Why Payments Are BigTech’s Gateway to Finance
This chapter examines why BigTech platforms so often enter finance through payments, and why the answer is more than “payments are digital.” The important question is what a payment relationship gives the platform: a frequent connection with users and merchants, a view of economic behavior, and sometimes a position on the infrastructure through which value moves. Understanding that sequence lets us distinguish a wallet that sits on an existing card network from a payment service that becomes difficult for users or financial firms to replace.
Payments begin where platforms already need trust
An e-commerce platform cannot complete a sale without a way for a buyer to transfer value to a merchant. A messaging service can make person-to-person payments convenient, while a ride-hailing service needs a reliable way to settle a trip. Payments are therefore a natural complement to the platform’s original activity. They reduce friction in the transaction that the platform already wants to coordinate.
That commercial logic is only the first layer. A platform that handles a payment can also keep the user inside its own interface. The user does not need to leave the marketplace, open a separate banking application, or enter the same information again. The merchant receives a smoother checkout, and the platform receives another interaction from which it can learn. The payment service may generate only a small margin, but it can strengthen the core business and support other sources of revenue.
The IMF describes three forces behind BigTech’s expansion into financial services. The first is commercial: payments support e-commerce and other platform transactions, while lending and insurance can be attached to the same customer relationship. The second is technological: scale, application programming interfaces, cloud computing, and machine learning can make a new financial service easier to distribute. The third comes from incumbent financial institutions themselves. A bank may retain the balance sheet while outsourcing customer acquisition or distribution to a platform. In that arrangement, the financial service is embedded in a nonfinancial experience.
This is why it is useful to separate the payment interface from the payment infrastructure. A digital wallet may store tokenized card details on a phone while relying on the card network and regulated institutions to move the funds. In that case, the wallet’s visible convenience does not mean that the company operates the settlement system. Other BigTech payment services use mobile-money or real-time-payment infrastructure more deeply. The user sees an app, but the regulatory and economic significance depends on what happens behind the app: who holds customer funds, who processes the transfer, who can suspend an account, and which other services depend on the channel.
The difference is especially clear between advanced economies and many emerging market and developing economies. Where card payments are already widely available, BigTech entry may be limited to a wallet or another interface layer. Where card networks are less pervasive, a mobile-money or QR-based service can become a primary route for everyday transactions. In China, the IMF describes QR payments by Alipay and WeChat Pay as central to the expansion of BigTech payment services. In Kenya, M-Pesa used a network of agents and conventional mobile technology to reach rural, unbanked, and underbanked populations. Neither case depends on a futuristic payment technology. QR codes and mobile transfers are relatively ordinary tools; the important change is the scale and distribution network around them.
That distinction guards against a common mistake. Digital finance does not become important simply because it uses a novel technical stack. A familiar technology can have major consequences when a platform places it in a setting where many users, merchants, and later financial products meet. Conversely, a sophisticated wallet may remain less consequential if users can switch easily and the underlying payment rail is supplied by many competing providers.
The IMF reports several indicators of this scale. It describes Alipay and WeChat Pay as together holding close to 95 percent of China’s retail mobile-payment transaction volume, and reports that Safaricom’s M-Pesa accounted for 89.7 percent of Kenyan mobile-payment volume in 2025. These are dated, jurisdiction-specific figures reported through the note’s cited market sources, not a universal ranking. Their value here is to show the range of a payment role: in some markets the platform is one convenient option; in others it is close to the default route for retail exchange.
A payment produces both a transaction and a data relationship
Once a platform handles a payment, it receives more than confirmation that money changed hands. It can observe the timing, frequency, counterparties, amounts, merchants, and relationship to other platform activity, subject to the applicable legal and privacy framework. The IMF stresses that payment data can become more useful when combined with nonfinancial information such as e-commerce or social-media activity. A merchant’s sales pattern may help indicate whether that merchant could service a loan. A user’s regular payment behavior may add information where a conventional credit file is thin or absent.
The mechanism is cumulative. A platform first attracts users for a nonfinancial service. Payment makes the interaction more frequent and keeps the user closer to the platform. Those transactions create data. The data can improve personalization or help identify potential borrowers. A financial product can then make the platform more useful, creating another reason for the user or merchant to remain. The loop does not guarantee a good credit decision, and payment data alone cannot provide a complete picture of financial health. It does explain why payments are the gateway through which other products can follow.
There can be a real inclusion benefit. The IMF reports that, between 2006 and 2019, the launch of M-Pesa was associated with access to financial services in Kenya rising from 14 percent to 83 percent of the population. The figure comes from a cited case study and does not prove that the payment service alone caused every part of the change. It does show the practical importance of a widely distributed payment channel in a population with limited access to traditional banking. A transaction history can also give a small business or individual a signal that a lender did not previously have.
