Determinants of digital payment usage in Uganda

Abstract

The importance of digitalization of payments systems cannot be understated. Digital payments invoke greater financial inclusion and enhance efficient flow of funds for payment of goods and services. The objective of the study was to understand the determinants of digital payment usage in Uganda. Specifically, the study assessed whether internet access, phone ownership, mode of receiving wages and socio demographic factors determined digital payment usage in Uganda. This study utilized a logistic regression model to analyse cross-sectional data from the 2021 Global Findex database. The empirical results indicated that internet access, phone ownership, receiving wages digitally, education level and area of residence significantly determined digital payment usage in Uganda. Surprisingly, the study found that, income, age and gender do not significantly predict the likelihood of adopting digital payments in Uganda which could indicate no discrimination in terms of income, gender and age in Uganda’s financial sector. The empirical results are comparable with the research findings in similar studies. The study exposes some areas that need further attention by financial institutions and policymakers, specifically in regard to internet access and wage payment.