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After a summer of bad news for the global economy, we are at a worrying turning point. Rising interest rates, high inflation, and stunted consumer spending have created a complex path ahead for all. The economic fog is even denser than usual, but many would agree with the view that when the going gets tough, fintech gets going.

by Tom Voaden, Strategic Partnerships Lead at BR-DGE

For the Buy Now Pay Later sector, like so many areas of the fintech ecosystem, these economic headwinds will create both challenges and opportunities. Tightening consumer purse strings is an opportunity for BNPL to reinforce its core mission around low fees and choice. In turn, rising consumer demand for alternative payment methods could accelerate merchant adoption of BNPL services at the till. Recent data from Juniper Research predicts that BNPL consumer usage will increase from 360 million today to over 900 million by 2027, perhaps highlighting that the pandemic surge was just an appetiser to a prolonged period of accelerating global adoption for the rest of this decade.

However, in times of recession, customer default rates will need to be monitored closely and there is now an even greater need to safeguard consumers. In this area, firms have an opportunity to be forward-thinking and embrace prioritising innovative consumer protection and controls before regulation comes into play.

BNPL 2.0 = diversification

With an eye on the future, Buy Now Pay Later providers are increasingly looking to diversify their offerings ahead of regulation. Open Banking is one area where the likes of Klarna have focused, and see strong growth opportunities in the future. New ventures such as this can also allow the enablement of new capabilities which combine with and complement their core BNPL offering. Their new business unit “Klarna Kosma”’ claims to process nearly a billion information requests to bank accounts every year. Global expansion is another priority, with leading players looking to make inroads into markets where BNPL penetration has room to grow, such as the US and India.

Beyond this, regulation will lead to greater diversification of the goods and services that BNPL can be used for. The reality is, the more BNPL providers are required to, or decide to secure financial licenses, whilst also carrying out more stringent checks on customers, the more they may have scope to offer higher lending and longer-term payment plans. It is likely that we will see providers focus more on areas such as automotive and medical services post-regulation.

The bottom line here is that BNPL providers see a number of strategic opportunities across the ecosystem to leverage their proposition and ultimately unlock new revenue streams. The intent and appeal of this is clear, but it will be interesting to see in the coming years how this plays out.

Regulation as a driver for BNPL consolidation

In the UK, the sector is in its final sprint to regulation, with the government pledging to publish a consultation on draft legislation towards the end of this year. In preparation for this, many firms will need to increase their resource and focus within legal, compliance and risk to ensure they are playing by the rules. This need will no doubt impact the margins of BNPL providers and could be a catalyst for M&A in the sector.

Across the globe, there are now hundreds of BNPL providers offering various shades of flexible payments. The jury is out on whether this is an overcrowded space, but it is easy to see consolidation becoming the answer when market share and resources are inevitably squeezed. Block’s acquisition of Afterpay earlier this year further shows the appeal of the sector to larger financial institutions. A number of factors are at play here, but it is likely that M&A becomes as common as fundraising rounds for the BNPL sector in the years ahead

Looking to the future

The economic outlook is challenging for businesses and consumers. Forward-thinking and agile, the BNPL sector will need to harness its knowledge and expertise to support consumers at the same time as continuing its impressive growth trajectory. Increasing competition between payment providers will also further drive innovation in the checkout space which many will need to react to. The customer journey has also grown in importance and is just one key area where providers can innovate in order to meaningfully support both consumers and merchants.

As demand amongst consumers has grown, and preferences evolve, it is important the industry works to ensure merchant customers can meet this shift. The opportunity, therefore, lies not only in offering consumers greater payment flexibility and choice at the checkout but also in ensuring merchant checkout innovation moves as fast as customer preference diversifies and changes.

As the BNPL sector matures, it is reasonable to expect that the path ahead will be very different to the recent past.

The metaverse as a concept has permeated much of the media narrative around technology this year, having been catapulted into the public conscience when Facebook changed its name to Meta back in November 2021.

by Jawad Ashraf, CEO and Co-Founder of Virtua

A digital network of interoperable, interactive virtual worlds – this new medium of interconnectivity promises to have as big an impact on society as social media did back in the noughties. Experts, developers and brands are constantly innovating in the space, exploring the myriad of ways in which they can capitalise on the increased scope for audience retention and growth.

