Even as the global economy grapples with inflation, supply chain constraints and high commodity prices, new payment solutions are helping billions in emerging markets access and deploy much-needed capital.

Driven by a decline in cash payments during the Covid-19 pandemic, digital payments skyrocketed in line with the growth in e-commerce, as the financial technology (fintech) sector expanded to provide consumers with a wider variety of payment options.

The growth of digital payments has been strongest in emerging markets, where noncash retail payments increased by a compound annual growth rate (CAGR) of 25% between 2018 and 2021, compared to 13% globally for the same period. A young, tech-savvy population and demand access to financial services are driving growth.

Digital payments are expected to continue to expand globally, with a projected CAGR of 15% for 2022-26.

Fintech in emerging markets has drawn significant investment

Fintech in emerging markets has also drawn significant investment. Fintech operators accounted for 37% of the record $4.85bn in funding that African start-ups received in 2022 – the largest share of any sector.

This growth, evident in the uptake of cryptocurrency and microcredit models such as “buy now, pay later” (BNPL), serves to expand financial inclusion while reshaping the way consumers tap into capital inflows.

Boosting financial inclusion

According to the World Bank, some 1.4bn adults remained unbanked as of July 2022. Banking penetration has increased significantly in recent years, however, with 76% of adults having access to a bank account globally, compared to 51% a decade ago.

The digitalisation of financial services has been integral to expanding financial inclusion, as well as diversifying the sector. The popularity of digital payment methods has benefitted non-traditional financial actors as well, with nonbanks owning the dominant front-end payment application in countries like India, Kenya, the Philippines and Vietnam.

One such mobile-enabled system, India’s Unified Payments Interface (UPI), has helped digital payments in the country rise by 50% over each of the past five years. In March the Reserve Bank of India debuted a UPI for feature phones, a development that could potentially bring financial services to an estimated 400m people in rural areas.

Another popular mobile money system, M-Pesa, allows users to make payments and store and receive funds via their mobile phones, granting access to financial services in areas where banks do not have a presence. The service is used by 51m people across seven African countries and is set to expand into Ethiopia following a licence approval in October 2022.

Innovative payment methods are even helping to provide more accessible and affordable health care to consumers in emerging markets. Nigeria’s Soso Care, for example, accepts recyclable waste such as scrap metal, plastic or car batteries in exchange for health coverage, seeking to bridge the care gap and tackle waste disposal in a country where 23% of the population has health insurance.

Digital currency developments

Blockchain-powered fintech, especially cryptocurrency and non-fungible tokens (NFTs), offer decentralised exchanges that enable transaction flows despite macroeconomic pressures such as rising US interest rates and inflation on fiat currencies around the world.

Due to these advantages, emerging markets are leading the uptake of cryptocurrency despite the global bear market: 10 of the top-20 countries on the 2022 Global Crypto Adoption Index published by blockchain data platform Chainanalysis were classified as lower-middle-income countries, while eight were upper middle income.

Vietnam ranked first on the index, due in part to the popularity of cryptocurrency-based gaming platforms that use play-to-earn models. The Philippines, Ukraine and India held the second, third and fourth spots, respectively.

NFT marketplaces such as FanCraze, a platform that sells cricket NFTs and has financial backing from US venture capital firm Sequoia Capital, are credited with India’s rise on the index.

Despite sharp declines in value, Bitcoin was adopted as legal tender by the Central African Republic in April 2022. Egypt, Kenya, Nigeria and South Africa, Africa’s four-largest economies, also boast the largest number of cryptocurrency holders on the continent.

Uptake of central bank digital currencies (CBDC) has also grown as governments attempt to navigate the burgeoning digital currency landscape. As a digital form of cash issued and regulated by central banks, CBDCs are seen as less volatile than cryptocurrency assets. More than 100 CBDCs were in development stages around the world as of mid-2022, with Nigeria’s eNaira debuting in October 2021 and the Bahamas’ sand dollar launched the year before.

Hoping to expand their fiscal reach and make up for funding shortfalls, a number of African nations have levied taxes on digital transactions.

In May 2022 Ghana rolled out a 1.5% tax on the transfer amount of electronic transactions. Despite consumer criticism and a resurgence in cash-based transactions, the measure may be encouraging formalisation by driving businesses to register with the Ghana Revenue Authority, thereby broadening the country’s tax base.


In addition to China, which officially announced the use of digital yuan for citizens at the beginning of 2020, many countries are continuing to study and experiment with this, such as Sweden’s e-krona trial.

The Bank of Thailand (BOT) together with 8 commercial banks has initiated “Project Inthanon” since 2017 to study the efficiency and feasibility of using CBDC in the financial sector. Including trials of cross-border money transfers with the Hong Kong Monetary Authority. 


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