chance of a
default. A clear general trend in supplier payments
by small and medium retailers is the increasing
popularity of electronic fund transfers and checks
in lieu of cash.
Business-to-Person (B2P) Payments
Grocery retailers: Cash is the main payment
method for salaries by grocery retailers. Micro
retailers pay 95 percent, in value, of all wages in
cash. (Figure A6.6.5). Staff numbers are small
and many prefer just paying cash from sales as it
is easier and more convenient. It was indicated in
some cases that staff members are not well educated
or versed in operating or own bank accounts, so
payments cannot be made into them.
While cash remains the major payment instrument,
small and medium grocery retailers pay with checks
or electronic fund transfers. More staff members
have bank accounts across small and medium
retailers than micro. A few small and medium
retailers also make transfers to mobile money
accounts of their employees.
Non-Grocery Retailers: A very similar pattern
is observed, except that wage payments in cash is
slightly lower, and by checks is higher.

Table A6.6.12 – Employee Salary Payments by Grocery Retailers: Pakistan

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 2 98 6,971 2,525,998
Small 10 2 140 29,641 2,506,294
Medium 53 2 133 142,147 2,575,507
Total Grocery MSM 6 2 107 16,359 7,607,799
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure A6.6.5 – B2P Payments by Grocery Figure A6.6.6 – B2P Payments by Non-
MSMRs by Retailer Type (Value Share) Grocery MSMRs by Retailer Type (Value Share)
Value Share (%) Value Share (%)
100% 3% 1% 1% 100% 2% 1%
2% 1% 9% 5% 6% 8% 8% 12% 10% 6%
18% 14% 17% 17%
80% 22% 80% 19% 21%
25%

60% 60%
95% 85%
40% 77% 79% 75% 40% 75%
65% 72% 68%
63%
20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Non- MSMRs
MSMRs Grocery
MSMRs
Mobile Money Electronic Fund Transfer Check Cash Mobile Money Electronic Fund Transfer Check Cash

Source: Team estimates based on trade interviews, pulse surveys Source: Team estimates based on trade interviews, pulse surveys
and literature review and literature review

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84
Table A6.6.13 – Employee Salary Payments by Non-Grocery Retailers: Pakistan
Average Average Number of Average Total Salary
Non-Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 2 1 2,386 67,801 11,178,703
Small 9 1 2,422 269,297 5,002,366
Medium 52 1 2,402 1,493,191 11,569,724
Total Non-Grocery MSM 5 1 2,390 145,140 27,750,793
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

85
 7. TURKEY
OVERVIEW

Table A6.7.1 – Selected Country Indicators

Country Income Category: Upper Middle Income % Adults (% Age 15+) With An Account (2014): 62%
Population (2014): 76 Million Mobile Cellular Subscriptions/100 People (2014): 95
GDP Per Capita (Current Usd 2014): USD 10,515 # ATMs Per 100,000 Adults (2014): 77.1
Total Retail Sales Value (2014) USD 105,910 M # POS Terminals Per 100,000 Adults (2014): 3853.7
Source: Global Findex and WDI by the World Bank; Euromonitor Passport Consumer Finance and Economics Database; IMF FAS.

Table A6.7.2 – Number of Micro, Small and Medium Retailer Outlets (2014)
Retailers by Size Grocery Retailers Non-Grocery Retailers Total Outlets
Micro (0-5 Employees) 291,029 126,842 417,870
Small (6-25 Employees) 50,948 153,545 204,493
Medium (26-100 Employees) 11,773 20,028 31,800
Total Msm Retailers 353,749 300,414 654,163
Other Retailers (>100 Employees) 6,676 6,748 13,424
Total Retailers 360,425 307162 667,587
Number Of Distributors N/A N/A 372,000
Source: Euromonitor International - Passport - Retailing 2015, Turkish Statistics Institute (TUIK), Republic of Turkey Small and Medium
Enterprises Development Organization (KOSGEB), EuroStats