A whole new world

The entertainment industry was – perhaps as expected – among the first to jump on the wagon and get ahead of the curve, diversifying their creative strategy across various virtual worlds. Some high-profile examples of this would be Manchester City partnering with Sony to recreate a virtual Etihad Stadium in Decentraland; Spotify Island launching in Roblox; Warner Music Group entering Sandbox, and us at Virtua collaborating with Williams Racing to bring F1 fans a more immersive experience. With this, rhetoric has appeared that implies that the metaverse is essentially an ultra-advanced arena for fans and gamers to wrap themselves further around entertainment channels more so than they’ve ever been able to do before.

However,  all types of institutions and enterprises stepping into the metaverse – including digital real estate agents, fashion retailers, law firms, advertising agencies and educational institutions and advertising agencies. Even some small businesses have been testing out ways in which they can integrate Web3 into their daily operations with staff and clientele. Along with the progressive adoption of blockchain technology in the physical world and the rise of NFTs, we are preparing to see a monumental shift in the way society functions. A hybridised reality, in which the fundamental dynamics of social life are interchangeable between the physical and virtual, is on the horizon.

Implications for financial institutions

For financial institutions, this means engagement with Web3 concepts and the metaverse will soon be unavoidable. It will be a necessity. They should thus prepare themselves to be malleable in their approach to changing tides. Flamboyant PR stunts may not be called for, but they should certainly be familiarising with concepts such as asset programmability, smart contracts and peer-to-peer networking. In the metaverse, users will not only be communicating – but also earning and spending. The revolutionary aspect that comes into play and differentiates Web3 from Web2 is that they will now be able to merge real and virtual assets which the blockchain will grant them total control over. The financial sector will be required to adapt its services with new means of transactional exchange, asset management and identity verification in order to keep up.

Decentralised blockchain technology is resistant in practice to the agency that financial institutions exercise, but this does not mean that banks, financial advisers, brokerage firms and insurance companies won’t have a place in the metaverse. The likes of JPMorgan Chase, Bank of America and HSBC are all already involved in the metaverse. Investors, gamers, NFT collectors and general users will need the variety of services provided by institutions as they look to immerse themselves in this new world.

McKinsey & Co’s ‘Welcome to the Metaverse’ report also highlights that the shift is already occurring. Financial institutions are experimenting with virtual substitutes for telecommuting centres, investment advisory services and employee training within newly developed ‘financial towns.’ Another sector that will unquestionably be in high demand is the insurance industry. Metaverse residents will not only own digital property and NFTs, but also their data – which their avatars will be tethered to. With the blockchain still susceptible to hackers, all of this can still be stolen in the metaverse. Services that offer users cybersecurity policies to protect users from those potentialities will therefore be an imperative component of Web3 security measures. Forming partnerships with these firms will be a priority for Metaverse developers as they seek to provide their users with the comfort and surety that will attract them to their spaces.

Swiss Bank ‘Sygnum’ have also demonstrated the capacity for financial institutions to adopt crypto-native protocols – having already developed, regulated and managed many assets on DeFi (Decentralised Finance) applications using blockchain technology. They’ve recently announced that they will be the first of their kind to open a metaverse hub – due to launch in Decentraland’s equivalent to New York’s Times Square on 27th September.

The first steps to take

Beyond enhancing convenience for their staff and clients, firms across the sector should firstly be looking toward the marketing opportunities that the metaverse will provide them. As the retail and entertainment industry continues to innovate new means of interaction with their customers and audiences, so too should financial institutions be capitalising. The chance to strengthen their client base through new means of rapport is clear. As television, radio and print adverts were supplemented by social media ads, social media operations are being extended to carefully orchestrated creative initiatives in the metaverse. Despite whatever caution, there may be to incorporate the likes of avatars and virtual offices into their agendas, it is certainly worth considering the option to dedicate an arm of their workforce to focus on a metaverse strategy. It is as big an opportunity for them as it is for any other industry.

While the global payments scene continues to be dynamic, broadly speaking, there are three regional approaches directing the progress of the market in their respective geographies.  In the European Union, the United Kingdom, and South Korea, the regulatory aspect – rules such as PSD2, GDPR and Open Banking regulations – remain highly influential in the changes taking place, especially the creation of financial ecosystems.

In Asia, it is market and consumer forces that are driving payment innovation. This article by Rajashekara V. Maiya, Vice President and Head, Business Consulting Group, Infosys Finacle, discusses the different forces that are driving global payment innovation.

Power is passing into the hands of consumers via their handheld devices, which are today more technologically capable than desktops and laptops. With every individual owning a mobile, maybe even two, in the markets of Asia, “cross-industry relativism” is in full flow – consumers, who can pay for their Amazon purchases in one Paytm click,  want similar levels of payments innovation from their banks.

