High growth economies can bring challenges to those who seek a piece of these markets
The IMF’s in its ‘World Economic Outlook’ have identified Emerging Market and Developing Country GDP growth rates at more than 5% over the next 2-3 years, while at the same time projecting 3% for the US and Europe at almost flat.
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In sub-Sahara Africa (excluding South Africa), the challenges and opportunities for payments services and implementation can be equally challenging. The market is ripe for those who seek a non-saturated market as less than a quarter of the population have a bank account. SMS and other mobile payments are very attractive as the same population has a very high penetration rate of mobile phones.
The same risk/reward paradigm exists in Latin America, and not only in Brasil, which has climbed to the sixth largest economy in the world. Cash and bank transfers account for 70% of e-commerce payments and card penetration rates are less than 10% for the region as a whole. Interesting work is being undertaken in the mobile space and ‘host to host’ services for corporate payments processing. SMS payments still pose a risk to many providers because of security in these countries. However, advances are coming with the development of smartphone applications and accessories that allow even the smallest merchants to forgo needing secondary dataphone devices. EMV and other cardless methods are also taking hold as well, as originally reported by Payment Magnates.
Meanwhile, in Nigeria and Zambia, which are two of the fastest growing economies in the African region, check processing is becoming easier with the adoption of imaging solutions. The blending of these new and old methods are showing that the emerging markets can breathe new life into fading payment methods, and at the same time help them teach mature markets a few new tricks.