A few decades ago, a certain acronym was a darling of Wall Street, a place where acronyms thrive.
BRIC. And, later, BRICS.
Shorthand for Brazil, Russia, India, China and then, adding the S, South Africa. Back at the dawn of the millennium, the acronym was shorthand for the developing nations that were deemed to be the biggest suppliers of the raw materials and services crucial in keeping the world, well, running.
To that end, on a grand stage, in payments it is the BRICS that may shape – at least in part – how mobile payments evolve.
As reported last month, the BRICS have been moving toward a unified payment system.
As CNBC noted, and per commentary from Kirill Dmitriev, head of the Russian Direct Investment Fund (RDIF), “increasing non-market risks of the global payment infrastructure” has been the tailwind behind the move toward integration.
There may a bit of geopolitics involved, as so often is the case when large-scale national and international (commerce) plans are hatched. Russia, of course, has been in the midst of developing its own payments system as a SWIFT alternative, in the wake of sanctions that were imposed by Western nations as Russia annexed Crimea.
Drilling down a bit, and as reported in March, through the Russian publication Izvestia, the joint efforts could see the creation of an online wallet that would unite the payment systems of each of those countries. The publication has noted that the wallet would work much like other digital wallets, such as Samsung or Apple Pay, and would be tied to a separate cloud platform.
The nod toward a unified cross-border mobile payments framework would go at least some way toward bringing far-flung pieces of currencies and languages – a digital commerce Tower of Babel, if you will – into harmony.
The potential is there to create a virtuous cycle, where mobile payments beget more use of mobile devices, and mobile devices beget more adoption of mobile payments.
Touring the Landscape
Consider Brazil, where, as reported in this space earlier in the week, a number of digital firms are jockeying for position to carve out at least some of the $2.2 trillion in banking assets. The jockeying has been cross-border in nature, as Tencent Holdings and SoftBank Group have joined the fray.
For these and other firms, the lure comes in the fact that the population of 200 million includes 132 million consumers with internet connections. The landscape is a fertile one, as 25 percent of consumers lack bank accounts – but the familiarity with technology may help boost comfort with tech-driven transactions.
As reported in October, Latin America Google Pay executive Joao Felix has said there are 60 million people with debit cards in Brazil and only 50 million with credit cards. Increasing and enabling debit card payments will help Google grow in mobile payments, he said.
Russia is in part spearheading the pan-mobile payments initiative – considering that eCommerce, as noted by Ingenico in recent months, is a market worth as much as 28 billion. Separately, TNS Russia has estimated that eWallets are used by as much as 78 percent of its survey respondents aged 12-55.
The South African market – where digital payments are, according to Statista, worth $8 billion USD and growing in double digits at a compound annual growth rate of more than 11 percent – is driven in part by the South African Reserve Bank’s Vision 2025 program, which looks to boost financial inclusion.
And for India, of course, national initiatives are also a driving force in cashless payments. The drive in the wake of demonetization just a few years ago has spurred what Credit Suisse has said could be a $1 trillion market just three years hence.
In an interview with PYMNTS, Jeremy Wilmot, group president for on-premise and cloud P&L at ACI Worldwide, told Karen Webster that though a majority of transactions are done in cash, as much as $500 billion in transactions – or about 15 percent of the country’s GDP – will be done electronically this coming year alone. Here, the National Payments Corporation of India has been helping to boost electronic payments adoption (and Google Pay and Paytm have been gaining traction as well).
That national push in India is, arguably, eclipsed only by China, where the country’s central bank is busy preparing to launch a digital version of the yuan – and in doing so, would be the first central bank to throw down this gauntlet. The firm iResearch Digital has estimated the market to be worth about 55 trillion yuan, growing at roughly 23 percent year on year. The country’s mobile payment landscape has been dominated by the likes of Alipay and Tenpay, with a collective market share of more than 90 percent.
The BRICS are notable, too, because they contain three of the top FinTech markets in the world as estimated by Ernst & Young. That trio would include China, India and Russia. There’s cross-pollination here, too, as China’s Alibaba and Tencent have been aggressively investing in Indian startups such as Paytm.
The next decade may see these countries – which are home to roughly 40 percent of the globe’s population – unify around a single mobile payments service and become an epicenter for eCommerce (and other transactions) done seamlessly across borders.