But information creates power as well as access. If a platform is the only party that can combine payment, commerce, and social signals at scale, other lenders may find it difficult to match its view of the customer. The platform can use that advantage to offer a more tailored service, but it may also use it to steer users, price products, or strengthen its position. Users may not be able to negotiate the terms on which their data are collected and combined, especially when the platform is the practical route to other daily services.
Network effects reinforce this position. More users make the payment service more useful to merchants; more merchants make it more useful to users. A large installed base lowers the cost of distributing a new financial product and can let a platform launch or cross-subsidize a service that a smaller entrant could not afford. The IMF notes that loss-leader strategies may reduce costs and increase choice in the short term while weakening competition and reducing choice over time. A service that appears free can carry indirect costs through advertising, limited data control, or the higher cost of leaving the ecosystem.
Open banking changes the pattern without automatically eliminating the problem. When users authorize third-party providers to access bank-account or transaction data through application programming interfaces, a payment experience can become less tied to one incumbent bank. Broader open-finance or open-data arrangements can permit more categories of information to move between providers. Yet BigTech firms have the resources and user base to use newly available data more aggressively than smaller entrants. Portability can reduce lock-in, but it can also give a powerful platform a larger information base. The outcome depends on who can access which data, under what consent, and whether users have a meaningful alternative.
Competition can also take place around the payment rail rather than against the platform interface. The IMF describes banks responding in several ways: some provide services or infrastructure to BigTech payment arms, while others compete directly. Argentina’s Modo is described as a collaboration between large banks and payment providers. Sweden’s Swish, launched by the six largest banks, has become a dominant payment application, while a group of US commercial banks created Paze as a joint wallet connected to customers’ card accounts. Interoperable or clustered QR codes can make it easier for different providers to reach the same merchants. These examples matter because they show that “BigTech versus banks” is not the only structure. A bank can be a partner, a supplier, a rival, or several of those at once.
That mixed structure changes the regulatory question. If a platform depends on a bank or card network, the platform may not control settlement, but it may still control the customer relationship and the data generated at the front end. If several providers share a rail or wallet, interoperability may reduce the cost of switching without ensuring that data, fraud responsibility, or service continuity are equally portable. A payment market can therefore look competitive at one layer and concentrated at another. Following the layers is more informative than assigning the whole system a single label.
The payment interface also becomes a point where several risks meet. Rapid digital adoption can increase fraud before consumer-protection and market-integrity rules catch up. A provider with a large embedded user base can become important quickly, challenging supervisors with limited resources. If a payment service becomes a critical route to commerce or credit, an outage or account restriction can affect more than one transaction. And if the platform supplies cloud, data, or other technology services to financial institutions, its operational importance can extend beyond the users who see the payment app.
The sequence is easier to see when the visible app and the less visible relationships are placed together:
The diagram is not a claim that every BigTech firm owns every layer. It is a way to locate control. The platform may own the interface but depend on a bank or card network for settlement. It may receive data from its own nonfinancial services and from an open-banking arrangement. A partner may make the loan while the platform controls how the offer is displayed. Each variation changes who bears a particular risk, but all of them connect the payment relationship to later financial activity.
When a payment option becomes a dependency
The key boundary is substitutability. A payment product is not necessarily systemic because it is popular, and a large user count does not reveal whether alternatives are available. The more useful questions are whether users can move to another service without losing access to commerce or credit, whether merchants can accept another route, whether another provider can take over quickly, and whether financial institutions rely on the same technology behind the scenes.
That is also why payment scale can have two effects that appear contradictory. It can reduce access barriers by giving an unbanked user a simple way to transact. At the same time, it can make the provider a gatekeeper whose decisions affect the user’s ability to participate in ordinary economic life. It can make later credit more informed, while giving one firm an unusually detailed profile of the borrower. It can lower the cost of a transaction today, while making switching more expensive tomorrow.
The IMF’s position is not that every payment activity has already become a financial-stability threat. The note says current implications remain limited in most jurisdictions, while emphasizing rapid growth and the possibility that a service becomes critical with little direct substitute. That is a reason to watch the transition from optional to necessary, not a reason to label every wallet a systemic institution.
Payments are therefore a gateway in two senses. They are a commercial gateway because they extend an existing transaction. They are an informational gateway because they connect behavior to later financial decisions. Once those two roles are combined at scale, the next question is no longer just how a platform moves money. It is how the platform uses what it sees—and whether it can make the payment relationship part of the way credit is screened, priced, and repaid.