In North America, where an overall weak payments market infrastructure exists side by side with pockets of excellence, it is the latter that is leading payments evolution. For example, Silicon Valley’s rich financial ecosystem is a driving force that every bank wants to be a part of. The North American approach is the opposite of the European one, with innovators, rather than regulators, in the payments driving seat.

Besides these three approaches, the following factors are shaping payments today:

Trends in the making

• Emerging regulatory or recommendatory payments standards – FDX in the U.S. and Canada, BIAN globally, PSD2 in Europe, CMA in the U.K. and CDR in Australia
• Trending domains, for example, Buy Now Pay Later in North America and Europe; P2P payments in Latin America, Europe, and North America; personal finance and payments aggregators; and cryptocurrency-based money transfer
• Disruptive business models, for example the recently announced Digital Banking Units in India, or other “people-less” branch models, providing a frictionless banking environment
• Banks behaving like Fintechs, and Fintechs behaving like banks to diversify payment and remittance ecosystems
• APIs which provided a strong enablement framework and then evolved an economy of their own
• New technology trends, including green tech, metaverse, big data, artificial intelligence and cloud, making the payments revolution more solid, yet seamless.

Retail payments innovation is crossing over to SMB and corporate segments

It is time to push the boundaries of payments, to give SMB and corporate banking customers the same benefits as retail consumers. For example, how can the QR code, where the rapid growth in subscription (1.5 billion in 2020 predicted to reach 2.2 billion in 2025) fuelled peer-to-peer or person-to-merchant payments,  be extended to drive ease of SMB and corporate payments?

A start for global standards

The shift from ISO 15022 to ISO 20022 is freeing cross-border payments from message type, to allow a broad swathe of remittance transactions. As payments become open, and API-driven, it is morphing from a peripheral service into a  “product” in its own right. What’s more, it is seen as a foundation for innovation, a potential “platform” offered as a cloud-based service with ecosystems built around it. No other banking product offers so much possibility.

A new class of start-ups, namely paytechs, is focusing only on payments innovation. Almost 90 countries are involved in pilot, or advanced POC, projects to build Central Bank Digital Currencies, which will fuel the payments journey by enabling faster, cheaper, safer, transparent and seamless transactions.

While payments are looking up globally, some regions are clearly ahead.

India leads the way

India is taking its success in digital payments forward with its Payments Vision 2025, which seeks to bring about industrialization, internationalization and inclusion in payments, and ensure UPI transactions continue to grow at a 50 percent CAGR over the current base of 6 billion monthly transactions.

Expectations run high with regard to innovations such as ONDC (Open Network for Digital Commerce) and OCEN (Open Credit Enablement Network), which are expected to drive payments to a new level. Both are game-changers, with the potential to disrupt the disruptors. ONDC will democratize digital commerce to bring about a multiplier effect in payments. OCEN will help to close the $1.2 trillion funding gap that cannot be bridged by the mainstream banking industry – think street vendors, micro-industries, and other tiny businesses with no access to formal credit who can now tap a microlending ecosystem. OCEN, which has already got the support of 7 banks, 40 account aggregators, and several Lending Service Providers, will change lending from low trust, high cost, high friction to high trust, low cost and low friction, to set benchmarks in global banking.

What next

APAC payments are expected to expand at 22.8 percent CAGR between now and 2026, must faster than North America’s 6.6 percent or Europe’s 12.9 percent¹. One reason is that North America in particular is battling process and technology challenges, an example being the traditional, low trust-high friction lending processes mentioned earlier.  A solution is to build “public good” infrastructures that can serve a variety of purposes, such as India’s UIDAI, whose Aadhaar number facilitates everything from bank account opening to SIM card purchases to direct benefit transfers.

This is especially critical because in theory, the American e-commerce market, estimated at $2 trillion in 2025, is best placed to propel the future growth of real-time payments. The problem is that it lacks the market infrastructure to do it. The U.S. should start building this infrastructure now, to be ready to tap exciting future opportunities in global payments.

Sources:

https://worldpaymentsreport.com/

The Online Safety Bill, a landmark piece of legislation which has been five years in the making, has stirred up a lot of debate in recent weeks.

by Martin Wilson, CEO, Digital Identity Net 

It is designed to lay down in law a set of rules about how online platforms should behave to better protect their customers and users. The bill covers a wide range of issues including the spreading of illegal content, protecting children from harmful material and protecting individuals against fraud.

