Mobile Identity Is Flipping the Infrastructure of Cross-Border Payments

In identity verification, who someone says they are across financial services can often depends on where they live.

In mature economies, financial identity is commonly anchored in banking relationships. Opening a bank account establishes identity, enables payments, and unlocks access to credit, savings and commerce.

But across large parts of the world, including Africa, the Middle East, and South Asia, that sequence never fully materialized. Mobile phones arrived before banking infrastructure could scale, and telecom operators, not banks, became the institutions with the most consistent, verified relationships across their distribution geographies.

This deep but latent well of digital identity capabilities has now caught the eye of global payment networks, as evidenced by the Wednesday (Feb. 18) news that Ericsson has launched a money movement partnership with Mastercard.

By aligning telecom identity with global payments reach, Ericsson and Mastercard are betting that linking telecom-based wallets directly into an international payments network can effectively upgrade local mobile-money schemes into cross-border financial instruments thanks to the existing compliance-grade identity frameworks.

Financial services, in other words, could become another form of network traffic in emerging markets. Something authenticated, routed, and delivered alongside voice and data.

See also: Volatility Forces Banks and FinTechs to Rethink Cross-Border Strategy

Shift in Financial Identity

The traditional financial stack treats identity verification as a prerequisite to service delivery, typically handled during account onboarding. In mobile-first markets, however, identity is established much earlier through SIM registration requirements, which often mandate government-issued identification, in-person verification, and ongoing subscriber validation tied to device usage.

These processes, designed originally for national security and fraud prevention, have had the knock-on impact of creating one of the largest distributed identity infrastructures in the world, particularly in emerging regions.

A new digital wallet provider entering these mobile-first markets must build customer verification systems from scratch, often replicating work the telecom sector has already performed. By contrast, a telecom operator launching a financial service is starting with a prevalidated customer base, an established distribution network, and an authentication mechanism embedded in the handset itself.

The Mastercard and Ericsson partnership could signal that a deeper competition is underway across financial services, banking and payments over what is known as the “first mile” of financial interaction, or the moment a user is identified, authenticated and connected to a service.

Banks historically owned that relationship through account opening. FinTech companies attempted to capture it through app-based onboarding. Now, the situation appears poised to enter its next act.

The PYMNTS Intelligence report “Global Money Movement: U.S. Edition,” found that digital wallets have moved from a payments technology to an infrastructure for financial inclusion in cross-border commerce. And while most consumers use digital wallets for cross-border transactions, less than half of small to medium-sized businesses (SMBs) do so, signaling a white space opportunity for growth.

Read also: The Cross-Border CFO Playbook: Using Local Collections for Growth

Path of Connectivity

As digital services converge, that first mile is becoming the most strategically significant part of the value chain. Whoever controls it can shape how users access credit, remittances, insurance and commerce.

Historically, payments infrastructure expanded alongside merchant acceptance networks and card issuance programs. That model assumed a retail environment where point-of-sale hardware and formal banking relationships could scale in tandem. In many emerging economies, neither did. What scaled instead was mobile penetration.

Today, digital wallets, real-time transfers, and airtime-based transactions dominate everyday financial activity in these regions. Cross-border payment providers and global settlement networks are now adapting to connect with these ecosystems rather than replacing them. The direction of integration has reversed: Instead of mobile money plugging into banking rails, banking rails are plugging into mobile ecosystems.

The result may be less a new product than a new architecture.