Emerging markets, including India to drive e-payments: PwC

With electronic payments witnessing a boom combined with emerging new market players and alternative business models, the payments landscape in emerging markets, including India, is expected to transform, says a PwC report.

“The growth of economic power within the emerging markets and their potential to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem,” multinational accounting firm PricewaterhouseCoopers said in its report titled, ‘Emerging Markets – Driving the Payments Transformation’.

Vivek Belgavi, FinTech Leader, PwC India said, “Given the underlying infrastructural issues in emerging markets, there needs to be a focus on developing the infrastructure both for issuing and acceptance of payments products and instruments. Alternate payment instruments and modes like mobile wallets, virtual cards and accounts, social media and contactless payments are gaining traction for specific use cases, especially the unbanked customer base, driven by technology, customer needs and declining margin.”

While payment banks are expected to start services in India in 2016, there are still issues with electronic payments. Though there are over 25 million credit cards and 660 million debit cards in India, there are just 1.4 million points of sale terminals as of March 2016. Brazil in contrast has 4.5 million. Debit card transactions in India grew 43 percent whereas growth in credit card transactions was a more sedate 27 percent. As far as automated teller machines (ATMs) are concerned, India has around 2 lakh machines against China’s 7 lakh.

“Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry,” said Hugh Harley, financial services leader for emerging markets, PwC.

The report said that the payments ecosystem will also be redefined by regulatory interventions, to balance the disruption of alternative payment service providers with the reliability of traditional players. Noting 85 percent of the global population resides in emerging markets, it said that customer expectations are driving the change in payments industry in these markets.

“Nearly 90 percent of people under 30, which account for 75 percent of the online transactions, reside within the emerging markets. This is favouring the growth of online transactions, which is in turn curtailing the black economy and stimulating economic growth.”

The report further elaborates on how basic financial services lag behind achievements like literacy and urbanization and in response, there has been a rapid expansion of new economically viable technologies and innovations like e-banking and mobile money.

It adds that proliferation of smartphones and tablets, which are serving as a convenient, cash free and card-free financial transaction medium is driving growth in e-commerce spending, and there is a rapid development of new payment concepts based on mobile infrastructure initiated by the online retailers.