Artificial Intelligence as a Catalyst for Hybrid Payment Ecosystems: Reconceptualising the Cash Paradox in Developing Economies

Digital payments are spreading quickly, and artificial intelligence (AI) is often described as the technology that will finally push economies to go cashless. In both developed and developing countries, people still use a great deal of cash even where digital payments are common. This study refers to this contradiction as the cash paradox and argues that it is not a temporary issue that technological advances will eventually eliminate. Instead, it represents a persistent structural characteristic of modern payment systems. Building on this view, the study develops the AI-Enabled Cash Paradox Framework, which treats the paradox as the central idea for explaining how payment systems change over time rather than as an obstacle to be eliminated. The framework draws on three well-established theories: the Technology Acceptance Model, Diffusion of Innovations theory, and institutional theory. It is built from a review of twenty studies selected through a transparent, PRISMA-guided search of Emerald Insight, Scopus, Web of Science, and Google Scholar. The study makes two main contributions. First, it defines AI Capability as a single construct with four connected parts, namely sensing, analytical, adaptive, and trust-building capability, rather than treating AI as a loose list of tools. Second, it sets out three linked propositions that connect AI Capability, the growth of digital payments, the cash paradox, and the rise of hybrid payment ecosystems. On this view, the role of AI is to manage the paradox rather than resolve it, bringing digital and physical payments together into one system that is resilient and inclusive. The framework offers an integrated way of thinking about payments and provides guidance for policymakers, regulators, banks, and fintech firms in developing economies.

Artificial Intelligence, Cash Paradox, Digital Payments, Financial Inclusion, Hybrid Payment Ecosystem

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