Even before its introduction, various parts of the bill were drip-fed via the media, such as measures to protect people from anonymous trolls, protect children from pornography and stamp out illegal content. Each development was met with intense scrutiny.

And since its introduction, this has continued with many current and former politicians, tech execs and business leaders sharing their views on the bill described by the UK government as ‘another important step towards ending the damaging era of tech self-regulation’.

But is it enough to protect people online?

Welcome change

The rules the bill sets out to change have needed updated for a long time. The bill brings more clarity and should be easier to police.

At last, big tech will be held accountable as the bill imposes a duty of care on social media platforms to protect users from harmful content, at the risk of a substantial fine brought by Ofcom, the communications industry regulator implementing the act.

It’s a step towards making the internet a safer, collaborative place for all users, rather than leaving it in its current ‘Wild West’ state, where many people are vulnerable to abuse, fraud, violence and in some cases even loss of life.

User verification

An initial issue I had with the earlier version of the bill, is that it positions algorithms which can spot and deal with abusive content as the main solution. This does not prevent the problem; it merely enables action to be taken after the event.

Arguably in recognition of this, the UK Government recently added the introduction of user verification on social media. It will enable people to choose only see content from users who have verified they are who they say they are – all of which are welcomed.

But the Government isn’t clear on what those accounts look like and its suggestions on how people can verify their identity are flawed. The likes of passports and sending a text to a smartphone simply aren’t fit for the digital age.

Account options

 In my view, there should be three account options for social media users.

• Anonymous accounts: available for those who need it e.g., whistle blowers, journalists or people under threat. There will still be a minority who use this for nefarious reasons, but this is a necessary price to pay to maintain anonymity for those who need it. The bad actors will receive the focus of AI to identify and remove content and hold the platforms to account.
• Verified account: Orthonymous (real name) – accounts that use a real name online (e.g., LinkedIn) and are linked to a verified person.
• Verified accounts: Pseudonymous – accounts that use an online name that does not necessarily identify the actual user to peers on the network (e.g., some Twitter), but are linked to verified accounts by the services of an independent third-party provider. Leaving identification in the hands of the social media platforms would only enable them to further exploit personal information for their own gain and not engender the security and trust a person needs to use such a service. The beauty of this approach is that it remains entirely voluntary and in the control of each individual to choose whether to verify themselves or continue to engage in the anonymous world we currently live in.

We expect that most users would choose to only interact with verified accounts if such a service was available and so the abuse and bile from anonymous, unverified accounts can be turned off. After all, who doesn’t want a nicer internet where there are no trolls or scammers?

Verifying users

In terms of verification, the solution is a simple one. Let’s look to digital identity systems which let people prove who they are without laborious and potentially unreliable manual identity checks.

Using data from the banks, which have already verified 98% of the UK adult population, social media firms can ensure their users are who they say they are, while users share only the data they want to, so protecting their privacy. This system can also protect underage people from age-restricted content.

Such digital identity systems already exist in countries such as Belgium, Norway and Sweden and have seen strong adoption and usage for a range of use cases. There is of course no suggestion that such a service will eradicate online abuse all on its own, but it would certainly be a big step in the right direction.

Buy-in required

With the introduction of the Online Safety Bill, the UK is now leading the charge on protecting people online and its approach is consistent to those being considered around the world.

However, the Government needs buy-in from social media firms, banks, businesses and consumers to win this fight. By working together and utilising the right tools and partners, we can all help protect people online, making the internet and social media platforms a safer place for all.

In e-commerce, everyone wants to sell more. You can do this in many ways: via social media, through user testimonials, by offering discounts and displaying how many items are left in your inventory. The list goes on.

by Attila Doğan, VP of Product Management, PPRO

The thing is, though, if you want people to click the buy button, they need to first check out. And the checkout is very important for conversion.

In fact, the likelihood of a conversion increases the farther along customers are in the buying journey. It goes to over 45% when customers get to the checkout page and tops 80% on the payment page. This means that if your checkout is good, customers will most likely buy.

So, let’s dive into some key tips on how to make your checkout more consumer-friendly to increase your conversion.

Keep it simple

The more trouble your customers have in navigating your website, the less likely they are to buy. This goes especially for checkouts. For example, the more fields and steps a checkout has, the less likely you are going to see a conversion.