Table A6.7.3 – Consumer Payment Methods

Payment Method Value Share (2013) Value Share (2014)
Paper Payment Transactions 56.8% 53.4%
Cash Payments 56.7% 53.3%
Other Paper Types 0.1% 0.1%
Total Electronic Payments 43.2% 46.6%
Card Payment Transactions (excl. Commercial) 38.9% 41.8%
Electronic Fund Transfers 4.3% 4.9%
Consumer Payment Transactions Total 100% 100%
Source: Euromonitor International - Passport - Consumer Finance 2015

Table A6.7.4 – Main Findings

Overall Total Electronic Payments Electronic Payments Electronic Payments
Payment Type Flow Transaction Value (USD ‘M) (Value %) (Volume %)
P2B 96,762 43% 35%
B2B 96,638 63% 45%
B2P 30,518 87% -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
86
MSMR RESEARCH FINDINGS – TURKEY

Table A6.7.5 – Information on Interview Responses Across MSMRs: Pakistan

Retailer Size/Retailer Number of Interview Responses Number of Interviews Responses
Payment Source Type Grocery Non-Grocery
P2B Micro 12 14
Small 11 16
Medium 9 6
B2B Micro 8 10
Small 8 9
Medium 7 6
B2P Micro 5 11
Small 11 16
Medium 9 6
Source: Team estimates based on trade interviews, pulse surveys and literature review

Person to Business (P2B) Payments
Grocery retailers: Cash is the main payment
method, both in value and volume terms, especially
at micro grocery retailers (Figure A6.7.1). Card
payments are more common at small and medium
grocery stores.
Micro grocery retailers that were interviewed for
this study noted that consumers tend to pay in cash
at the beginning of each month, but towards the end
of the month, the majority of payment transactions
are done by cards, regardless of the value of the
purchase.
Anecdotal evidence from the interviews suggest
that for medium and high-income urban consumers
cards are the preferred and common payment
method, both because they are safer to carry and
also because card issuers offer loyalty rewards,
discounts and attractive financing for card usage. In
rural areas and low-income urban neighborhoods,
card ownership is low and a large proportion of
the population is unbanked, thus the most common
method of payment remains cash.
Credit facilities are not limited to financial card
owners. It is common for micro grocery retailers in

Figure A6.7.1 – Grocery P2B Payments by Retailer (Value & Volume Share)

Value Share (%) Volume Share (%)

100% 1% 100% 1%

30% 27% 31%

80% 42% 39% 80% 37% 39% 34%
47% 42%

60% 60%

40% 40%
70% 73% 69%
61% 63% 61% 65%
58% 53% 57%
20% 20%

0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cards Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

87
 Table A6.7.6 – Sales of Grocery MSMRs: Turkey
Average Annual Number of
Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions per Retailer Sales (C2B) per Retailer Basket
by Size Retailers Retailer 2015 (USD 2015) (USD ‘000) per Day Size (USD)
Micro 291,029 37,576 135,691 39,490,038 112 3.6
Small 50,948 79,429 697,237 35,522,480 221 8.8
Medium 11,773 185,514 2,843,884 33,479,724 548 15.3
Total Grocery MSM 353,749 48,527 306,693 108,492,242 142 4.7
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Table A6.7.7 – Grocery MSM Retailers Summary (Turkey 2015)

Retailer Type Store Info
Grocery - Micro • Known as “bakkal”, these shops serve
all incomes, depending on the area
where the store is located
• Long hours make them convenient for
everybody
• On average 75 percent of customers
return to the stores
• Most outlets are independent. The
owner works at the store and is
helped by family members or employs
a couple of sales people
Grocery - Small • Known as “market”, these outlets
serve all income groups, depending on
the area where the store is located
• Small grocers are most common in
urban areas
• On average 65 percent of customers
return to the stores
• Most retailers are independent but
the owner may have more than one
store
Grocery - Medium • They serve mainly middle- and high-
income consumers, but also some
low-income consumers They are
located in urban areas On average 72
percent of customers return to the
storesA combination of independent
owners with several branches and
chain retail stores
Source: Team estimates based on trade interviews, pulse surveys and literature review
Products Sold
• All types of fresh food,
bread, a small selection of
packaged food and drinks
• Average value per day is
USD 3.6 per basket and sells
about 112 baskets per day
• All types of fresh food,
bread, a good selection of
packaged food and drinks
• Average value per day is
USD 8.8 per basket and sells
about 221 baskets per day
• All types of fresh food and a
large selection of packaged
food and drinksAverage
value per day is USD 15.3 per
basket and sell about 548
baskets per day
Payment Method Details
• Cash is the main payment
method (70 percent)
• In low-income areas the use of
cards is lower, but in urban areas,
it is very high
• Cash is mainly used in rural micro
retailers.
• Customers even pay for small
amounts with cards
• A high percentage of retailers
own bank accounts
• Cash (58 percent) and cards are
used (42 percent)
• Customers even pay for small
amounts with cards
• High POS terminal usage
• Majority of retailers own bank
accounts
• Cash (53 percent) and cards used
(47 percent)
• Customers pay in cash only for
low-value purchases (USD 1-2)
• Decreasing cash usage

