Payment mythbusters – how people really pay in emerging countries

This editorial was first published in our Online Payments and Ecommerce Market Guide launched on 1 November 2017. The guide features several important thought leadership editorials from ecommerce and payments industry professionals, which makes it a top-reference source for anyone involved in the payments ecosystem.

Local knowledge is the key ingredient for any successful global business expansion, especially when it comes to payments.

ASIA PACIFIC

Myth: Recurring payments in India are not supported by online wallets

Truth: India is witnessing exponential growth in online wallets. We are seeing, on average, about a million new mobile wallet users each day and ever-expanding internet and smartphone penetration continue to drive this growth. A key value proposition for wallets is the existence of this strong mobile-environment and its ease of access – a similar motivator for consumers to sign up for subscription billing. Yet, the market has been slow to bring the two together, but that does not mean it cannot be done. Through our local partnerships, we offer an innovative solution that gives merchants the ability to accept recurring transactions from consumers using online wallets. From a merchant’s perspective, there are a lot to gain from this and it can help maximise customer lifetime value.

Myth: Consumers prefer to use credit cards for online purchases in Vietnam

Truth: Cash is still king in Vietnam and that is also true for online purchasing. As the country is going through major changes, there is huge potential for growth here. In fact, it is one of the fastest growing economies in the region. In 2016, Vietnamese consumers spent over USD 4 billion shopping online. It was a 37% hike from the previous year. This is expected to rise to USD 10 billion by 2020, with each shopper spending an average of USD 350 each year online (Vietnam E-Commerce and Information Technology Agency (VEITA) report April 2016). While demand is undoubtedly there and rapidly increasing, consumers still overwhelmingly prefer to pay for their online purchases using cash. Largely, this is due to habit and poor financial infrastructure. Digitisation is going to come from the banking industry and merchants need to have access to local knowledge to best navigate in the region and to take advantage of the growing demand.

LATIN AMERICA

Myth: Debit cards in Mexico cannot be used for online purchases

Truth: Unlike the rest of Latin America, Mexico has significantly more debit cards (134 million) than credit cards (30 million). By default, many debit cards are unable to process online transactions, but this is beginning to change. We are seeing local acquirers partnering with major card brands to open up the market. Debit cards, with very few exceptions, can now be used to transact online for first-time and can also be used for recurring payments. Local acquirers are, therefore, essential for merchants. Ignoring them would mean missing out on a huge revenue opportunity in Mexico. The majority of cross border digital purchases made by Mexican consumers are primarily from the US. This signals a growing demand for American goods and services and international retailers are paying attention.

Myth: Brazil’s Boleto and Japan’s Konbini can only be paid physically and in person

Truth: Boleto and Konbini are popular in their relevant markets with unbanked consumers. It enables customers to make purchases online and pay for them over the counter at their local convenience store or supermarket. However, both payment methods can just as easily be used by consumers with bank accounts and paid completely online or on their smartphones. By offering these types of payment methods, you are enabling consumers, previously unable to make international purchases online, to buy from your ecommerce business. This is particularly true for the Brazilian market where the majority of credit cards cannot be used
for international purchases.

AFRICA

Myth: There’s zero liquidity for Nairas (Nigeria’s currency)

Truth: A predominantly youthful population of over 180 million, an 80% smartphone penetration rate and a low credit card use make Nigeria a great market for digital payments. Although the country’s digitization journey has been a slow one, we are expecting to see greater liquidity for Nairas, as more is done to encourage consumers to rely less on cash and embrace digital payments. Debit cards are overwhelmingly the most popular online payment method, but most cannot be used for international shopping. To leverage this huge consumer base, merchants must offer solutions that support local cards. This is one of the mos important lessons we have learned since we entered Nigeria. Here, we offer a robust network of local acquirers, which can help assure that revenue generated from a Nigerian customer base can be successfully remitted to the merchant.

About Rossini Zumwalt

Rossini has extensive experience in setting up strategy and managing operations for ecommerce payments and risk, both as a merchant and solution provider. She served as a Senior Director at Symantec and, prior to that, as Head of Global Treasury. She also held several leadership roles for the Merchant Risk Council.

About Abhishek Banerjee

Abhishek has a deep background in payments and fraud prevention engineering, along with big data and analytics. Before joining Emergent Payments, Abhishek was the Head of Engineering for payments and risk at Western Union and prior to that he was in a similar position at Symantec.

About Emergent Payments

Emergent Payments offers a total global and local payments solution for high-growth markets. They serve as both a payment facilitator and payment gateway for digital merchants in Asia Pacific, Latin America, Eastern Europe and Africa.