Working Paper 184

In this paper we look into the increasing use of electronic payment technologies in low-income countries (LICs), with a particular focus on the use of mobile money in Ghana. Our study evaluates the effectiveness of tax exemptions for incentivising businesses and customers to adopt digital merchant payments, and shaping their perceptions of the tax system. Specifically, we investigate the impact of an exemption embedded in Ghana’s electronic transfer levy (e-levy), implemented in May 2022. Through a mixed-methods approach, involving survey data from 1,065 businesses and focus group discussions with Ghanaian citizens, we explore the barriers and drivers to merchants’ (businesses’) registration with mobile money for digital merchant payments. We assess the impact of the exemption on payment methods and customer preferences, as well as merchants’ perceptions of the tax system. Our findings highlight that larger digitally- and financially-inclusive businesses are more likely to adopt digital merchant payments. The exemption appears to have encouraged the use of mobile money for merchant payments, leading to a shift away from personal accounts. However, cash remains prevalent among both users and non-users of mobile money. Merchants using the exempted service express more satisfaction with various aspects of the e-levy policy, and show greater trust in the government and the fairness of the tax system. Our study offers valuable insights into the adoption of digital merchant payments in LICs, and the impact of tax exemptions on merchants’ behaviour and perceptions. We provide policy recommendations aimed at promoting the uptake of digital payments among merchants, and enhancing the effectiveness of the tax administration.


Celeste Scarpini

Celeste Scarpini is a Research Officer at the ICTD, and a PhD student at the Department of Economics, University of Sussex. Her main research interests relate to tax administration in sub-Saharan Africa, from technology adoption to data management and revenue collection strategies.

Fabrizio Santoro

Fabrizio is a Research Fellow at the Institute of Development Studies, and the Research Lead for the second component of the ICTD's DIGITAX Research Programme. His main research interests relate to governance, public finance, and taxation, with a strong focus on impact evaluation methodologies and statistical analysis. He holds a PhD in Economics from the University of Sussex.

Mary Abounabhan

Mary Abounabhan is a Research Officer for the DIGITAX programme. Her research focuses on the the appropriateness and effectiveness of digital financial services taxes and their development impacts. She has completed her Masters of Globalisation, Business, and Development at the Institute of Development Studies, focusing her research on the Moral Economy of social media taxation in Lebanon.

Awa Diouf

Awa is a Postdoctoral Researcher at the ICTD and an economist specialising in public finance in developing and transition countries. She holds a doctorate from the Université Clermont Auvergne in France, and the Initiative Prospective Agricole et Rurale (IPAR), a think tank based in Senegal.
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