85% of the population lives in emerging markets, where approximately 90% of all transactions are cash-based.

1. Fundamental
Considerations for
Cashless Payments
in Emerging Markets
There is a seemingly endless variety of technologies for accepting
cashless transactions; however, there is no “one size fits all,” which can
make finding the right payment solution a daunting process—especially
in emerging markets where many obstacles can threaten digital
commerce success.

2. 1
Fundamental Considerations for Cashless Payments in Emerging Markets
This 3-Part series highlights the following variables that stakeholders in developing markets should consider
when evaluating cashless payment technologies:
I. Infrastructure
II. Merchant and Consumer Trends
III. Processing and Acquiring Capabilities
Part I covered basic infrastructure for introducing and expanding cashless (or “less cash”) ecosystems.
Infrastructure providing access to electricity and the web dramatically varies in strength and availability in
emerging markets, and payment technologies have differing internet and electrical requirements. The strength
and availability of both types of infrastructure demand special consideration, as it can help guide stakeholders’
toward the most appropriate solution for making their cashless visions a reality. Considering these variables
can increase the chances of successful payment technology deployment and the ability to manage, service
and grow cashless payment assets in the future.
PART II: Consumer Payment Trends & Local Merchants
Cashless ecosystems are futile without significant adoption among merchants and consumers. Understanding
the needs and preferences of both audiences is important for stakeholders to determine the cashless
payment systems that are most practical to their market, and thus, are most likely to see large-scale adoption.
Consumer Payment Trends
Today, more than 300 types of cashless payments are used around the world. Card-based payments--credit,
debit, charge and pre-paid—represent nearly 60% of cashless methods used globally. Cards differ by how
they store account information. Typically, data is stored in EMV or RFID (contactless) chips, or in magnetic
stripes embedded on the card. Payment devices are configured to read information based on how it is stored
on the card before transmitting it throughout the payment network to complete transactions.
Mobile payments, such as Apple Pay, Samsung Pay, PayPal, Android Pay and other alternative payment
methods—represent just over 20% of the cashless payments used globally. Account information is stored
in a cellphone—either in a mobile app or on a decal fixed to the device—and transmitted to a mobile-
enabled payment terminal via near field communication (NFC). By 2019, use of mobile payments is expected
to increase by more than 10%, and most of the growth is expected within developing markets where
smartphone proliferation is surprisingly high.

3. 2
Fundamental Considerations for Cashless Payments in Emerging Markets
Latin
America
Asia/
Pacific
Middle
East
Sub-Saha-
ran Africa
0
20
40
60
80
100
Selecting hardware that accepts multiple card-based payment methods can ensure longevity of stakeholders’
investments by preventing them from having to replace devices whenever new card-based payments are
introduced. However, it’s just as important to think beyond cards—despite their current dominance in the
global cashless arena. Adoption of in-store payments is largely driven by consumers, and evidence shows that
alternative methods—particularly mobile payments—
have the greatest potential for adoption in markets
where consumers are more likely to have a smartphone
than a bank account, and where card use is relatively
low among the banked population.
Fortunately, there are devices that have the
ability to accept all forms of card and mobile
payments, and many can also be configured
to accommodate new methods in the future
through minor software updates.
Owns a
Smartphone
Banked &
Uses Card
Unbanked

4. 3
Fundamental Considerations for Cashless Payments in Emerging Markets
Local Merchant Models
Besides payment acceptance capabilities, cashless devices are diverse in terms of form factor, features and
functionality—and some may not be appropriate for certain merchants.
Retailers & Large Merchants
Retailers and large merchants typically have existing cashless payment acceptance capabilities and
relationships with local and/or global financial institutions. Likewise, they are more likely to have an
established market presence, as well as relatively tech-savvy customers and employees. Typically, expanding
cashless capabilities is the goal of this segment, and many are placing greater emphasis on cashless systems
that can help improve business intelligence, efficiency and consumer loyalty.
These include devices that can connect to cloud-based platforms, offering the ability to monitor sales
and transactions in real-time—at specific sites and throughout the entire enterprise—and greatly simplify
compliance and reporting processes. Other features can empower them to engage consumers with special
digital offers during checkout, conduct transactions at the counter or in the aisle, support mobile commerce
apps, and create unique in-store experiences that strengthen their brand.
Large merchants and retailers are critical to promoting the concept of cashless in underbanked regions, as
they tend to be the earliest adopters of B2C technology innovation. They also purchase the highest volume
of technology, which can help create an economy of scale for their smaller counterparts. When evaluating
technologies for this segment, stakeholders should consider payment devices with cloud connectivity through
a variety of operating systems, dual countertop and mobile point of sale (mPOS) capabilities, consumer-
facing multimedia screens, and advanced processing speeds –all of which can support the in-store shopping
experience they want to provide in the future.
Micro-merchants & Small Businesses (MSMs)
Emerging markets are home to more than 180 million micro-merchants and small businesses (MSMs).
These include everything from small restaurants and shops, to merchants and service providers that conduct
business door-to-door or in open-air environments. By definition, each has fewer than 10 employees and
experiences exceptionally high employee turnover. Nonetheless, MSMs eclipse the number of retailers and
large merchants in most markets; more than 95% of merchants in Brazil are MSMs. In India, more than 1.5
million merchants comprise this segment, which contributes as much as 20% of the country’s GDP.

