“Cash is king” and “if it ain’t broke don’t fix it” are common phrases heard in the payments industry. However, digital payments have had an undeniable impact in the sector, and according to new research from Boku, the global network for localised payment solutions, there has been a continued decline in the market share of traditional card payments.

Produced in collaboration with Juniper Research, the Boku report, titled 2024 Global Ecommerce Report: The Changing World of Payments surveyed 10,500 consumers. It analysed data from 37 major markets across the globe to identify global, regional and country specific trends. The findings highlight significant and rapid consumer shifts in e-commerce payments away from the traditional card networks (and in emerging economies cash on delivery) towards local payment methods such as digital wallets.

Nick Maynard, VP of fintech market research, at Juniper Research said: “Our research for this report from Boku highlights that against a backdrop of continued strong growth in e-commerce, the global card schemes (credit, debit and card-linked wallets) continue to lose share to regional and local payment methods. This is a trend seen at an aggregate global level but also repeated in every region across the world.”

Emergence of A2A payments

Further findings revealed that account-to-account (A2A) payments (instant payments and bank transfers) such as PIX in Brazil, UPI in India, or iDEAL in the Netherlands are revealed as the fastest-growing payment method within e-commerce. A2A payments are forecast to more than double and become the fastest growing local payment method within e-commerce. This accounts for 18 per cent of all e-commerce transactions by volume by 2028 globally (up from eight per cent in 2023).

Furthermore, instant A2A and non-card-linked wallets will account for over 50 per cent of e-commerce transaction value globally by 2028.

Declining card transactions and growing local payment methods.

The report also found that card values will decline to 19 per cent of transaction value by 2028 (down from 31 per cent in 2023). By volume, card payments will account for just 30 per cent of e-commerce transactions in 2028 ( down from 41 per cent in 2023).

By 2028, local payment methods will account for 58% of ecommerce transaction values (up from 47 per cent in 2023), accounting for a majority of transaction value online for the first time. Boku also estimated that in four years 37 per cent of all individuals globally will actively use local payment methods.

Younger generations are paving the way

Payment choice is key for consumers around the world. Today’s mobile-first generations – with whom access to and affinity with card networks is low – prioritise the convenience and seamless nature of paying with digital wallets, direct carrier billing and Instant A2A payments. As with the adoption of many new technologies, the adoption of localised payment solutions by younger generations and populations is paving the way for adoption by older consumers.

Stuart Neal, CEO of Boku said, “Our research shows the way the world transacts online is changing fast, and that change is being driven in the main by a consumer preference for convenient, seamless payment methods like digital wallets, direct carrier billing and Account to Account transfers.

“Merchants now realise that the key to their future global growth and success lies in their ability to offer consumers more payment choice. At Boku, we’re excited to provide the world’s largest merchants with access to our global network of localised payment solutions so their customers can more easily pay for the things they love, the way they want – no matter where they are in the world.”

Regional takeaways include:

Africa & Middle East

Africa & Middle East is in many ways already a local payments and mobile money success story, with the region’s services such as M-PESA and MoMo seeing strong adoption. As such, merchants require highly localised payments strategies in these markets to ensure continued results.

Asia Pacific

Asia Pacific payment requirements are changing quickly. While card payments will continue to account for a significant amount of payments – around a third of e-commerce payments by volume by 2028 – local payment methods are fast gaining traction, winning market share from card payments.

Europe

Europe, in particular, will see a dramatic shift away from cards, with the proportion of e-commerce transaction volume featuring cards dropping from 53 per cent in 2023 to just 30 per cent in 2028. A2A payments will experience massive growth from 16 per cent volume of transactions in 2023 to 25 per cent in 2028, due to the ability it provides in moving money without additional intermediaries.

Far East and China

Far East and China is a mobile wallet-dominated market, with great emphasis on ‘super apps’ such as WeChat and Alipay. E-commerce payment methods are anticipated to stay somewhat consistent with this over the forecast period with little shift in the payment methods used, due to how well-established the market already is.

LatAm

LatAm is a market in motion – e-commerce payment methods are changing rapidly, which means merchants must alter their acceptance strategies, or they will fail to take advantage of e-commerce growth. PIX is the obvious early success story, but CoDi in Mexico, as well as PSE in Colombia are also winners.

North America

North America is a heavily-developed market in regards to e-commerce, with the majority of consumers having access to bank accounts and plastic cards. One of the greatest concerns for e-commerce consumers across North America is the ability to checkout seamlessly, as well as having the ability to pay in installments resulting in growth of lower friction payment methods such as; Buy Now Pay Later (BNPL), A2A payments and non-card-linked wallets.

