Payment Prospects in Emerging Markets

August 2013

Large numbers of emerging markets, including some among the BRIC and CIVETS economies, remain untouched by traditional financial services. These markets will provide ample opportunities for card operators and issuers willing to conduct business in these new frontier markets for card payment

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Growth is in the BRIC and CIVETS economies

Although the global card market remained dominated in 2012 by developed markets, the fastest growth is coming from emerging markets, namely the countries that make up the BRIC and CIVETS economies.

Payment preferences vary between emerging markets

In general, the BRIC economies tend to spend more on debit cards than credit cards. The opposite is true among the CIVETS economies, where credit is the preferred card type.

Grown in consumer expenditure could equate to greater card spend

Consumer expenditure continues to grow robustly across many emerging markets. As incomes rise, households have more to spend on non-necessities, which could equate to higher card spend.

Income inequality poses a challenge in some emerging markets

Income inequality in emerging markets is higher than in developed markets due to greater disparities between regions, genders, ethnicities and education, and a lack of adequate government policy and resources to help the poor.

Mobile likely to be the key channel to reach the unbanked population

In emerging markets, the mobile phone has the potential to become a lifeline for rural and low-income urban consumers with no connection to the financial mainstream, whereas the mobile phone in developed markets is more about increased consumer convenience.

Impact of BRIC markets cannot be ignored

The four BRIC markets are predicted to account for 44% of total card payment volume added worldwide over the 2012-2017 period.

Financial literacy efforts will be important for reaching unbanked consumers with card products

Financial literacy efforts among unbanked consumers will become increasingly important, as this will provide financial institutions with new customers. Governments have employed a variety of strategies, which rely on both private and public resources, in order to increase financial literacy.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Introduction

Scope
Key findings

The Rise of the BRIC and CIVETS Markets

THE RISE OF THE BRIC AND CIVETS MARKETS
BRIC and CIVETS economies dominate emerging market story
Emerging markets added most to absolute card volume in 2012
Card usage in emerging areas is hurt by inadequate infrastructure
Lack of POS terminals reinforces attachment to cash for many
Cash culture remains a barrier to adoption in emerging markets
Egypt’s first electronic bill payment network tries to displace cash
BRIC markets spend more on debit, CIVETS markets opt for credit
Store cards in Latin America used as an entry-level card product
Pre-paid cards offer Indonesian unbanked a payment alternative
Issuers target wealthiest consumers through credit, not charge

Analysis of the Emerging Consumer

ANALYSIS OF THE EMERGING CONSUMER
Meteoric rise of consumer markets could equate to higher card use
Consumer expenditure has grown robustly in emerging markets
Income inequality poses challenge for card players in Colombia
Expanding middle class leads to a rise in disposable income
Rising middle-class population could spur future card usage
Household formation drives everything from debt to card spend
Higher disposable incomes in Turkey will expand credit market
Desire for status symbol products drives shopping tourism
Retailers cater to Chinese travellers by accepting China UnionPay
Majority of world’s population lives in BRIC and CIVETS economies
Emerging markets account for almost 90% of the youth population
Limited internet access holds back potential e-commerce market
Chinese consumers embrace e-commerce due to convenience
Mobile likely to be the channel to reach the unbanked population

Prospects for Emerging Markets

PROSPECTS FOR EMERGING MARKETS
CIVETS card payment markets are expected to grow rapidly
Fastest-growing markets are expected all to be emerging countries
Government initiative is expected to drive Vietnamese card growth
The unmistakable impact of the BRIC markets on card prospects
Egyptian revolutions expected to lead to greater card adoption
China to add more debit volume than next 10 markets combined
Chinese debit cardholder beginning to use debit for daily purchases
Shift from traditional to modern retail formats could spur card usage
Conversion of unbanked population critical to card player success
Increasing financial literacy to reach consumers with card products
Sample of effective industry-led efforts to improve financial literacy
Sample of effective non-industry efforts to improve financial access
Recent regulations impacting the emerging financial card markets
Mobile will become an important tool for reaching consumer base
Key trends to watch across emerging markets in the coming years

Definitions

Data parameters and report definitions
Data parameters and report definitions, continued
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