So, make it simple and streamlined by reducing the number of fields or pages available. For fields, only ask for information that is absolutely necessary to complete the transaction. Want customers to sign in to buy? Then create a guest checkout to make things easier for those who do not want to register.

Similarly, if you are keen on having a multiple-page checkout, show your customers where they are in the checkout process. In other words, the design of your checkout should be straightforward, easy to navigate, and clear.

This clarity also goes for the language you use in your checkout. As well as using clear, everyday language, the language of your checkout page should be the same as the rest of your website. So, if your site is in German, then the checkout should be in German.

Be honest

By now, one key rule for checkout improvement should be obvious: make buying easy on your customers when it comes to your checkout’s setup and language.

Going a level deeper, this also means that you need to be honest. Pricing should be transparent at all times so there aren’t any surprises at checkout. 48% of shoppers abandon carts because of extra costs such as shipping, taxes, and higher fees than expected.

The solution? Let customers know of any estimated fees, early on. And offering free shipping is always a good idea.

Make it secure

Shoppers do not only want simple and honest checkouts that are easy to navigate. They want to feel safe when shopping online.

On the merchant side, estimates say online fraud can cost merchants over $12 billion per year. So, it is extremely important that your checkout is secure. Artificial intelligence can be used to put off fraudsters without getting in the way of discouraging real customers.

It also helps to make customers feel safer if you show a security designation, such as an SSL certificate, which means your website is authentic and connections to it are encrypted.

Diversify your devices

We live in an age where people shop on phones, tablets, and desktops. Worldwide, there are around 15 billion mobile devices, which include tablets and smartphones. From that mix, about 4 billion people across the globe own smartphones, and their shopping experiences have to run smoothly on all devices, including when it comes to checking out. This means ensuring your checkout works well on multiple devices and operating systems.

The right payment methods

This one may seem obvious, but you have to have the right payment methods in your checkout. The “right” payment options are the ones your customers use and want. Since the preferred methods change depending on where you are in the world, you need to know how people like to pay wherever you are selling.

In fact, 77% of online purchases in 2021 were made with local payment methods (LPMs). For example, popular LPMs in Belgium are Payconiq and Bancontact whereas if you are in Denmark, Dankort, Trustly, and Klarna are favoured options that belong to the payments mix.

The mix, or variety of payment options you offer, is important. No matter where you are selling, your customers like to pay in multiple different ways when checking out. So, if they see their preferred method at checkout, the more likely they will hit the buy button.

How to know you have nailed conversion

Ideally, you would do all of the above and sales would shoot up. But, as we all know, e-commerce is complex and things are rarely so simple.

This means that you should have a good handle on your checkout data, including where people are getting stuck. And you should also consider A/B testing to fine-tune your checkout process.

Considering all of the above, putting yourself in your customers’ shoes and making their online shopping experience as seamless and easy as possible will eventually lead to the increased conversion rates you’re seeking.

#1 INNOVATE
The world is changing faster than you think. Being distinctive and innovative is key to your survival and success. Create a top 10 list of innovation ideas you can implement across all functions of your business in 2020 and get it done. As Nike says, Just Do It!

#2 FOCUS, FOCUS, FOCUS
Focus is everything is life. Nothing can be achieved without focus. Pick the areas you want to go after and then put all your resources behind them. The real challenge will be – can you stay disciplined and avoid the distractions? Sometimes it is better to have the blinkers on!

#3 DRIVE ENTERPRISE VALUE
Customer is king, and your human capital is valuable, but what about the shareholder? Time to give them some tender loving care. Listed or unlisted – track your enterprise value monthly. More importantly, for every main strategic initiative, ask the question – how will it drive enterprise value?

#4 IT’S ALL ABOUT THE CASH
Cash still remains king. Sometimes it good to learn some lessons from the often criticized PE industry. Measure your business on cashflow. Run it like a shop. When your shutter goes down at night – how much cash did you bring in?

#5 DISCARD & ADD
Too many companies sink under the weight of too many products they like to sell. 20% of products generate 80% of revenue. The tail is always too long. Have the guts to discard products that don’t generate revenue and add selectively to drive your innovation agenda.

#6 ONLINE IS KING
Your channels are changing as you sleep. While your office and stores are shut, the customers are at play. Fastest finger first on their favorite online sites. Make being a best-seller on the #1 online channel your priority. Getting online right could make the difference on whether you live or die.

#7 THE NEED FOR SPEED
Patience is out of style. Customers want everything now. Clients wanted it yesterday. If you can’t take care of them, somebody else will. Online has made the world flat. Crash the turn-around-times of every key process in your organization. Go Formula 1!

