Fintech For The Poor: Do Technological Failures Deter Financial Inclusion ?

We examine the impact of transaction failures on the working of a biometric-enabled payment system introduced in India to facilitate banking by the poor. On average, nearly one-third of transactions fail. However, the proportion of failures decline steeply with user experience. The usage of the system, especially on the intensive margin front, increases significantly with experience. Finally, using the revealed preference framework, we find that transaction failure does not deter the users from using the biometric platform. Further tests reveal that convenience offered by technology seems to score over other conventional banking channels, despite a high failure rate.