Optimizing Subsidy Allocation in Two-sided Markets: Evidence from Digital Payment

In collaboration with MTN Ghana, we are conducting a Randomized Controlled Trial (RCT) in Eastern Ghana to evaluate the effectiveness of different subsidy allocations on digital payment usage among small retailers. We will divide 120 communities into one control and three treatment groups, each receiving a novel, budget-neutral subsidy: to merchants, to consumers, or evenly split between the two. Participants earn digital lottery tickets with each digital payment transaction, and a single winner receives a reward of 400 Ghana Cedis each month for three months. This study aims to determine how different subsidy allocations to either side of the market can most effectively enhance digital payment adoption and usage within a fixed budget.