#8 UNLOCK YOUR HUMAN CAPITAL
People are important, but not at the price of success. Structure right, have the right headcount and competency, but more importantly create a performance oriented organization. Reward the performers and clean up the tail every year in a humane way – yes, it is possible to do both together.

#9 GO COOLTECH, GO DIGITAL
The world has gone digital. Maybe this time the trees can really be saved. Automate to the maximum. Word’s like AI, Machine Learning, Robotic Process Automation are not Latin anymore. Simple applications using these technologies are available for all businesses. Use them. The robots have arrived!

#10 WORK & LIFE CAN BE BALANCED!
It’s true. Starts with your cell phone. Look at it every hour or two during the work day and once every evening at the most. Twice on the weekend. Sorry I can’t be more generous. And focus your free time on your family and friends – not Netflix. It is possible to work hard and play hard.

Have a great 2020, and see you on the other side of the calendar!

 

Regards

With the rise of Covid-19 in 2020, countries worldwide began to introduce national lockdowns in an effort to stop the spread of the virus. Across the globe, people found ways to cope with navigating the so-called “new normal.”

by Karen Nadasen, CEO, PayU South Africa

Africa, for example, has long believed that “cash is king,” but with more than half of the population having limited or no access to traditional banking, mobile money has proven to be life-changing. Thanks to alternative payment methods, many African families were still able to access essential services simply through a mobile device. Fintech firms have been critical in facilitating these transactions throughout.

In general, fintech development has been directly linked with financial inclusion, poverty alleviation, and enabling economic progress in Africa. However, as the payments industry develops, the goal is to strike a balance between new benefits and long-term economic value. The integration of finance and technology creates an ideal environment in which the continent’s market economy can improve its efficiency.

As fintechs continue to build on existing mobile and telecommunications infrastructure, it is clear that we are only at the cusp of Africa’s potential as the next payment and e-commerce hub.

The current state of FinTech in Africa

Last year, Europe saw record-breaking fintech investment in the Nordic region ($4.8 billion), Germany ($2.5 billion), and France ($2 billion). When compared against Africa, there is still room for growth, but it is evident that African entrepreneurs are gradually catching up with research finding that in 2021, African entrepreneurs raised more than $4 billion in VC funding, with fintech startups accounting for more than half of total capital.

The same research also found that the top four countries with the biggest population of software developers received 81% of venture capital funding globally (Kenya, South Africa, Egypt and Nigeria).

These countries, in particular, have been progressively making a name for themselves as fintech leaders within the African region. South Africa had been notable due to its well-established banking system, with its top four banks providing 80% of banking services in the country. Kenya, on the other hand, continues to make significant strides as a result of M-Pesa, the mobile-based fintech. In fact, M-Pesa provides more than 51 million customers across seven countries in Africa with a secure and affordable way to send and receive money, top-up airtime, make bill payments, receive salaries and even receive short-term loans.

In Egypt, new government laws are making it easier to apply for banking licences. Because of this, the country has risen to prominence as a key supplier of fintech firms in the last year. That said, Nigeria remains the largest investment in developing fintech startups. Paystack and OPay are among Nigeria’s most well-known fintech unicorns, valued at more than $1 billion.

Additionally, while research shows that 45% of the population relies on a formal bank account, 81% have reported owning a mobile phone. Increasing mobile access is creating opportunities for fintech intervention to enable financial inclusion in the region.

Why access to mobile devices is key

According to World Mobile’s research, Africa’s internet economy will more than double in value over the next three years, from $115 billion today. Furthermore, 71% of investors expect mobile phone affordability in Africa to improve over the next three years, according to the same study.

14 years after the launch of M-Pesa in Kenya, there are now nearly 200 million consumers subscribed to mobile money services in Africa. In fact, mobile payments across the continent saw large growth even prior to the pandemic. Africa was actually responsible for two-thirds of total global mobile money transactions recorded in 2018 alone.

That said, there is still much to be done to enable fair access to mobile devices, such as data costs. Kenya and South Africa for example, have the most advanced mobile infrastructure and high internet traffic in the continent, yet it falls far behind the worldwide mobile data pricing list in 2021, with charges of $2.25 and $2.67 per gigabyte of data respectively. This, in comparison to the $0.27 charge in Sudan for example, is a significant barrier to further mobile adoption.

