Lithuanian fintech Nikulipe shared their insight into the current landscape and payment trends in fast-growing and emerging markets.
Nikulipe reports that 2021 has seen a strong post-pandemic rebound in online shopping, with the global e-commerce market growing to $13 trillion that year. Emerging markets such as India, parts of Africa, the Balkans and the Baltics have gradually become a stronghold for e-commerce businesses.
Rising online sales in emerging markets are expected to contribute 20% of all retail sales in 2022. Local Payment Methods (LPMs) have played an important role in supporting the growth of this economic activity by putting in place a native and stable payment infrastructure to support the demand for online shopping, both local and cross-border, according to the press release.
For sub-Saharan Africa, mobile payments dominate the region as the preferred local payment method, with adoption in countries like Kenya reaching up to 72%, while only around 35% of the region’s population has a bank account. The estimated transaction value of mobile payments was USD 701.4 billion in 2021, representing 70% of the global mobile money value of USD 1 trillion.
Meanwhile, the value of the Baltic e-commerce market is expected to reach USD 3.47 billion in 2022. According to data from Lithuanian, Latvian and Estonian statistical institutes, more than half of the region’s population between the ages of 16 and 74 made an online purchase at least once. one month each year. Moreover, in 2021, around 50% of Estonian online shoppers and 25% of Latvian and Lithuanian online shoppers made cross-border purchases. Credit card penetration levels in the Baltic States are below 30% in Estonia and around 16% in Latvia and Lithuania, which means that traditional card payment is not the best option for Baltic consumers , explains Nikulipe.
Southeastern European states have seen an increase in e-commerce activity since the start of the pandemic. For example, Slovenia saw a 16% growth and Croatia a 23% increase in online shopping. An increase in activity has led to wider adoption of debit and credit cards in the region, with Visa and Mastercard dominating as the preferred payment method for Balkan consumers. Exceptions are the Czech Republic and Serbia, where residents are slow to sign up for e-money services or still largely use cash to pay for goods.
Regarding India, Nikulipe says a country with around 1.4 billion consumers is a big emerging market and e-commerce is expected to reach $100 billion in 2022 alone. vast is naturally more diverse when it comes to preferred payment methods. LMPs include e-wallets, mobile payments, and even government initiatives such as e-RUPI. Meanwhile, credit and debit card adoption per capita is only 0.66%. Mobile commerce accounts for 36% of all e-commerce transactions in India, while digital wallets are used in a quarter of all e-commerce payments.
Finally, in the LATAM region, transactions are mainly dominated by cash and card payments with Visa and Mastercard as the main providers, reports Nikulipe. Some countries in the region have launched initiatives to promote alternative payment methods. For example, Mexico recently announced it is opting for a regulatory path similar to that of Europe, while Brazil is already moving forward on its Open Banking regulatory roadmap.
Merchants entering the aforementioned marketplaces will face unique challenges in offering native LPMs preferred by local consumers. Preferred LPMs range from mobile payments to online banking and e-wallets instead of traditional card payments seen in established Western markets, according to the press release.
Nikulipe is a fintech company that facilitates access to emerging and fast-growing markets for fintechs, payment service providers and their merchants by streamlining cross-border payment solutions.