Table A6.7.8 – Sales of Non-Grocery MSMRs: Turkey

Average Annual Number of
Non-Grocery Number Number of Sales Sales per Total Annual Baskets Sold Average
Retailers of Transactions Retailer Sales (C2B) per Retailer Basket
by Size Retailers per Retailer (USD) (USD ‘000) per Day Size (USD)
Micro 126,842 18,983 93,621 11,874,973 57 4.9
Small 153,545 38,475 438,101 67,268,270 113 11.4
Medium 20,028 104,520 1,882,484 37,701,653 335 18.0
Total Non-Grocery MSM 300,414 34,648 388,946 116,844,895 104 9.1
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
88
low-income areas to keep tabs for regular clients that
need to be settled in cash at the end of the month.
Checks do not exist and electronic fund transfers
are used minimally for P2B payments, mainly in
small and medium-sized non-grocery retailers.
Figure A6.7.2 – Non-Grocery P2B Payments by Retailer (Value & Volume Share)
Value Share (%)
100% 1% 3% 2% 1%
80% 42% 42%
44% 45% 44%
60%
40%
58% 57%
55% 52% 54%
20%
0%
Micro Small Medium Non- MSMRs
Grocery
MSMRs
Electronic Fund Transfer
Source: Team estimates based on trade interviews, pulse surveys and literature review
Table A6.7.9 – Non-Grocery MSM Retailers Summary (Turkey 2015)
Retailer Type Store Info
Non-Grocery - Micro • All income groups are served,
depending on location of store
• On average 56 percent of
customers return to the stores
• Most outlets are independent,
but the owner may have more
than one store. The owner
usually works at the store and
is helped by family members or
employs one more person(s)
Non-Grocery - Small • Mainly used by middle- and
high- income consumers
• On average 56 percent of
customers return to the stores
• Most retailers are independent
or may own other stores locally
Non-Grocery - • Mainly used by middle- and
Medium high- income consumers
• On average 43 percent of
customers return to the stores
• Mainly chain retail stores
Annexes: A6. Country-Level Findings
Non-grocery retailers: Cash is used over half the
P2B transactions, both in terms of value and volume
(Figure A6.7.2). All non-grocery retailers accept
cards as payments, regardless of the size of the retail
outlet. Anecdotal evidence from the field research
suggests that consumers like to pay for their higher
Volume Share (%)
100% 1% 2% 2% 1%
80% 39% 40% 34%
40% 39%
60%
40%
61% 59% 59% 65%
58%
20%
0%
Micro Small Medium Non- MSMRs
Grocery
MSMRs
Cards Cash
Products Sold Payment Method Details
• Most common: Apparel/ • Card (42 percent) and cash use (58 percent)
footwear, consumer • Cash is used by some consumers to be able
appliances/ electronics, to negotiate better prices
toys, DIY, drugstores/ • Electronic fund transfers are also used but
pharmacies, jewellery very rarely
• Average value per day is
USD 4.9 per basket and
sells about 57 baskets
per day
• Most common: Apparel/ • Cash (55 percent) is used by some
footwear, consumer consumers to be able to negotiate better
appliances/ electronics, prices
toys, DIY, drugstores/ • Card (44 percent) use is on the rise
pharmacies, jewellery • Electronic fund transfers are also used, but
• Average value per day is very rarely
USD 11.4 per basket and
sells about 113 baskets
per day
• Most common: Apparel/ • Cash (51 percent) use reducing in favour of
footwear, consumer card (45 percent) use
appliances/electronics, • Electronic fund transfers are also used, but
DIY very rarely
• Average value per day is • Retailers offering online shopping accept
USD 18 per basket and cards and also cash payments on delivery
sell about 335 baskets
per day
89
 value purchases by cards because of the loyalty
points and the potential to pay off the transaction in
instalments. Small retailers prefer cash in general,
however card payment options are also offered to not
to lose customers. Banks transfers, albeit very rare,
are accepted as payment by non-grocery retailers.
Business-to-Business (B2B) Payments
Electronic fund transfer is the most common
method of supplier payment method by MSMRs,
both grocery and non-grocery, accounting for 54
percent of total payment value. Cash and checks
represented 18 percent and 19 percent, respectively,
and cards 9 percent.
Grocery retailers: Grocery retailers prefer to
pay their suppliers via electronic fund transfers
because they are deemed convenient, safe and
less expensive than other methods of payment.
For suppliers, electronic fund transfers are also
convenient. Check payments carry additional costs
to both suppliers and retailers. For example, to
follow up check payments, suppliers may need to
hire an additional employee, increasing operational
costs. Additionally, in order to have a Checkbook,
retailers need to demonstrate their financial
credibility with the bank.
Micro grocery retailers also commonly use cards in
addition to cash for supplier payments, especially
in rural areas as bank branches may not be close
by and micro retailers may not be able to obtain
checkbooks. Post-dated checks are popular
instruments as well, and the terms vary from 45
days to four months.

