What can payment differences around the world tell us about the future of commerce?
19 / 05 / 2023
One thing I love about payments is the sheer variety of our industry. Payment habits and trends differ from country to country, stemming from the unique history of each region and how that has shaped and defined their culture.
For example, in Africa, the remoteness of some communities, together with a lack of trust in traditional banks, has led to the rise of mobile money (e.g. M-PESA) and agent banking, where local corner shops act as “agents” to provide access to banking services. In India and Brazil, which were high-cash economies, the government-led schemes UPI and Pix have seen huge adoption in recent years, converting many cash payments to digital ones. Many parts of Asia have led the way in the use of mobile devices for payments. And in Europe, debit and credit cards, which remain the dominant payment means today, have seen innovation after innovation over the last 40 years. Indeed, the idea of a retailer using a card imprinter to make a carbon copy of the embossed details on your card seem as old-fashioned now as paying by cheque.
But what can these cultural differences tell us about the future of commerce?
In the Worldline Discovery Hub we are often finding that trends that are taking-off in one region can signpost what the future may hold in other geographies. For example, Damien Cramer looked at digital wallets through this lens in his post Digital Wallets: An east vs. west divide? And in her article Alt-Commerce: the era of a new economy, Olivia Viniss noted that, in China, group buying platforms have taken off and suggests watching out for this trend picking up in Europe, saying:
“A price-led model that has emerged from China, led by firms like Pingduoduo, allows consumers to place orders in groups to get better deals, often directly from manufacturers. During the Covid-19 lockdown in Shanghai, there was a surge of self-organised community groups led by consumers who purchased food and other products to overcome supply shortages. In other countries in Southeast Asia, there are also similar examples of group-buying led by reseller agents.”
However, just because something has worked in one country or region doesn’t mean that it will automatically take-off somewhere else. Indeed, when Angelo Caci (Managing Director of Syrtals Cards & Beyond) joined our Navigating Digital Payments podcast, I asked him why UPI and Pix had been so successful and whether we might see similar initiatives succeed elsewhere. He responded that behind this success was:
“Strong political will and support, no fees for consumers and a low cost for merchants, ease of use, real-time transactions and 24/7 availability. In these countries cash was strong and there was a void to fill to enable digital financial inclusion. It has worked in India and Brazil, it doesn’t mean we will have the same conditions to make it happen in other regions.”
Different payment preferences and habits exist not only between countries, but also inside countries. One person might prefer cash, someone else a debit card, and someone else a crypto-wallet. There is a danger that if only one segment is catered for (e.g. tech-savvy smart phone owners) then some in people can be left behind and become excluded from society. This is one reason the Worldline Discovery Hub conducted a study into the payments digital divide, where we tried to understand what drives people’s payment preferences. You can see the findings in our infographic, report or our presentation and panel discussion during Financial Inclusion Week 2022, where I was joined by Karen Elliott (Professor of Practice in Finance and Fintech at Birmingham University Business School) and Oana Ifrim (Lead Editor at The Paypers).
Returning to what I said at the start of this post, I think these few examples show how much diversity there is in in how people prefer to pay and how innovation can come from appreciating these differences and seeing how concepts and ideas that are working in one area might be applied to another. As we set out in our Navigating Digital Payments report, this diversity in payments is not going away, in fact it is set to increase. But this increasing diversity puts a responsibility on the payment industry to make this complex landscape easy to understand, access and use, for all merchants and consumers.