Technology Adoption and Leapfrogging: Racing for Mobile Payments (Revised February 2026)

Mobile payments are reshaping the global payment landscape, with some developing economies leapfrogging advanced economies in adoption. We build and estimate a dynamic model of sequential payment innovations — progressing from cash to card to mobile — to explain this pattern. The model matches cross-country payment technology adoption patterns and shows how advanced economies early success in adopting card payments dampens subsequent mobile payment adoption. Extending the framework to a two-sided market with price coherence, we show that payment externalities justify policy intervention: promoting mobile payment adoption and usage (e.g., via subsidies or price differentiation) enhances welfare, especially in developing economies.