The Indian Subcontinent

The Indian Subcontinent is seeing an increasing shift towards local payment methods, with A2A payments in particular gathering momentum. Local payment methods are anticipated to have a sizable share of payment methods by 2028, equating to 72 per cent of e-commerce transactions by value, an increase from 58 per cent in 2023.

India is the largest driver of both volume and value within the Indian Subcontinent, therefore it is unsurprising that the highly successful UPI scheme is driving local payments forward, providing a template for future growth.

This March, The Fintech Times is shifting its spotlight towards insurtech, exploring the potential impact of blockchain technology on insurance processes and its role in instilling trust in digital transactions.

Navigating the intricacies of regulatory frameworks presents a formidable challenge for insurers operating on a global scale, as regional variations significantly influence their strategies and operations worldwide.

These regulatory disparities dictate product development, distribution methods, capital requirements, risk management practices, and market entry decisions.

To delve deeper into this, we consulted industry experts for their insights on how regional regulations shape insurers’ approaches and activities across diverse markets.

Unified approach

Regional variations in regulatory frameworks have significant impacts on insurtechs and insurers’ strategies and operations worldwide, says Caroline Hanotiau, general counsel at insurtech Qover.

“The operational complexity of managing compliance efforts and monitoring updates and changes in regulations can be resource-intensive. Additionally, stringent regulatory requirements in certain regions may act as a barrier to market entry, limiting potential expansions for insurers.

“Innovation can also be constrained by regulatory requirements in certain regions, which may restrict product development and distribution rules.

“However, at Qover, we have developed a unified API that allows us to navigate these challenges and ensure compliance across all countries, while still innovating and providing consumer protection.”

Central bank regulation

Mustafa Melhem, business development manager for insurance at Eastnets, a global provider of compliance and payment solutions for the financial services sector, addresses the importance of central bank regulation in fostering stability and mitigating fraud in well-regulated insurance markets.

“In many regions, the insurance sector is regulated directly by the central banks through a dependent or independent insurance authority. We consider these regions as well-regulated insurance markets.

“They offer a strong and stable insurance market, empower the local insurance sector, foster better partnerships with the global reinsurance and financial sectors, and protect policy holders and beneficiary rights.

“These markets also offer protection of any third parties’ rights, such as healthcare providers and other insurance service provider. They also empower the insurance companies’ solvency margins and ensure strict control of fraud and money laundering.

“In other regions, where the insurance sector is reporting to different governmental departments or ministries, the central banks are not fully involved and therefore these regions are poorly regulated. So, these markets are lacking the above benefits, which encourages increased fraud.”

Robust IT systems

“Insurers are, and have always been, under enormous pressure to make their products conform to the regulatory needs of every geography they serve,” says Sam A. Shay, creative director at Socotra, which provides a modern enterprise platform  to insurance businesses.

“Even a small insurer that sells only one basic personal auto product in the U.S. has to create a variant of that product for each state, greatly increasing the complexity of doing business across any kind of border. The resulting amount of compliance work, product definition and more that goes into growing into larger regions or offering a more expansive product portfolio can be incredibly cumbersome.

“The insurers best-poised to handle this are the ones that use IT systems with robust insurance product inheritance models that allow them to easily configure each of their products to suit every regulatory environment the product is offered in – rather than offering unique products for every geography.”

Managing compliance

“Regulatory differences significantly shape the strategies and operations of global insurers, influencing product development, distribution methods, capital requirements, risk management, compliance, and market entry, including mergers and acquisitions (M&A),” says Ryan Cox, senior director and head of AI Business at digital transformation consulting firm Synechron.

“Insurers must customise their products to comply with various regulations, align distribution strategies with legal frameworks and maintain adequate capital to meet solvency requirements. They also need region-specific risk management strategies to navigate varying compliance standards and associated costs from one region to another.

“Market entry decisions hinge largely on regulatory landscapes, with insurers preferring markets with more favourable regulations while acknowledging regulatory challenges.

“M&A activities require thorough assessment of regulatory impacts and approvals across jurisdictions. Despite regulatory complexities, insurers can find opportunities by proactively managing compliance, maintaining operational flexibility, and using technology to enhance regulatory processes’ efficiency.”

Adaptable strategies

Highlighting the dynamic impact of regional regulatory variations on insurers is Javed Akberali, co-founder and managing director of insurtech Wellx, who said:

“Regional variations in regulatory frameworks significantly impact insurers’ strategies and operations worldwide. Differences in data protection laws, licensing requirements, and compliance standards require insurers to adapt their business models and strategies to each jurisdiction.

