Digital transformation will be driven by the emerging markets
Expanding global middle class, rapid urbanization, rising literacy rates and the associated spending power is what is going to drive the digital transformation in the emerging markets.
The tech-savvy young population will lead this shift in digital transformation and everyone in the payment ecosystem like merchants, payment schemes, regulators, payment service providers, payment application providers are working out innovative ways to adopt technologies to enhance this transformation.
This transformation will be led by India, China, Indonesia, Brazil, Philippines, Malaysia, Turkey and South Africa, which are considered the emerging markets. Nigeria and Mexico can also be added to the mix as new emerging markets. Nearly 90% of the people under 30 reside in these markets and this is the age segment that accounts for most digital transactions and the number of transactions are expected to grow at a rapid pace.
This tech savvy generation forces businesses to go the digital way as that is how they prefer to transact. It is no more a choice or convenience for businesses to provide digital avenues, but an essential part of how transactions are going to happen.
The governments in the emerging markets also have now woken up to the huge costs, risks and inefficiencies that come with cash transactions. They recognise that economic growth is directly related to digital payments as it reduces fraud, black economy, and also promotes access to formal credit and savings instruments thereby driving GDP growth. This push has resulted in accelerated financial inclusion in the emerging markets to bring more and more people into the digital transaction net.
Bringing the unbanked population into the banking net through financial inclusion, technology to make transactions secure and improving the acceptance infrastructure are the key elements to ensure the drive towards digital transformation. This is precisely where the entire payment ecosystem is moving towards.