Figure 6.7.3 – Grocery B2B Payments by Retailer (Value & Volume Share)

Value Share (%) Volume Share (%)

100% 100%
12% 10%
22%
31%
80% 80% 24%
46% 50%
30% 59% 54% 60% 18%
60% 73% 60% 10% 14%
11% 14%
13% 2% 17%
40% 9% 40% 2%
4%
17% 30%
2% 18% 56% 24%
47% 25% 45%
20% 20% 38%
16%
24% 19% 18%
11% 9% 14%
0% 0%
Micro Small Medium Grocery MSMRs Micro Small Medium Grocery MSMRs
MSMRs MSMRs

Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table 6.7.10 – Supplier Payments by Grocery Retailers

Average Number of Annual Total Annual Average B2B
Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 175 106,534 31,004,616 610
Small - 231 536,550 27,335,880 2,323
Medium - 600 2,126,169 25,030,399 3,544
Total Grocery MSM - 197 235,678 83,370,895 1,197
Retailers
Distributors/Suppliers 372,000 - - - -
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
90
Medium-sized grocery retailers make use of long
credit facility options for payment to suppliers.
These payment periods vary depending on the
agreement between the retailer and the supplier
from 30 to 90 days.
Non-grocery retailers: The most common method
for B2B payments by non-grocery retailers is
electronic payments, specifically electronic fund
transfers and in some cases cards. (Figure A6.7.4).
Micro non-grocery retailers also heavily use cash.
Credit lines are also used by non-grocery retailers,
with payment option ranging from monthly to six
months. The frequency of supplier payments can
range from on every order, to weekly or monthly.

Table 6.7.11 – Supplier Payments by Non-Grocery Retailers

Average Number of Annual Total Annual Average B2B
Non-Grocery Supplier Payment Payments to Payments Value per
Retailers Number of Transactions per Suppliers per to Suppliers Transaction
by Size Distributors Retailer per Year Retailer (USD) (USD ‘000) (USD)
Micro - 98 58,057 7,363,991 590
Small - 157 265,301 40,735,684 1,686
Medium - 180 1,117,970 22,390,258 6,211
Total Non-Grocery MSM - 134 234,643 70,489,932 1,752
Retailers
Distributors/Suppliers 372,000
Source: Team estimates based on trade interviews, pulse surveys and literature review

