2021 has seen immense acceleration and continuous development of the payments industry, giving a strong overall boost to global e-commerce. While the popularity of payment trends like Buy Now, Pay Later (BNPL), which is expected to exceed $ 100 billion in the United States alone, is expected to dominate Western markets in the coming year, markets fast-growing and emerging markets appear to be moving slightly in a different direction for 2022.
Frank Breuss, CEO of Nikulipe, a fintech company creating and connecting local payment methods to access emerging and fast-growing markets, identifies three major trends for the fast-growing and emerging markets that he sees take off in 2022.
Importance of frictionless experiences
E-commerce and digital services continue to grow in emerging markets, as well as globally, making frictionless experiences a key component for consumers. Breuss notes that long and often flawed payment processes, along with a lack of preferred payment methods, have long been dominant issues in these markets waiting to be resolved.
“Consumers who were hesitant to shop online previously have been pressured or prompted by the pandemic restrictions to change their shopping habits – in most cases, to shop online for the first time. If the experience has been positive, they are more likely to continue with their new way of shopping. This need for frictionless experiences will only increase in emerging markets as e-commerce, while growing exponentially, continues to understand and try to meet consumer demands.
Convenience and security will likely remain a top concern for buyers in the coming year as well, and prioritizing this could result in increased conversion for a number of traders.
Mobile payments in the foreground
While a significant number of the population in fast growing and emerging markets is still unbanked, mobile payments are likely to continue to lead the way when it comes to local preferred payment methods (LPMs). According to Breuss, Africa could become one of the main regions where mobile payments are the key aspect of e-commerce.
“Africa has one of the youngest populations and the second largest in the world, which is why there is great potential for an even larger digital audience,” he explains. “In recent years, internet penetration has also increased due to the vast expansion of mobile devices, especially smartphones, which has led to the dominance of mobile e-commerce in the online shopping scene in African countries in particular.”
The number of e-commerce users on the continent is expected to reach over 334 million by 2021, and by 2025 it is predicted that there could be around 520 million users, which supports the idea. that mobile payments could become a dominant payment trend for 2022..
Subscription services could show even higher demand
More home-oriented consumption habits have led to the growing popularity of subscription services, most notably video-on-demand (VOD) services like Netflix. Breuss notes that VOD services, as well as music subscriptions, could gain even more traction in the coming year as consumers in fast-growing and emerging markets demand greater demand for easily accessible means of entertainment. and more global.
“Consumers in fast growing and emerging markets have been excluded from many popular subscription services due to geography and payment restrictions for some time now. The lockdowns have only accelerated consumer demand for these services. The global subscription e-commerce market is expected to reach $ 478.2 billion over the next three years, and the majority of emerging markets will be part of it. “
In South Africa alone, there are currently 7.2 million active subscriptions, 90% of which are digital content subscriptions. The popularity of these services is only expected to increase and by 2025 could reach 10.8 million. The number in Eastern Europe for subscription video-on-demand is also expected to increase – by 2026, the number is expected to double to 40,000, from 20,000 in 2021.
The three key trends, which could be the most important in fast-growing and emerging markets for the coming year, all emphasize convenience, efficiency, wider accessibility and inclusiveness. Frictionless experiences, which also include the growing accessibility of subscription services as well as preferred local payment methods like mobile payments, appear to be a driving force behind the emerging market payments landscape in 2022.