Over the past decade, countries have invested heavily in modern payment systems. Fast payment systems are now widely available, even in many low- and middle-income countries. In many emerging markets, most adults own a debit card, a wallet or transaction account. On paper, the digital rails are in place.

But step into a small neighborhood shop and the story often changes. Cash still dominates. Digital accounts are used mainly to withdraw money, not to pay. The missing link is not access—it’s merchant acceptance.

This problem is not new, and it’s not about technology. It’s about getting digital payment solutions into the hands of small business owners in underserved segments and geographies, making payments more inclusive and ubiquitous, and in turn helping to build more resilient, job creating economies.
 

The Real Bottleneck: Small Merchants

Digital payments are a two-sided market. Consumers may have cards or wallets, but without merchants who can and want to accept them, usage stalls.

For small merchants, the barriers are real. Transactions are low in value. Margins are thin. Onboarding costs, devices, and service fees add up. For payment providers, serving these merchants is often unprofitable—at least at first.

Yet when small merchants do accept digital payments, everyone benefits. Consumers use accounts more often. Businesses become more visible and gain access to services like credit. Governments see better transparency. The whole digital economy deepens.

So why doesn’t the market fix this on its own?
 

A Collective Action Problem

Expanded merchant acceptance creates economywide gains, but no single provider captures enough of those gains to justify heavy early investment. The result is hesitation, fragmented pilots, and short lived subsidy programs that rarely scale.

This challenge is strikingly similar to what happened years ago in telecommunications. Mobile networks expanded quickly in profitable urban areas, but rural and low-income regions were left behind. The solution was collective funding through universal service mechanisms.

Payments ecosystems face a similar moment today.
 

A Practical Solution: Acceptance Development Funds

An Acceptance Development Fund (ADF) is a simple idea: a timebound, coordinated way to pool resources and push digital acceptance where the market is slow to move.

Instead of scattered efforts, an ADF brings stakeholders together—issuers, acquirers, payment networks, and public authorities—to fund acceptance in underserved regions or merchant segments. The goal is not permanent support, but momentum: help the market reach scale, then step back.

This approach works.

In Poland, an industry led fund dramatically expanded acceptance while digital payments surged and cash usage barely grew. In India, a national fund established by the Reserve Bank of India has supported the largescale rollout of a broader mix of acceptance points in underserved areas, accelerating merchant uptake of digital payments. In Malaysia, the growth rate for point-of-sale (POS) terminals was about doubled.

The lesson is clear: modest, well designed collective investments can have outsized impact.
 

What Makes These Funds Work

Experience across countries points to a few simple principles: 

• Be clear and timebound. Funds work best when goals and exit plans are defined upfront.
• Align policy and regulatory actions. Interventions deliver greater impact when linked early to concrete acceptance development commitments.
• Govern transparently. Trust matters when multiple players contribute.
• Target incentives carefully. Support should kickstart adoption, not replace viable business models.
• Choose lowcost technology. Affordable, scalable tools make acceptance sustainable.
• Track usage, not just deployment. Idle terminals don’t drive inclusion.

In some countries, the private sector can organize these mechanisms on its own. In others—especially where early returns are low and collective action challenges prevail—central banks or finance ministries can play a catalytic role by convening stakeholders and aligning incentives.
 

From Infrastructure to Inclusion

Building digital payment rails is only half the job. The real impact comes when those rails reach the smallest merchants—where daily transactions happen.

When that bridge is built, digital payments move from being available to being used. And that is what turns infrastructure into inclusion.

A new World Bank report provides guidance on establishing an ADF to accelerate the penetration and growth of digital merchant payments. This report is part of the World Bank’s package on Electronic Payment Acceptance, including the assessment guide, and the role of incentives, innovations and intermediaries.