Connecting two countries' apps like Venmo or Cash App boosts trade by 4%—that’s about half the impact of a massive free trade deal.
March 25, 2026
Original Paper
Interlinking payment systems and trade flows
SSRN · 6461993
The Takeaway
We typically assume trade is driven by high-level treaties and tariffs. This research reveals that the technical 'plumbing' of how money moves across borders is nearly as powerful as the laws governing trade themselves.
From the abstract
This paper provides the first causal estimate of the economic impact of interlinking payment systems across countries. We exploit a new dataset of payment systems interlinking initiatives, which identifies over 2,000 connections, and employ standard gravity methods to estimate their impact on trade flows. Consistent with trade costs theory, we find that inter-connected countries have around 4% higher trade volumes, roughly half the effect of a trade agreement and a quarter of the effect of a com