While there are many foundations and drivers to achieving financial inclusion, the potential impact of extending digital financial services through a more widespread acceptance among small retailers is substantial. Traditional retailers in developing economies, the majority of which are micro, small, and medium enterprises, most often do not use electronic payments and are excluded from the formal financial sector. They can help expand the use of electronic payments by consumers and contribute to the greater efficiency of financial services for small businesses. This report, co-sponsored by the SME Finance Forum, aims to deepen the understanding of barriers to and incentives for the acceptance and use of electronic payments, from the perspective of micro, small and medium retailers (merchants). The report’s structure is as follows:  

• Part 1 describes the specific market challenge and its importance for financial inclusion; quantifies the market opportunity with global sizing estimates for cash versus electronic transactions for the total value of B2P, B2B and B2P payments; and frames the six main obstacles that hinder merchants’ adoption of electronic payments.
• Part 2 presents five innovation insights observed from the case collection exercise and provides in-depth descriptions of selected relevant cases.
• Part 3 suggests actions and focus areas for industry practitioners and policy-makers to consider as levers for driving acceptance and uptake of electronic payments.

Matthew Gamser, CEO of the SME Finance Forum, has provided guidance to this report.