The Impact of Digital Payments in the World’s Rising Economies
As digital payments continue their rapid growth worldwide, an estimated 40% of all business-to-business (B2B) payments will be made in Latin America, Africa, and Asia by 2027. Capgemini Research Institute estimates show B2B digital payments rising by 11% annually, with a steeper growth of 14% in these regions.
Those conclusions come from the new report Beyond Borders, published by EBANX, a Brazil-based payments technology company. The study points out how thorough the transition will be in less-developed parts of the global economy, since an estimated 70% of B2B transactions are still conducted manually.
International purchases have been fueling digital commerce in the world’s rising economies. In Latin America, cross-border transactions account for roughly three quarters of all online purchases, according to Payments and Commerce Market Intelligence.
Digital payments are used by more than half of the population in rising markets. According to the World Bank Global Findex, Latin America, Africa, and Asia have raised their adoption of digital payments by as much as 25 percentage points over the past decade.
The Impact of UPI and Mobile Money
In the larger picture, Pix in Brazil, Unified Payment Interface (UPI) and RuPay in India, and PSE in Colombia are digital payments that have greatly expanded financial and digital inclusion. India’s UPI, which launched in 2016, now accounts for more than 70% of the country’s digital transactions. India has pledged to spend $318.4 million to promote UPI and RuPay.
In Africa, Mobile Money allows users to conduct transactions through a mobile device, without the need for a bank account. The service now has more than 600 million registered accounts and almost universal penetration in more advanced countries like Kenya.
A study from GSMA showed that Mobile Money was responsible for adding nearly $600 billion in GDP in the countries where it has been available over the last decade, a 1.5% increase. In sub-Saharan Africa, the contribution to the GDP reached 3.7%.