Countries like South Africa will see more widespread adoption of mobile payments once it becomes more accessible to all consumers. In September 2021, the number of banknotes and coins in circulation in South Africa represented 2.7% of the country’s R6.1 trillion GDP, reflecting the high demand for cash in South Africa. To ensure a noticeable shift to digital services across the entire continent, fintech innovation needs to consider accessibility and affordability.

Despite this, mobile payments continue to lead Africa’s fintech revolution and two things remain clear: the migration to digital payments is here to stay, and the acceleration of fintech-led solutions will continue to see support by governments and regulators due to its potential to promote economic growth.

Investing in Africa to drive financial inclusion in emerging markets

Financial services for cross-border trade, peer-to-peer remittances, personal money management, and more, will become more accessible and commonplace across Africa as technology advances and mobile payment capabilities improve. This, in turn, will create further opportunities for both merchants and consumers to build on the region’s economic growth.

There is still significant progress to be made, however, in shifting the preference for cash and ensuring affordable mobile data. Once this is addressed across the entire continent, mobile payments will see a steep increase in adoption, particularly due to the increased recognition of its socio-economic benefits. 2022 will see more partnerships occur between financial institutions, governments and mobile payments providers. This will ultimately create more choice, opportunity and day-to-day improvements for the millions of people across the globe’s largest continent.

The decentralised nature of blockchain has underpinned its success from the earliest days of Bitcoin. The launch of Ether, the second-largest cryptocurrency by market capitalisation, introduced a new type of blockchain called Ethereum designed to do much more than send minted coins from A to B. Ethereum ushered in a new era for blockchain with the smart contract, a game changing feature that has since been used to make a whole plethora of DeFi applications and is rewriting the rule book on how we think about the role of centralised finance.

by Chris Aruliah, Chief Product Officer, BCB Group

Smart contracts are the driving force behind DeFi and have enabled a torrent of innovation on blockchain protocols attracting a rapidly growing user base. Anyone can deploy a smart contract onto a public blockchain which can be developed in a way that ensures the code is unchangeable and automatically runs whenever pre-programmed conditions are met by users. The unchangeable nature of such smart contracts removes the need for an overseer to check that an agreement is being carried out as intended. This trustless peer-to-peer environment is creating incredible efficiency and scale with the total value locked in smart contracts over $200 billion, up from $1 billion in 2020. As a result concepts like Web3 have become part of our lexicon with higher levels of liquidity flowing into smart contracts run on DeFi platforms.

DeFi exchanges like Uniswap and Pancakeswap don’t use fiat currency, which maintains a level of autonomy from traditional finance. Investors who want to profit from financial products unique to DeFi need to use centralised exchanges like Coinbase or Kraken to use their fiat to buy Ether or tokens compatible with DeFi platforms.

These newly acquired assets then need to be transferred to a wallet like MetaMask which makes it possible to connect with and use a decentralised exchange. To convert these assets back to fiat this process is done in reverse with funds returning to a CeFi system connected to fiat payment rails and banks. This highlights how reliant DeFi is on a reliable integration with traditional finance that requires compliant on and off KYC ramps. While this centralised and decentralised alliance is the start of opening up DeFi markets to institutional investors there are considerations such as counterparty risk that need to be taken into account.

A primary incentive for investors to lock their funds into DeFi smart contracts is the profit being made on yield farming and lending protocols generating returns with interest rates far exceeding opportunities on offer in traditional finance. The increased liquidity on these platforms has created a huge demand for borrowing with smart contracts automating the entire process. Unlike CeFi exchanges, DeFi exchange transactions are public with a high degree of transparency though users are pseudonymous, only represented by a series of numbers (wallet address), and while they have used KYC ramps on centralised exchanges to buy crypto assets needed to invest on DeFi platforms, institutions may also need to prove who they are lending to.

Providing a robust guarantee that all those participating in a DeFi liquidity pool have met stringent KYC and AML standards would provide institutional investors with the confidence to capitalise in this space. The most ardent supporters of decentralisation may argue that further centralised control would be a step backwards and that the reason for the success of DeFi has been because of the firm resistance to centralisation. The current hybrid approach of CeFi bridging the gap to DeFi from fiat to crypto liquidity pools will see further iterations to accommodate a wider market with both decentralisation purists and traditional finance players able to find DeFi platforms that leverage the latest smart contracts to best suit their individual needs.

