Too Early to Bring Payments to Emerging Markets?

Tremendous GDP growth in China and India has recently attracted attention from payments firms hoping to deliver mobile solutions to consumers. But a new Gallup poll might inspire a bit more hesitation on the part of those expanding firms going forward.

In particular, the poll shows a significant level of dissatisfaction among the poorest consumers in several emerging markets — precisely the target market for many U.S. payments firms’ mobile money-based global expansion plans.

Gallup surveyed thousands of residents in those two nations — along with Brazil, Russia, and South Africa (“BRICS,” you could say) — to gauge consumer satisfaction with living standards. In a majority of cases, the nation’s poorest quintile reported widespread displeasure.

Residents in Brazil and China gave Gallup the thumbs up on economic conditions. Of the five countries, Brazil leads the way in living standard satisfaction, with 77 percent of those polled expressing contentment. China is behind just slightly, with a 72 percent proportion of happy people.

In India, 61 percent are satisfied — but that ratio has fallen since last year, Gallup says, down from 64 percent. Meanwhile, only 45 percent of residents in South Africa, and just 39 percent of people in Russia, say they are satisfied with living conditions.

The breakdown can be explained at least in part with each nation’s poorest residents. In Brazil, a majority of that nation’s poorest quintile has nonetheless been satisfied with living conditions since 2009; the same has been true of China since 2010. But in Russia, only a third of the nation’s poorest quintile says it is satisfied with conditions. In India, the ratio is 42 percent; South Africa’s proportion is lowest, at 30 percent.

Several U.S. firms have recently invested significant resources in delivering payments solutions to these countries’ poorest residents. Banks, payments networks and prepaid service providers are working with mobile tech firms to bring commerce capabilities to every SMS-enabled phone on the planet, of which there are many. A partnership between Monetise, Visa, and HDFC Bank in India is a key example.

But as Gallup shows, seeing a positive GDP growth rate and assuming a “rising tide” for the entire country may be a faulty business strategy.

Full results from Gallup, as well as details about the research group’s methodology for the survey, are available online.