“This variation necessitates a flexible, informed approach to global insurtech operations, underscoring the importance of understanding and navigating these disparities to succeed on the international stage.”

Membership organisation, Tech East, which is aiming to make the East of England the next global tech cluster, has commissioned consultancy firm Whitecap Consulting to create a comprehensive report on fintech in Norfolk. 

The new report will look to map and quantify the landscape of the fintech industry in Norwich and the rest of the county, as Tech East begins its campaign to develop the fintech scene across Norfolk – driving collaboration and investment in the sector.

Specialist data partner mnAI will also produce a proprietary Impact Index assessment on the contribution of cohort firms to ESG (Environmental, Social and Governance) and sustainability goals to support the report, which is planned to be published at a launch event on 24 April.

A Hackathon delivered in association with Aviva Foundry and a public event in partnership with FIGNorwich (Financial Industries Group) will also form part of the new initiative, alongside promotion of the sector on Tech East’s website and other online channels. The Hackathon will take place from 8 to 9 March and will bring together tech, innovators and businesspeople to explore key challenges and devise solutions over two packed days of collaboration.

Tim Robinson, chief executive of Tech East, commented: “Norfolk’s growing fintech community is already playing a pivotal role in driving innovation and advancement within the financial technology sector.

“Our goal is to establish a vibrant ecosystem well connected to the wider UK fintech industry that encourages collaboration, knowledge exchange, and convergence of fintech startups, established entities, investors, and supporting infrastructure.

“We are inviting local fintech businesses to get involved in this project and attend key events so they can contribute to the development of the sector, benefit from future opportunities and connect with industry leaders.”

‘Getting Norwich and Norfolk on the fintech map in the UK’

Cllr Fabian Eagle, Cabinet Member for Economic Growth for Norfolk County Council, said: “Norfolk County Council is delighted to have been able to support this study into the potential of a fintech cluster in Norwich. Fintech represents a key opportunity to inject growth and emerging skill sets into the local economy.

“We have a growing number of fintech businesses within Norfolk and fantastic assets, such as the Fintech Lab at the Norwich Business School, UEA. We have no doubt that businesses coming together collectively will add considerable value and critically, bring their voice to the national stage as this exciting sector develops.”

Steve Davidson, Chair of FIG, also commented: “FIG is delighted to be working in partnership with Tech East on this project. The financial and professional services cluster in Norwich and Norfolk is well established. We know the value of collaboration and innovation and investing in technology.

“This is why we are strong supporters of this initiative – the continuing emergence of a thriving fintech sector is fantastic news for all of us. Moreover, we hope it results in getting Norwich and Norfolk on the fintech map in the UK”

Web3 games developer Animoca Brands and Saudi Arabia’s NEOM Investment Fund announced a new partnership on Oct. 30 to drive Web3 development in the region. 

According to the announcement, the new deal will have Animoca working with NEOM to build Web3 enterprise service capabilities. The planned Web3 services are intended to be applied globally, though they will first be deployed to support advancements in emerging tech in the Saudi capital, Riyadh and the NEOM region.

NEOM is a region in northwest Saudi Arabia that is being built into what the government calls a “living laboratory” for a new future society. It is envisioned to be hyper-connected with emerging tech and a hub for innovation.

The Animoca partnership plans to establish a hub within NEOM to support the local Web3 ecosystem and is a part of Saudi’s greater “Saudi Vision 2030” plan for increased diversification economically, socially and culturally.

Majid Mufti, the CEO of NEOM Investment Fund, commented on the development:

“Web3 technology and infrastructure development will not only be an important foundation of NEOM’s tech stack and architecture, but also has potential to revolutionize global industries.”

The NEOM Investment Fund is also proposing to invest $50 million in Animoca Brands. 

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Yat Siu, the co-founder and executive chairman of Animoca Brands, described part of his vision for the Web3 ecosystem as “the emergence of a new meta-nation.” With the emergence of this new deal with NEOM, he said:

“Now NEOM could well become the first region to fully harness the power of blockchain.”

In recent years, the greater Middle East region has been rapidly accelerating its adoption of emerging technologies. Aside from its NEOM project, Saudi Arabia recently partnered with universities in China to develop an Arabic-based artificial intelligence (AI) system to process queries in its local language.

On Oct. 18, OpenAI, the developer of the popular AI chatbot ChatGPT, announced a partnership with Dubai-based technology holding group G42 focusing on Middle East expansion.

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