Though emerging markets may not have access to the same financial and payments infrastructure, these economies are making strides in seizing the opportunity for next-generation commerce.
With the help of advanced technologies and connected devices, many emerging markets around the world are able to bypass the need for a traditional payments infrastructure and instead access payments in new ways.
But as emerging markets continue to leapfrog into new payments opportunities, who is there to catch them when they land?
Ravi Pochiraju, the new SVP of Growth Markets for ACI Worldwide, said enabling and supporting these emerging markets in their pursuit of greater access to payments is just part of his 100-day plan for his new role at ACI.
In these developing nations, where debit and credit cards may not be the go-to payment method like in the U.S., there is a need for digitally driven or cloud-based payment solutions.
For ACI, Pochiraju said this means delivering on unique go-to-market strategies and value propositions for its clients and partners.
The Global Payments Gap
A good example of the influence of leapfrogging opportunities can be seen in India, where Pochiraju explained there are roughly 624 million debit cards in circulation but only about 10,000 points of sale on which those payment cards can be swiped.
“Ninety-four percent of these debit cards are actually in rural India, and 95 percent of these 110,000 POS terminals are in urban India,” he said, noting the “monstrous gap between having plastic in hand and not being able to utilize it.”
In India’s predominately cash-driven economy, many have said the best thing to do is to install ATMs to help address the problem. While installing more POS terminals could cost $250 per terminal, installing ATMs may cost anywhere between $18,000 and $40,000 each, Pochiraju estimated.
These types of infrastructure gaps are creating the scenarios in which emerging markets have no choice but to leapfrog.
AGS TTL, working with ACI software, is working to reduce the cost of deployment for new payments banks in India, thereby helping to bridge the gap in banking services that exists for millions there today.
Because the environment for commerce continues to evolve differently across these various markets, it suggests that payment solution providers will have to rely on a very different set of strategic considerations in order to meet market needs.
Pochiraju noted that concepts of eCommerce, mCommerce and omnichannel can be quite esoteric in these scenarios, because a person in an emerging economy may not always be able to move from desktop, to tablet, to mobile depending on when and where they want to complete a transaction.
"It sounds incredibly intellectually stimulating, but from a more practical point of view, it doesn't happen.”
Following The Market Potential
Despite its economic crisis and subsequent pressure to adapt, Brazil remains an emerging market with tremendous opportunity. Pochiraju explained that, in many cases, the best time to pursue entering a country is actually when the economy is facing problems or challenged.
Pochiraju also noted the growing commerce opportunity throughout the ASEAN region, which, when treated as its own ecosystem, has the fourth or fifth largest economy in the world.
While he said that, in more ways than one, the cluster of countries is as different as they can be, there are still deep ties that go back centuries within the area, and there’s currently a significant amount of cross-border interactions taking place.
Even in Indonesia, where a demographic of 300 million people rivals that of the U.S., mobile devices have enabled the country’s capital to rank as the place with the highest density of Twitter messages in the world.
"We are now looking at what was considered to be a third-world and now is more respectably referred to as an emerging economy, dominating a medium like Twitter,” Pochiraju said.
When it comes to China, Pochiraju explained that there’s no denying that, to be successful in the global economy, you've got to succeed in the nation that is home to one-seventh of the world's population.
"On that count, both India and China need to be part of any growth story,” he added.
But capitalizing on the opportunity in China and not ending up as “roadkill” on the country’s economic roads mean being able to better understand and operate in the regulatory environment.
Reimagining The Role Of Commerce
Pochiraju explained that, regardless of the payment form factor of the country of origin, the ultimate goal is for commerce to just happen.
In these emerging regions, which can be very fertile from a payments perspective, the challenge is helping entities to ignite new solutions and change what payments really look like in these countries.
ACI’s role, Pochiraju said, is to facilitate collaboration among FinTechs, banks, merchants, regulators and those that are engaged in the payments value chain — while also enabling an immediate payments value proposition in a universal and secure way.
While it can be challenging to integrate a variety of payment form factors and methods across markets, Pochiraju said that ACI’s mission is to take away the pain of connectivity.