In the first part of the article, we examined what drives growth when it comes to the ecommerce payments space and we presented the size of this market. The second part of the article continues the overview of the main regional developments and specificities, focusing on Latin America, Europe, North America, Africa and the Middle East.
Key developments in Latin America
There are financial inclusion initiatives in Latin America as well, and the central bank of Brazil has announced recently that in November 2020 it will launch an instant payments platform called PIX. The platform will be available to the entire population, and it is expected to enable Brazilians to transfer money 24/7, making it easier to carry out transactions via QR code technology and via identification methods such as phone numbers, email, and national ID numbers – therefore, data will enable the payments, which will be credited instantly. Consequently, the adoption of account-to-account (A2A) payments will most probably see an increase in Brazil.
In Latin America, with a population of 356 million, an online population of 218.3 million, and internet penetration reaching 61%, ecommerce keeps on expanding. The economic environment in this region might still present some challenges, but the ecommerce payments market has grown in recent years, the total value of online commerce in Argentina, Brazil, Chile, Colombia, Peru, and Uruguay being worth USD 41.22 billion – according to PPRO’s ‘Payments and e-commerce report’ for Central & South America. The smartphone penetration reached 53%, the banked population 62%, while retail payments have grown in dominance to a 63% share, up from 59% in 2013, according to McKinsey & Company.
The high smartphone penetration rate sets the scene for further technological development in this region, and we can definitely expect revolutionary changes to happen. Some super apps candidates have already emerged. One of them is Mercado Pago, the payment arm of the Argentina-based marketplace Mercado Libre. At first, it enabled payments between the different users from the marketplace, but it didn’t stop there, and today it offers a broad range of financial services. Another worthy candidate is Colombia-based startup Rappi, which started by offering food delivery services. After significant investment rounds, Rappi has become a unicorn in record time, and has opened a financial services unit in October 2018, Rappi Pay. Today, it operates throughout the region, in countries such as Brazil, Argentina, Chile, Uruguay, Peru, Mexico, and Colombia.
The status of the ecommerce payments market in Europe
In Europe, digital payments for ecommerce are used by millions of people across the continent. Ecommerce in the Eastern European markets is growing at an average rate of 19%, with 3.6% of all retail sales made online, according to PPRO. When it comes to Western Europe, analysts predict that the number of users who will start looking online for items at a discount (rather than on the high street) will increase in the near future – and Euromonitor International expects ecommerce to account for 14% of all sales in Western Europe by 2021.
Europe’s case is slightly different due to the regulatory changes happening in the region, but as ecommerce becomes safer, growth is bound to happen. Some of the main factors that impact the digital payments space in Europe, besides regulation, are financial inclusion, request-to-pay (R2P) functionalities, and the rise of new technologies (such as NFC, VR, or AI).
The status of the ecommerce payments market in North America
In North America, the growth in the ecommerce payments space is driven mainly by competition, with giant players sustaining the pace of progress – a progress that is still slightly decelerated by mature technology infrastructures. With an ecommerce market that is worth more than USD 808 billion, growing at a rate of 13% a year according to PPRO, the most common online payment method in the region is the credit card (57% share of the ecommerce payments market), followed by e-wallets (with a 22% market share).
In this region, super apps are not an important part of the ecommerce payments market landscape yet, but some internet giants have displayed some attempts to encompass the super app model in the West. Nonetheless, a real user demand for the super app model does not seem to manifest in North America for now.
Key developments in Africa and the Middle East
In Africa and the Middle East, there are many differences among countries when it comes to payments, politics, and economy, and ecommerce represents only 4% of the region’s retail market, with a credit card penetration of 12% and an internet penetration of 55%, according to PPRO. When it comes to online sales in the region, super-platforms like Jumia in Nigeria, Kilimall in Kenya, and Takealot in South Africa are paving the way for international ecommerce companies that want to enter the market. However, technological developments are taking place and global trends impact this region as well. Some of these developments in the ecommerce payments landscape are the implementation of blockchain, the use of QR codes, and the adoption of e-wallets – even if the most common way to pay for online purchases is by card (44% market share) and the traditional payment methods are still dominant when it comes to online payments and ecommerce across Africa and the Middle East.
Final thoughts
Most probably, technological trends, regulation, and innovation will continue to impact the ever-changing ecommerce payments landscape, while the players in this industry will strive to provide a smooth user experience to customers worldwide. All things considered – it will be interesting to see what the next decade has in store for the ecommerce payments market!
This editorial is also featured in our Who's Who in Payments 2020 – Complete Overview of Key Payment Providers, a report presenting a comprehensive overview of the key solution providers in the payments space, as well as educational insights into the size of the market and the development of the payments ecosystem.
About Raluca Constantinescu
Passionately curious, Raluca is fascinated by the way in which technology and innovation impact our lives, and she is always keen on discovering the latest trends in the payments industry. After graduating in Foreign Languages and Literature, Raluca developed a genuine passion for editorial activities, having an extensive background in editing and publishing.
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