Nikulipe reports that 2021 has seen a strong rebound post-pandemic in online shopping as the global ecommerce market amounted to USD 13 trillion in value that year. Emerging markets such as India, parts of Africa, the Balkans, and the Baltics, have gradually become a stronghold for ecommerce businesses.
The online sales increase from emerging marketplaces expected to contribute to 20% of all retail sales in 2022. Local Payment Methods (LPMs) played an important role in supporting the growth of this economic activity by setting a native and stable payment infrastructure to support the demand for online shopping, both locally and cross-border, as per the press release.
For sub-Saharan Africa, mobile payments dominate the region as a preferred LPM, with adoption in countries such as Kenya reaching up to 72% while only around 35% of the region’s population has a bank account. The estimated transactional value of mobile payments was USD 701.4 billion in 2021, which accounts for 70% of the world’s USD 1 trillion mobile money value.
Meanwhile, the Baltic ecommerce market value is projected to reach USD 3.47 billion in 2022. According to data from Lithuanian, Latvian, and Estonian statistical institutions, more than half of the population in the region aged 16-74 made a purchase online at least once a month each year. Moreover, in 2021, approximately 50% of Estonian and 25% of Latvian and Lithuanian online shoppers made cross-border purchases. Credit card penetration levels in the Baltic states are less than 30% in Estonia and approximately 16% in Latvia and Lithuania, which means traditional card payment is not the best option for Baltic consumers, says Nikulipe.
The southeast European states have seen a surge in ecommerce activity ever since the pandemic started. For example, Slovenia has seen a 16% growth and Croatia a 23% increase in online shopping. An increase in activity prompted a wider adoption of debit and credit cards within the region, with Visa and Mastercard dominating as the preferred payment method for the Balkan consumers. Exceptions are the Czech Republic and Serbia, where the locals are slow to sign up for e-money services or still widely use cash to pay for goods.
Regarding India, Nikulipe states that a country with around 1.4 billion consumers, is a large emerging market and ecommerce is projected to reach USD 100 billion in 2022 alone. Furthermore, a market this big is naturally more diverse when it comes to preferred payment methods. LMPs include e-wallets, mobile payments, and even government-run initiatives like e-RUPI. At the same time, credit and debit card adoption per capita is just 0.66%. Mobile commerce accounts for 36% of all ecommerce transactions in India, while digital wallets are used in a quarter of all ecommerce payments.
Finally, in the LATAM region, transactions are mainly dominated by cash and card payments with Visa and Mastercard as the main providers, reports Nikulipe. Some countries in the region have started initiatives to foster alternative payment methods. For example, Mexico recently announced opting for a regulatory path similar to that of Europe, while Brazil is already advancing into their Open Banking regulation roadmap.
Merchants entering the aforementioned markets will have to solve unique challenges by offering native LPMs preferred by local consumers. The preferred LPMs range from mobile payments to online banking and e-wallets instead of traditional card payments seen in established western markets, according to the press release.
Nikulipe is a fintech company that facilitates emerging and fast-growing market access for fintechs, payment service providers, and their merchants by streamlining cross-border payment solutions.
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