The hidden power of emerging markets
By Manpreet Haer, Co-founder at PayFuture
The acceleration of digitization caused by the pandemic has significantly boosted online shopping and e-commerce in general. Social restrictions and lockdowns have effectively bolstered the already growing e-commerce industry into what it has become today. As a result, however, this has led to saturation in established markets, thus pushing traders to seek new opportunities in emerging markets.
Located in often densely populated developing countries, emerging markets are where the economy has enormous potential for growth. Regions of the world such as the Indian subcontinent, Africa, Southeast Asia and Latin America are considered emerging markets, providing Western traders with opportunities to diversify their reach and make the most of take advantage of business opportunities abroad.
A recurring characteristic of emerging markets is that they are often in the midst of a digital boom. For instance; India has more than 636 million internet users, but e-commerce has yet to take off in the same way as in the United States and European countries. However, with more and more of India’s population using cashless payments due to Covid-19 and 80% of Indian adults with at least one digital financial account, it is only a matter of time before its industry begins to flourish as well. Coupled with continued advancements in mobile payment technologies, such as digital wallets and contactless payments, it’s easy to see why India is being lauded for its untapped potential for e-commerce merchants. In fact, personal watercraft report in emerging markets indicates that payments business in these regions is not only large, but will continue to grow by 2030.
However, access to these emerging markets poses certain challenges. Emerging markets can be complicated, bureaucratic and unpredictable, making it difficult for traders looking to set up shop in these regions. First, merchants need to make sure they tailor their payment processes and solutions to that of their chosen market – a complex process if you don’t know when to start and how to deal with the legalities. With different markets having different payment methods native to their country, merchants will need a tailored approach for each region. To achieve this, merchants will need to pay attention to the regulatory landscape and consumer behaviors in their respective markets. This new insight should then be taken into account when adapting the payment solution.
For companies without the resources, experience or knowledge, managing the various complexities that surround payments in emerging markets can seem very risky, if not impossible given the multitude of hurdles to overcome. On top of that there will be a need for “someone on the ground” in that country and finding reliable local partners to work with requires a thorough understanding of the political and regulatory environment, business etiquette business and local culture. Meeting these requirements often proves too difficult for Western traders, thereby deterring them from accessing these potential growth areas.
Given the complexities faced by traders wishing to enter these emerging markets, we decided that a bridge was needed for traders to access them. To become that bridge, we took the initiative to form strategic and symbiotic partnerships with local payment service providers to provide this crucial access to merchants without them having to do as much heavy lifting. In addition, to strengthen our commitment, we have decided to take a stake in these companies once the relationships have matured, thus ensuring control of the process from start to finish. This in turn allows us to have the resources, facilities and information necessary to safely and effectively guide our merchant clients to these emerging markets.
The industry has undoubtedly changed over the past few years and opened everyone’s eyes to the possibilities that emerging markets offer. To make the most of these opportunities before they become mainstream and saturated, traders should turn to those with the expertise, resources and analytics to help them unlock the potential of emerging markets by stimulating real business growth. Failure to do so or entering emerging markets without a good understanding of the intricacies of the region risks being overshadowed by more forward-thinking companies that have made the effort to seek expert advice.