The traditional retail and wholesale payments: What has evolved and impact on payment choices in the real economy over developing countries.

Over time, traditional retail and wholesale payment systems have undergone profound transformation, shifting from cash-dominated transactions to increasingly digitized and technology-driven ecosystems. Historically, retail payments in developing countries relied heavily on physical cash, informal credit, and paper-based instruments such as cheques, while wholesale payments were conducted through banking systems characterized by high transaction costs, delays, and limited accessibility. However, the last two decades have witnessed significant evolution driven by financial innovation, regulatory reforms, and rapid technological advancement.

A major structural shift has been the transition from paper-based and cash systems to electronic and digital payments, including card-based transactions, mobile money, and real-time payment systems. The proliferation of mobile phones and digital platforms has been particularly transformative in developing economies, where mobile payment systems have often leapfrogged traditional banking infrastructure. These innovations have enhanced transaction speed, reduced costs, and expanded financial access to previously unbanked populations . In parallel, wholesale payment systems have evolved through automation, real-time gross settlement (RTGS) systems, and interoperability frameworks, improving liquidity management and financial system efficiency.

These developments have significantly influenced payment choices in the real economy. Consumers and businesses increasingly prefer digital and mobile payment methods due to convenience, security, and accessibility. Empirical evidence suggests that digital payment adoption stimulates consumption, increases business revenues, and supports small enterprise growth by reducing liquidity constraints and transaction frictions . Moreover, the integration of fintech solutions—such as digital wallets, QR-code payments, and contactless technologies—has reshaped behavioral patterns, often encouraging higher spending and shifting preferences away from cash.

Despite these advancements, the transition remains uneven across developing countries. Cash continues to dominate in many regions due to infrastructural gaps, digital illiteracy, trust deficits, and regulatory challenges. In several African and Asian economies, reliance on cash persists, especially in rural and informal sectors, highlighting the coexistence of traditional and modern payment systems . Additionally, risks such as cybersecurity threats, digital fraud, and exclusion of technologically marginalized populations pose ongoing challenges.

In conclusion, the evolution of retail and wholesale payments in developing countries reflects a hybrid trajectory characterized by both innovation and persistence of traditional practices. While digital payments are reshaping economic participation and efficiency, inclusive policy frameworks and infrastructure development remain essential to ensure equitable access and sustainable transformation of payment choices in the real economy.