5. 4
Fundamental Considerations for Cashless Payments in Emerging Markets
Snapshots of Success
The importance of considering consumer trends and local merchant environments when evaluating and
selecting cashless technologies is evident in the following snapshot of projects taking place in different
markets around the world:
INDIA
High transaction fees imposed on card-based transactions by global card brands were hampering India’s
initiatives to improve financial inclusion and reduce its economy’s reliance on cash. In response, the
government agency—National Payments Corporation of India (NPCI)—along with backing from 10 public
and private sector banks, developed RuPay, a domestic EMV and contactless card scheme that is more
affordable for local banks and merchants. To help ensure RuPay acceptance, NPCI partnered with a payment
technology innovator that had a footprint of more than 800,000 cashless devices used by India’s retail, petro
and transit industries to accept card-based and NFC payments. As a result of their flexibility, the devices
were able to support the new payment scheme with a software update. Today, RuPay cards are issued by
approximately 240 banks to consumers in rural and urban areas and are used for more than 20% of all
transactions in India.
MALAYSIA
The Malaysian Electronic Payment System (MEPS) is a payment consortium focused on expanding cashless
capabilities throughout Malaysia. In 2015, MEPS issued a rigorous new set of EMV chip and contactless card
standards to ensure the security, compliance and global interoperability of Malaysia’s payment infrastructure.
MEPS, as well as the many financial institutions comprising its interbank network, partnered with a payment
and commerce technology provider to offer the market’s first MEPS-certified cashless solution. Devices
within the solution enable merchants throughout Malaysia to accept card - and NFC-based MEPS payments
from consumers in all environments, helping the country and its financial institutions continue reducing the
use of cash in new and secure ways.
INDONESIA
Use of digital payments continues steeply increasing in Indonesia, where consumers see them as a more
efficient and less complicated alternative to cash. However, recent news reports indicate growing frustration
over the lack of interoperability among the country’s large volume of installed cashless devices, which prevent
consumers from consistently being able to use digital payments while shopping. To address the issue, Bank
Indonesia—in partnership with the Indonesia Payment System Association—will release new regulation in
the coming months to enable interoperability and interconnectivity among all digital payment systems in the
country.

6. 5
Fundamental Considerations for Cashless Payments in Emerging Markets
THAILAND
As part of its move toward becoming a cashless society, Thailand launched PromptPay—a national digital
payment scheme that enables consumers to pay electronically and quickly transfer money online to
recipients with accounts at different banks. According to the Thai Bankers’ Association, 60% of all payments
in Thailand could become cashless within the next five years if enough digital payment devices are installed
throughout the country. Bangkok Bank, one of the largest commercial banks in Thailand, is helping fuel
the availability of such technology through its partnership with a leading payments innovator, which enables
it to provide merchants with flexible devices that accept PromptPay and all other cashless schemes in any
environment, and support digital loyalty incentives during checkout.
KUWAIT
A growing number of banks throughout the Gulf are offering NFC and contactless cards to consumers. This
is especially the case in Kuwait, which has a large and growing population of young adults and the highest
mobile internet usage in the region. Recognizing this trend, KNET—Kuwait’s leading payment provider—
joined forces with a global payment innovator to provide devices capable of supporting all payment types,
including NFC and contactless, preparing the country’s merchants for mass acceptance of cashless payment
methods once they go live in the market.
BRAZIL
Merchants in Brazil want the ability to accept contactless cards, as well as NFC payments due to the
proliferation of smartphones throughout the country. Large merchants want to differentiate themselves
by being able to checkout customers at the counter—or in the aisle—while also providing digital offers,
discounts and other loyalty incentives. And, portability is equally as important to the MSMs dominating
Brazil’s merchant landscape. Acqio Franchising—a network of specialized franchises offering mobile
payment devices in Brazil—recently selected a cashless solution to address these needs. The solution
increases Acqio’s product portfolio with a hand-held NFC- and contactless-enabled device featuring multiple
connectivity options (Wi-Fi, 3G and Bluetooth). The device offers Brazil’s large merchants and MSMs the
payment flexibility and portability they need. And, the solution’s multimedia capabilities can enable retailers to
provide a unique shopping experience to consumers as well.

7. 6
Fundamental Considerations for Cashless Payments in Emerging Markets
Up Next
Again, for cashless ecosystems to be successful, digital payment technology must be embraced by
merchants and consumers alike. Practicality helps ensure market adoption, which is why considering
consumer trends and local merchant environments is critical when evaluating cashless solutions.
Up next in Part III of this series, the importance of processing and acquiring capabilities will be highlighted.
Considering such capabilities is critical to ensure not only the successful deployment of digital payment
technologies, but also the ability to manage, sustain and secure cashless ecosystems moving forward.