THE PAYMENTS DISRUPTION REPORT: How digital is upending payments worldwide and what it says about the future

BII

This is a preview of a research report from BI Intelligence, Business Insider’s premium research service. To learn more about BI Intelligence, click here.

European and North American countries with advanced economies often serve as bellwethers for the payments industry when it comes to introducing new and disruptive technologies.

However, some of the greatest examples of digital payments disruption can be found in developing nations. In some cases, these countries not only adopt certain aspects of adigital payments ecosystem faster, but they also do so with more efficiency than their Western counterparts.

The fact that digitaldisruption in these regions can be complex and varied, makes it difficult for the industry to devise effective strategies for international expansion — but understanding the drivers of this disruption can significantly aid payments companies.

Despite each region’s unique attributes, there are shared key conditions that make a market ripe fordigitaldisruption. These include new payments infrastructure, increased access to financial services, and government intervention to drive digital payment capabilities.

In this report, BI Intelligence examines several case studies of digital payments disruption to draw valuable insights for players in developed markets like the US to consider. These include India — which has made itself a laboratory of payments disruption — as well as other developing regions, including Latin America and East Africa. It also analyzes disruption in Australia to show how major digital disruption can be facilitated in a well-developed market.

Here are some key takeaways from the report:

• In November 2016, Indian Prime Minister Narendra Modi announced that 500 and 1,000 rupee notes (worth about $7.50 and $15, respectively, at the time) — which represented 86% of currency in circulation — would no longer be legal tender in the country. Although this move was aimed at curbing corruption and counterfeiting, it had a far more wide-reaching consequence: It forced consumers to change how they pay, making India the largest case study of digital payments disruption in the world.
• Mobile money services are setting the stage for other forms of digital payments in markets like East Africa. Firms that can integrate their payment products with such services could see tremendous success — in 2016, there were eight countries — including in Kenya, Tanzania, and Uganda — in which more than 40% of the adult population was actively using mobile money, according to the GSMA.
• Social media continues to see growth in users, making it a vital platform for payments players to integrate within South America — in this region there was a 30% growth year-over-year (YoY) in active mobile social users, and a 21% YoY increase in the number of active social media users, likely led by millennials.
• Disruption isn’t limited to developing nations.Australia, which already has a well-established payments industry, remains on the verge of digital disruption thanks to a $720 million investment that will overhaul the banking system.