Going digital has become the norm and is no longer the exception. Even the smallest SMEs require digitalisation at a fast pace.

by Ronan Gallagher, Head of Omnichannel, Trust Payments

One of the most important steps in this journey of transformation is digitising payments. Although the last hurdle to cross in most customer experiences, payments and transactions are crucial steps. This will dictate whether the customer makes the final decision to pay for your service or product and essentially decides whether your business makes a profit or not.

The SME landscape is cluttered with competition and even a small differentiator can make a huge impact. Today’s world is characterised by faster, smarter and more efficient functions. The pandemic has accelerated the need for more digital efficiency and solutions. Gone are the days when cash was considered easy and effective.

Payment quality over quantity

However, with tight constraints around investment, SMEs need to keep in mind that they don’t have to provide every payment option to their customers. The right mix of choices that suits their business needs and customer preferences is the best practice.

Apart from the benefit to customers in providing an overall smooth and consistent experience, a unified payment system also helps a business understand its sales and inventory, as well as reducing management time.

An omnichannel payment process also serves as a point of data collection, helping SMEs better understand their customers, and their journeys as well as recognise pain points. Consumers today have a multitude of choices across every industry and every purchase decision. An enriched pool of insights will help to deliver a unique and seamless customer payment experience.

The omnichannel experience

Omnichannel payment methods that offer customers multiple payment options at checkout are changing the way businesses interact with customers and vice versa. They are providing a far smoother payment experience while also reducing the amount of time, resources and effort required to sustain a traditional payment journey.

A process that accepts multiple payment options has a range of benefits. An integrated option that drives a smooth, secure and consistent experience can increase sales as well as improve retention of customers.

Omnichannel payment processing requires the integration of not just online but also offline payment processes. Whether a customer decides to make a purchase online or offline, they should be able to choose the right payment method without having to experience any hindrance.

Loyalty is king

Customers have become far more demanding and they are looking for convenience. They want to make payments whenever and however they choose.

In order to provide these options, SMEs need to know their customer pain points. Recognising what works best for your customers is imperative to running a successful business.

SMEs are constantly looking for ways to improve their services and come out on top in a very competitive market. Having the right technology in place gives SMEs a bird’s-eye view of their customers and how they interact with the business.

Real-time data, real-time benefits

One of the most notable benefits of a seamless and integrated payment system is that it allows for real-time data synchronisation. This helps SMEs track and update changes between systems as they happen.

Another advantage is that real-time synchronisation allows for data consistency over time, making it a continuous process that can provide insightful information for the business to grow. Customers choose options that they are familiar with and most convenient to them. Data allows your business to understand what these options might look like.

Whether it is building better offerings, integrating more cutting-edge tech or offering discounts and coupons based on customer patterns- data enables it all.

Customer-orientated incentives

This real-time characteristic of data can prove significant in building customer loyalty. Through this analysis and understanding, SMEs can build out customer-oriented incentives to drive loyalty and retain customers.

By ensuring data insights are implemented, businesses can provide a frictionless experience across all channels both in-store and online. This will also enable customers to make repeat purchases, spend more and even recommend others to your business.

Data will not only help SMEs offer the best and most secure payment options but whether incentives like basket abandoned reminder features, personalised discount add-ons and optimised checkouts are needed to get customers over the line.

A new type of commerce

The main aim of any commercial tech used by SMEs is to make functions easier and more efficient. At the same time, the tech used has to be adaptable and suit growing businesses. SMEs are prone to constant change and so the tech they use needs to be future-proof.

An emerging commerce concept at play here is Converged Commerce™. Born out of the idea that streamlined and cohesive solutions will improve customer journeys and how business will run in the future, connecting multichannel data gives SMEs rich insight to deliver memorable, personalised and consistent customer experiences.

If businesses put Converged Commerce into practice, they will forge and maintain deep and meaningful relationships, drive loyalty and increased sales.

The future of payments for SMEs

When SMEs think about their dream customer experiences, they think seamless; integrated. Customers do not want clunky and confusing journeys and are bound to shift to other offerings the second they feel uncomfortable. The right tech can help smooth over already existing infrastructure and at the same time support businesses as it expands and changes over time.

As the market gets more and more consumer-driven, hyper-personalised experiences are leading the way to build satisfying customer journeys. Only those businesses that can provide quality customer experience across all touchpoints are able to remain competitive.

While a seemingly large and daunting task with significant cost and resources, building a streamlined omnichannel payment experience is a lot simpler when harnessing the modern technology available at our fingertips. Payments are in an exciting place right now and taking a step in the right direction will be a gamechanger for SMEs looking to disrupt the landscape.