Digital Payments drive Social change in emerging markets
- 25% of the global population does not have access to the traditional banking systems.
- Emerging markets are home to 85% of the global population and nearly 90% of people under 30 reside within the emerging markets.
- Branch and ATM growth rates are falling emerging markets.
What does this translate into?
Emerging markets are leapfrogging from a largely disconnected and cash-oriented society to one where mobile devices are bringing consumers to the forefront of technology. They are leveraging technology. More importantly, they are driving innovation to add more relevant features and drive down cost. Practical, Affordable and Relevant (PAR).
So, what do we mean by PAR.
PRACTICAL: A lot of users in emerging markets have never used a device – PC, phone, etc. The device and/or app experience must be easy to access and easy to learn and use.
AFFORDABLE: The device must be affordable. The monthly plans have to be very inexpensive. We saw innovation in India’s mobile phone industry, where incoming calls were free. It allowed a lot of people to acquire phones just to receive call. Couple that with the business model innovation when Reliance introduced the Jio platform – reducing the cost of data to pennies per month. This type of technology and business model innovation drives usage. No wonder Reliance Jio is worth tens of billion $.
RELEVANT: Cheap or free are great options. However, consumers demand value. They need to be able to get real work done. We see that in the area of digital payments – the unbanked are making payments via money stored on mobile wallets. Payments are being triggered via SMS messages or QR codes. This engagement model will drive change.
Per World bank data, two third of the unbanked people (globally) own a mobile phone. This is an opportunity for financial inclusion. This is an opportunity to redefine the supply chain and bring in the unbanked community. Technologies like Blockchain provide a level of security and transparency that will drive growth in global commerce.
Lastly, there is the issue of infrastructure and scalability. Emerging markets are weak on digital infrastructure. While tremendous progress has been made in the last 10 years, we saw clear issues during the Covid19 crisis, where internet speeds reduced significantly (plus outages). Scaling a solution to millions of uses take significant resources – build the device, good UX to make sure the users can use it rapidly, relevant apps that provide value. This is clearly an area where Public-Private partnerships need to take precedence. Build infrastructure and digital solutions in tight partnerships to ensure sustainability even in the harshest conditions.
The challenges of the emerging markets are now driving innovation. Payment and digital commerce are at the forefront of this transformation. TraQiQ offers Digital Commerce solutions that have been in production for over 10 years and are continuing to grow, innovate and support a PAR world.