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How do Payment Trends Differ in Emerging Markets Compared to Established Ones?

Payments are arguably the face of fintech. When you think about financial technology, it is easy to think about solutions which are making payments faster, easier and more accessible.

Having already explored the biggest upcoming trends in the world of paytech, it is clear that progress in payments becomes drastically different depending on which region of the world you look at. To find out how payment trends differ across the world, we reached out to industry experts and asked them how these trends differ in emerging markets, compared to the most established ones.

Differing financial landscapes 

For Jeremy Baber, CEO of Lanistar, the payment card provider, emerging markets are less reliant on traditional banking, creating more opportunity for fintech growth in those regions: “When it comes to established versus emerging markets, there remains a distinct gap between the two in terms of financial landscapes.

Jeremy Baber, CEO of Lanistar
Jeremy Baber, CEO of Lanistar

“Established markets are dominated by traditional banking meaning the opportunities for newer fintechs to deliver significant change are much more restricted. There simply isn’t as much room to upset traditional players and carve a path. But for emerging markets, new technology and an appetite for embracing change has provided an advantage for not just fintech growth, but also for those governments and markets.

“Currently, emerging markets find themselves at a sweet spot, where their dominant population demographic of under 30 favours online transactions. This has allowed the growth of methods that support such payments, stimulating economic growth through providing standardised practices in an otherwise neglected market.

“Brazil, for example, has been the site of the development and roll-out of bank transfer methods such as PIX and QR-code-driven payments. This has been seen as a game-changer, especially in comparison to more established markets which are years behind. Without emerging markets wholeheartedly embracing cryptocurrency technology and development, many fintechs would not be seeing a significant lead against traditional competitors and even a lead in their future financial service development.”

Varying banking usage

James Simcox, chief product officer at Equals Money, a money movement solution provider, explains how varying amounts of different populations with bank accounts change the payments landscape in each region: “In established markets, a substantial portion of the population already have bank accounts.

James Simcox, chief product officer at Equals Money
James Simcox, chief product officer at Equals Money

“This means there’s often a greater understanding of banking and well-established payment systems, creating an easier and faster route for innovation. Trust in banks is generally established, which means they can focus on maintaining infrastructure and engaging stakeholders.

“In emerging markets, the challenge is educating merchants and addressing infrastructure gaps. For example, in Mexico, despite having instant payments, there’s still low banking usage. Kenya, however, skipped traditional banking and moved straight to mobile payments.

“Unlike in established markets, the absence of existing systems and infrastructure allows the chance to start from scratch with payment technology.”

Financial infrastructure impacting trends

Gabriel Le Roux, CEO and co-founder of Primer, the unified infrastructure for global payments and commerce, discusses how differing levels of financial infrastructure are the main cause of differing trends between emerging and established markets: “While digital commerce is becoming more common in both emerging and established markets, there is a clear difference between the two.

Gabriel Le Roux
Gabriel Le Roux, CEO of Primer

“Established markets have a much more advanced financial infrastructure, including online banking services. Typically, consumers in these markets prefer electronic payments over cash due to better convenience and security.

“Yet, the idea of a cashless society in emerging markets is extremely unlikely. Although innovation in mobile payments has grown over the last decade, emerging markets often face infrastructure challenges, including limited access to banking services and inadequate point-of-sale systems.

“In both markets, however, there is a growing shift towards ‘nationalised payments’ due to concerns about national payment sovereignty and rising international fees. Several countries, such as the United Kingdom or Brazil with its Pix payment network have already taken steps to launch or suggest their own domestic card schemes. It’s likely that we will see more countries try to establish their own card network, reducing dependency on the likes of Visa and Mastercard.”

Banking penetration and smartphone adoption

Amal Ahmed, director of financial services and EMEA marketing at Signifyd, the e-commerce fraud protection platform, said: “While cash and mobile money continue to dominate the landscape in emerging e-commerce markets, fueled by lower banking penetration and higher smartphone adoption, established markets see credit and debit cards taking centre stage.

Amal Ahmed, director of financial services and EMEA marketing at Signifyd, payment trends markets
Amal Ahmed, director of financial services and EMEA marketing at Signifyd

“Contactless payments and digital wallets are rapidly gaining ground, pushing cash aside, and as this becomes the norm globally, emerging markets present unique challenges and opportunities.

“Local payment methods like M-Pesa in Kenya or AliPay in China are crucial for success, and mobile-first optimisation is essential. Limited access to traditional banking necessitates creative solutions like micro-loans. Conversely, rising internet and smartphone use, alongside government initiatives and fintech innovation, are accelerating the digitisation of payments in these regions.

“Despite these differences, a trend towards convergence is undeniable. Mobile wallets, digital currencies, and buy now, pay later options are finding favour in both established and emerging markets.

“Ultimately, security and user experience remain paramount across the board, but navigating local regulations, data privacy laws, and cultural preferences is equally crucial for tailoring a winning payment strategy in any market. Building trust and ensuring secure digital transactions will be key for unlocking the full potential of e-commerce in emerging markets.”

Are payments in emerging markets overtaking the Western world?

Craig Ramsay, managing director and business development head at payments solution provider Episode Six, also comments: “Emerging markets are in the process of moving from cash directly to faster digital payment methods, like QR codes and wallets.

Craig Ramsay, managing director and business development head at payments solution provider Episode Six, payment trends markets
Craig Ramsay, managing director and business development head at payments solution provider Episode Six

“In these markets, cheaper transaction fees hold great appeal – the use of UPI in India, PIX in Brazil and Dimo in Mexico are all instances of digital-first propositions that offer seamless and secure payments to the unbanked and underserved.

“Governments in emerging markets are focused on payment solutions that are affordable, safe, and accessible to everyone. That means creating instant payment solutions that don’t require sensitive financial information. They’ve been a rousing success and propelled the adoption of digital payments in these countries.

“Overall, there’s a huge institutional investment in real-time payments within emerging markets, the Middle East is already the fastest-growing market globally. They’re speeding past card payments, a step that we relied on for so long in the Western world.”

The payments experience

Arnaud Crouzet, VP of Fime Consulting, the advisory service provider, discusses how the issue of financial inclusion changes based on the market: “For merchants, the payment experience has become business critical, and vital to their relationships with customers. They need frictionless payments integrated into the customer buying journey.

Arnaud Crouzet, VP of Fime Consulting, payment trends markets
Arnaud Crouzet, VP of Fime Consulting

“However, this expected buyer journey can vary significantly between emerging and established markets. As a result, domestic schemes are uniquely positioned to offer the bespoke payment framework required while bringing enhanced payment sovereignty to a nation. By providing localised support, domestic schemes are best positioned to meet the specific needs of the nations they serve.

“In emerging markets, the challenges of financial inclusion are far more prevalent than in established markets. In regions where smartphone penetration is far lower or a significant percentage of the population is unbanked, merchants need a way by which to offer enhanced yet still affordable payment experiences. This is essential to avoid excluding the unbanked or those without a compatible smartphone. New schemes such as that of Bangladesh Bank helping create an accessible, secure economic platform that meets the needs of the emerging market.”

Marca Wosoba, GM of global reach and head of payments at the Royal Bank of Scotland, also explains how emerging markets actually have an upper hand: “Emerging markets outpace their developed counterparts when it comes to the growth of real-time or instant payments.

“This is because emerging markets are less constrained and more willing to embrace new technologies and systems, making them a hotbed for innovation. Some of the most exciting innovations are happening in Africa with the mass adoption of digital payments, such as with M-Pesa in East Africa.”

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