The Digital Payment System: How Does It Impact Indonesia's Poverty?

Abstract

Digital payments are currently well-developed and available through various methods, especially in Indonesia. Digital payments are essential in ensuring the country’s economy keeps running and in helping to boost the economy. However, the impact of such payments on poverty is currently unknown. This study examines the impact of digital payments on poverty rates in Indonesia. We use the ECM (Error Correction Model) to analyze the impact of digital payments on poverty in the short and long term, using data from 2009 to 2022. The results show that an increase in digital payments through the volume of ATM and debit card transactions is associated with short and long-term poverty reduction. Meanwhile, the variable volume of credit card transactions and volume of electronic money transactions does not significantly impact poverty in the short or long term. Economic growth as a control variable also plays a role in reducing poverty significantly in the long term.