# **1 Introduction**

The last decade has seen an unprecedented expansion in access to consumer financial products, with an estimated 1.2 billion adults gaining access to a bank or mobile money account over this period (World Bank, 2017). While this has expanded the financial tools available to households, there is also widespread concern that financial intermediaries can profit from exploiting inexperienced consumers (Campbell et al., 2011). This is especially true in developing economies where financial access has expanded rapidly against the backdrop of enormous variation in consumer experience and sophistication (Agarwal et al., 2018; Anagol et al., 2017; Badarinza et al., 2019).

This proliferation of new financial products and technologies has been accompanied by an extensive debate about the tradeoff between access and consumer protection. Some regulators have argued that predatory practices are sufficiently widespread to warrant outright limits to access, fees, and product features—potentially at the expense of gains from broader financial inclusion.<sup>1</sup> Proponents of lighter regulation, on the other hand, have advocated for information-based policies that instead aim to increase transparency to strengthen consumer knowledge and sophistication.

An important open question at the heart of this debate is to what extent risks to consumers can be mitigated by “learning-by-doing” that occurs naturally, as new financial technologies are introduced at scale and used on an everyday basis. Studying this question is empirically challenging for several reasons. First, the typically high degree of selection into _adoption_ and _active use_ of new financial technologies requires a setting with exogenous variation in access as well as incentives to engage with the technology to identify consumer learning. Second, many types of consumer protection risks, such as side payments to intermediaries, are difficult to observe in administrative data and may require surveys, audit studies, and other non-traditional data to be accurately measured.

In this paper, we study consumer learning in the context of payroll accounts, a simple financial technology that is currently being rolled out to millions of workers worldwide in response to demands for increased supply chain transparency and as a result of the Covid-19 pandemic.<sup>2</sup><sup>_,_3</sup> We conduct a field experiment with a population of salaried factory workers in Bangladesh who, prior to our study, received their wages entirely in cash. In the experiment, workers were randomly assigned to either continue receiving wages in cash, or begin receiving wage payments into a bank or mobile money payroll account. In a set of comparison treatments, workers were given an account but

> 1See, Mullainathan et al. (2009), and Beshears et al. (2018) for perspectives on behaviorally informed regulation, and Agarwal et al. (2015) on the effectiveness of current consumer financial protection regulation.

> 2More than 50% of employees globally and 85% of employees in developing countries receive wages in cash. Approximately 300 million individuals earn regular verifiable wage income but do not have access to a formal financial account (Demirg ̈u ̧c-Kunt et al., 2017). In response to allegations of widespread labor rights and minimum wage violations, many international brands have started to require suppliers to pay employees into digital payroll accounts. This, in turn, has led entire industries to begin digitizing wage payments to their global workforce. See, for example, _“Fashion Brands Team Up To Spearhead Campaign Around Wage Transparency”_ , Forbes November 5, 2019.

> 3Several countries, including Bangladesh where our study is set, have made government bailouts during the pandemic conditional on firms phasing out in-person cash payments and introducing payroll accounts for workers.

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