Figure 6.7.4 – Non-Grocery B2B Payments by Retailer (Value & Volume Share)

Value Share (%) Volume Share (%)

100% 100%
25% 22%
80% 80% 31%
54% 47%
62% 63% 14% 56%
18%
60% 79% 60% 73% 14%
15%
15% 6%
17%
40% 9% 40% 2%
3% 4% 22%
18% 26% 2%
24% 20% 48%
20% 43% 3% 20% 38%
18%
14% 19% 25%
13% 13% 16%
0% 4% 0% 7%
Micro Small Medium Non- MSMRs Micro Small Medium Non- MSMRs
Grocery Grocery
MSMRs MSMRs
Electronic Fund Transfer Cards Check Cash

Source: Team estimates based on trade interviews, pulse surveys and literature review

Table 6.7.12 – Employee Salary Payments by Grocery Retailers: Pakistan

Average Average Number of Average Total Salary
Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 2 98 6,971 2,525,998
Small 10 2 140 29,641 2,506,294
Medium 53 2 133 142,147 2,575,507
Total Grocery MSM 6 2 107 16,359 7,607,799
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Annexes: A6. Country-Level Findings

91
 Business-to-People (B2P) Payments Cash is used less frequently by non-grocery retailers
compared to grocery retailers. Micro retailers in
The findings of the research are similar for both
rural areas, where customers also pay in cash, prefer
grocery and non-grocery retailers. Electronic fund
to pay their employees in cash. However, urban
transfer is the most common payment method by
micro retailers with more than two employees often
MSMRs to pay their employees and account for
resort to electronic fund transfers, as these retailers
87 percent of total payments (Figures A6.7.5 and
receive most of their customer payments via cards
A6.7.6). The remaining 13 percent is in cash.
and keep their earnings in the bank.
According to a law passed in 2009, employers with
more than 10 employees are required to pay their
staff via electronic fund transfers.

Figure A6.7.5 – Grocery B2P Payments by Figure A6.7.6 – Non-Grocery B2P

Retailer (Value Share) Payments by Retailer (Value Share)
Value Share (%) Value Share (%)
100% 100%

80% 33% 80%

55%
60% 74% 60%
87% 87%
96% 100% 100% 100% 96%
40% 40%
67%
20% 20% 45%
26%
13% 13%
0% 4% 0% 4%
Micro Small Medium Grocery MSMRs Micro Small Medium Non- MSMRs
MSMRs Grocery
MSMRs
Electronic Fund Transfer Cash Electronic Fund Transfer Cash
Source: Team estimates based on trade interviews, pulse surveys Source: Team estimates based on trade interviews, pulse surveys
and literature review and literature review

Table A6.7.13 - Employee Salary Payments within Non-Grocery Retailers

Average Average Number of Average Total Salary
Non-Grocery Number of Salary Payments Monthly Salary Annual Salary Payments
Retailers Employees per Employee per per Employee Payments per Year (USD
by Size per Retailer Month (USD) Retailer (USD) ‘000)
Micro 3 1 422 13,360 1,694,557
Small 12 1 471 68,192 10,470,547
Medium 60 1 424 303,680 6,081,981
Total Non-Grocery MSM 11 1 447 60,740 18,247,085
Retailers
Source: Team estimates based on trade interviews, pulse surveys and literature review

