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.

“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.

“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.

“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.

“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.

“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.

“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.”

FICO, the analytics software company, has published its ‘FICO UK Credit Card Market Report for September 2023’ revealing that credit card spend is up from last year, with cash sales diminishing 5.8 per cent in the same time frame.

The research comes from client reports generated by the FICO TRIAD customer management solution. It found that in September 2023, credit card spend was, on average, £805; £30 more than in September 2022 and almost £100 (£95) more than in September 2021.

Commenting on the findings FICO said: “Following a yo-yo summer of consumer spending and credit card management, September 2023 saw the average spend on credit cards fall slightly, albeit it remains higher than the previous year. With the festive season approaching and advertisers ramping up their spending push, it’s likely spending will rise in November and December, although the question will be how much, given the other well-documented financial pressures consumers are facing.”

Caution needed

In the past two years, December’s credit card spend has been £50 more than September’s figures. If this year and next year follow the same trend, consumers could be spending around £900 using credit cards in December 2024 on average.

However, lenders should be wary. There has been year-on-year growth of 9.3 per cent, 10.7 per cent and 17.9 per cent in the percentage of accounts missing one, two and three payments respectively. When looking at singular payments missed, September 2023 was a stark increase compared to August of the same year as there was a 13.5 per cent increase in missed payments.

FICO added: “For those customers missing two payments, the average balance has marginally decreased by 0.6% month-on-month at £2,605, but this has been trending upwards over the last few months.”

Rising card balances

The analytics software company also said: “Driven by the increase in spending, there has been a slight monthly increase in average credit card balances. There has also been an increase in the number of customers missing payments, illustrating that the ongoing economic volatility continues to impact consumer spending. Inflationary pressures and a weak economic outlook mean average balances are likely to continue an upward trend, remaining higher than last year for some months to come.”

In fact, the average credit card balance remained relatively stable compared to August, at £1,735, but continued the longer-term upward trend with a year-on-year increase of 8.6 per cent.

In May 2022, the percentage of payments to balance peaked at 42 per cent. Since then, there has been a downward trend and it currently stands at 38 per cent. This follows up-and-down movements since a two-year low in April 2023.

Return of cash?

The research also revealed that more and more cash has been used since March 2023. This upward trend continued in September as there was a 1.6 per cent month-on-month increase and a 4.3 per cent increase year-on-year. However, despite a rising proportion of cash sales to total sales in September 2023, when compared to the month prior, looking at the larger picture, the total number of cash sales to total sales has dropped 5.8 per cent since September 2022.

The spot trading volume of Coinbase, one of the largest crypto exchanges in the United States, has dropped by more than half, highlighting a shift in interest in crypto trading. 

Citing analysis from digital asset data provider CCData, mainstream media outlet Bloomberg reported on Oct. 11 that Coinbase registered around $76 billion in spot trading volume. Compared to its quarterly record for the third quarter of 2022, the new data shows a 52% drop in spot trading for Q3 2023.

According to the report, the new numbers are the lowest they’ve ever been since before Coinbase got listed on the Nasdaq Stock Market in 2021, which was also months before the prices of crypto were at their peak.

Despite the decline in its spot trading volume, the report noted that Coinbase gained market share in the last quarter as crypto exchange Binance came under increased scrutiny from regulators. 

On Oct. 6, crypto exchange Binance’s spot market share dropped for the seventh consecutive month. The trading volume lost has reportedly been grabbed by competitor exchanges such as Coinbase, Bybit and DigiFinex.

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Despite the lowering trade volumes and market shares for crypto exchanges, some crypto trading platforms have had success in terms of website traffic. While Binance and Coinbase saw sharp declines in terms of traffic, data back on Sept. 18 showed that exchanges like OKX, HTX (formerly Huobi), Gate.io, CoinW, XT.com and Bitmart had notable increases in web traffic year-to-date (YTD). According to the data, HTX’s web traffic saw a 200% increase, while Gate.io and Coinw saw a traffic surge of 143% and 66% YTD, respectively.

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