Cash vs. Electronic Payments In Small Retailing | Estimating the Global Size
92
Ayyagari, M., A. Demirgüç-Kunt, and V. Maksimovic
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Collins, D., J. Morduch, S. Rutherford, and O.
Ruthven (2009). Portfolios of the Poor: How the
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the Shadow Economy of 31 European and 5 other
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93
1. Collins et al. (2009)
2. Ayyagari et al. (2011), and IFC Enterprise
Finance Gap database (http://www.
smefinanceforum.org/data-sites/ifc-enterprise-
finance-gap), respectively.
3. Traditional retail refers to small and independent
shopkeepers that operate on a standalone basis,
covering a wide range of enterprises including
mini-markets, kiosks, etc., and are most often
family-run.
4. Transaction account: broadly defined as an
account held with a bank or other authorized
and/or regulated service provider (including
a non-bank) which can be used to make and
receive payments. Transaction accounts can be
further differentiated into deposit transaction
accounts and e-money accounts (CPMI and
World Bank Group, 2016).
5. In the retail sector, “person” corresponds to
“households,” “individuals,” or “consumers.”
This paper uses consumer-to-business, C2B,
interchangeably with person-to-business,
P2B as well as business-to-consumer, B2C,
interchangeably with business-to-person,
B2P. B2P in the context of this study is the
wage/salary payments by businesses to their
employees.
Endnotes
6. The most recent cross-country measure of the
informal sector (not restricted to retail) is by
Schneider (2012) based on data from 2008-
2009. All other data used in this study are from
2014-15. Schneider (2013) has more recent
information (for 2011-2013), however only for
31 European countries.
7. The Euromonitor Passport Databases are briefly
explained in Annex 2.
8. Annex 4.1 provides detailed information about
the selection process by cluster analysis.
9. Please note that these interviews are not based
on representative samples. The discussion
guides are included in Annex 5.
10. Please note that the volume of B2P payments
are not estimated. These depend on the number
of employees by MSMRs and the number of
times they are paid each month or year.
11. See http://www.eiu.com for details. The
countries included are mainly high income
OECD economies and upper middle income
economies.
12. This implies that the total consumer payments
amount to USD 49 trillion. Note that this is
broader than retail payments by consumers
for grocery and non-grocery purchases made
95
 at the micro, small and medium retailers, and
hence is much larger than the estimate of USD
18.8 trillion of P2B payments at MSMRs for
grocery and non-grocery products in this study.
13. http://www.emarketer.com/Article/Retail-
Sales-Worldwide-Will-Top-22-Trillion-This-
Year/1011765
14. Based on Euromonitor International estimates.
For other examples, see D’Arcy et al. (2012),
Productivity Commission (2014)
15. Some variables considered are not selected
among the five because (i) they did not have a
sufficiently large number of observations; (ii)
they were outdated, i.e. their most recent value
was not from the past 3-4 years; and/or (iii) the
correlation between the unselected variable and
the chosen ones were too high (larger than 0.6 in
magnitude), i.e. the unselected variable would
not statistically add much to the information
contained within the existing set of chosen
variables. Whenever data were available,
we opted for indicators that track the state in
our targeted segments, after ensuring that the
underlying correlations between the selected
and unselected variables are meaningful
statistically. For example, “urban population”
was used instead of “total population” and
“adults with formal accounts, poorest 40%”
was selected instead of the headline Global
Findex indicator.
16. 19,503 different pairwise combinations for 61
dependent variables requires estimating 1.2
million models. These variables are then to be
predicted for 161 countries, i.e. a total of 191.5
million predictions.
Cash Vs. Electronic Payments In Small Retailing | Estimating The Global Size
96
17. This way, there are 14,093 combinations,
rendering 0.86 million models to be estimated
and around 138.4 million predictions to be
made.
18. MAPEm=∑i|yi-ýî|/yi, where is the i country‘s
predicted value using all observations, except
the ith.
19. Inverse MAPE (=1/MAPE) are used as weights
because the larger the MAPE is for one model,
the larger its prediction error is and therefore a
lower weight should be assigned to that given
model.
20. Lithuania introduced Euro as legal tender
in January 2015, a few months prior to the
implementation of this study. This study is
based on data before and after the introduction
of the Euro. That, in addition to the possible
effects of the introduction of Euro on payment
behavior of consumers and retailers, may have
influenced the results. Bank of Lithuania (2016)
notes that the likely effect has been an increase
in electronic payments, notably card payments,
as consumers deposited litas into their accounts
in advance of the change and banknotes and
coins in circulation reduced by half prior to the
change.
21. Bank of Lithuania (2014) estimates that cash
transactions accounted for 81 percent of
domestic retail payments volume in 2013. At
the same time, Bank of Lithuania (2016) notes
that due to the introduction of the Euro as
legal tender in January 2015, there has been an
increase in the use of card payments as opposed
to cash, and cash in circulation decreased to
half.