2021 has seen an immense ongoing acceleration and development of the payments industry, giving a strong overall boost to global e-commerce—it is predicted that e-commerce sales worldwide will reach $4.9 trillion by the end of this year. While popularity of payments trends like Buy Now, Pay Later (BNPL), projected to pass $100 billion in the U.S. alone, is expected to dominate the Western markets in the upcoming year, Fast-Growing and Emerging markets seem to be moving in a slightly different direction for 2022.
Frank Breuss, CEO of Nikulipe, a Fintech company creating and connecting Local Payment Methods to access Emerging and Fast-Growing Markets, identifies three major trends for Fast-Growing and Emerging markets that he sees taking off in 2022.
Importance of frictionless experiences
E-commerce and digital services continue to grow in Emerging markets, as well as globally, making frictionless experiences a key element for consumers. Breuss notes that long and oftentimes faulty checkout processes, as well as lack of preferred payment methods, have long been prevailing problems in these markets that are waiting to be solved.
“Consumers that were hesitant to shop online before have been pushed or prompted by the pandemic restrictions to switch their shopping habits—in most cases, shopping online for the first time. If the experience was positive they are most likely to continue with their new way of convenient shopping. This need for frictionless experiences will only increase in Emerging markets, since e-commerce there, while growing exponentially, is still figuring things out and trying to meet the consumer demands.”
Convenience and safety are likely to remain at the front of the mind for shoppers in upcoming year as well, and prioritizing this could bring increased conversion for a number of merchants.
Mobile payments at the forefront
With a sizable number of the population in Fast-Growing and Emerging markets still unbanked, mobile payments are most likely to continue leading the way, when it comes to preferred local payment methods (LPMs). According to Breuss, Africa could come as one of the primary regions where mobile-based payments take the key aspect for e-commerce.
“Africa has one of the youngest and second largest populations in the world—that is why there’s a broad potential for an even larger digital audience,” he explains. “In recent years, internet penetration has also been rising because of the vast expansion of mobile devices, especially smartphones, which led to mobile e-commerce domination of the online shopping scene in African countries specifically.”
The number of e-commerce users in the continent is estimated to reach over 334 million by 2021, and by 2025, it is predicted that there could be roughly 520 million users—supporting the idea that mobile payments could become a prevailing payments trend for 2022.
Subscription services could show even higher demand
The more home-focused consumer habits have led to an increasing popularity of subscription services, more notably video-on-demand (VOD) ones like Netflix. Breuss notes that VOD services, alongside music subscriptions, could gain even more traction in the upcoming year, since consumers in Fast-Growing and Emerging markets are putting higher demand on easily accessible and more global ways of entertainment.
“Consumers in Fast-Growing and Emerging markets have been excluded from many of popular subscription-based services due to geographical and payment restrictions for some time now. The lockdowns have only accelerated consumer demand for these services. The global subscription e-commerce market is expected to reach $478.2 billion in the next three years, and the majority of Emerging markets will be a part of it.”
In South Africa alone there are currently 7.2 million active subscriptions, from which 90% are subscriptions to digital content. The popularity of these services are only predicted to grow and by 2025 could reach 10.8 million. Eastern European numbers for subscription video-on-demand are also expected to rise —by 2026 the number should double to 40,000, compared to 20,000 in 2021.
The three key trends, which could be the ones most prominent in Fast-Growing and Emerging markets for upcoming year, all bring focus on convenience, efficiency, wider accessibility and inclusivity. Frictionless experiences, which also include growing accessibility of subscription services as well as preferred local payment methods like mobile payments, seems to be a driving force behind the Emerging markets’ payments landscape in 2022.
Jack Dorsey’s Square Undergoes Name Change, Now Referred to as Block
Jack Dorsey, the co-founder of Twitter stepped down as the Twitter CEO only a few days ago, and a few days later announced a huge name change for Square. The company which is highly payment-focused will now be referred to as Block, which underlines Dorsey’s interest in the cryptocurrency scope.
Twitter Chief Technical Officer Parag Agrawal was called upon to take Dorsey’s place on the very popular social network, although Jack will remain on the Twitter board until at least the next shareholders’ meeting. There were speculations at the time of Dorsey’s resignation that he had prioritized Square over Twitter.
Jack Dorsey had been operating as the CEO of both Square and Twitter, and had been encouraged to step down from at least one of the companies.
Dorsey is a public supporter of bitcoin, as well as other cryptocurrencies. He recently announced a new business initiative for Square known as TBD5456697, in which the company will deliver decentralized financial services. After this, Jack’s decision to step down from Twitter makes sense given all the existing buzz around blockchain and cryptocurrency.
Square’s name change to Block is also quite logical, considering that the blockchain is the fundamental technology that will power some of Square – now Block’s – businesses. It’s not only the TBD, but also the crypto initiatives and Square payments.
In a press release, the company stated that the new name has a lot of associated meanings which include building blocks, a blockchain, neighbourhood blocks and their local businesses, communities coming together at block parties with music, a section of code and obstacles to overcome.
This name change is similar to what happened with Facebook and Meta, except this one does not come with any negative press. Facebook’s name change was announced by Mark Zuckerberg and others in the middle of a huge scandal concerning the ‘toxicity’ of the company.
However, just like Meta, Block will be a controlling entity over several other businesses. Block will oversee Square, Cash App, Tidal, and the new TBD54566975. There will be no organizational changes and the businesses will not lose their brands. Square’s payment services will still be offered, just like Facebook still exists as a social network.
Payourse, A Nigerian Blockchain Startup Raises $600K Pre-seed Fund To Expand Operations
Payourse, a Nigerian-based blockchain startup has raised $600,000 pre-seed fund to hire more talents, expand operations into new markets and accelerate crypto adoption on the continent.
Investors who participated in the pre-seed funding are, Michael Ugwu, Flori Ventures, Voltron Capital, Allegory Capital, CELO Co-founders Marek Olszewski and Rene Reinsberg, Kola Aina, Ventures Platform; Angel Touch Holdings; and Oluwatobi Anisere.
Payourse was founded in 2019 by Bashir Aminu (CEO) and John Anisere (CTO) to accelerate access to crypto for Africans by providing tools that make it easier, faster and cheaper for businesses to build user-friendly crypto products.
The company had earlier raised some funds in 2020 from Oluwatobi Anisere and subsequently $100,000 each from Ugwu in March and Flori ventures in July 2021. The $600,000 pre-seed fundraised is the company’s first official fundraising.
In an interview with Techpoint, Aminu revealed he had dropped out of a five-year degree program from the Federal University of Technology, Minna in 2017 and had co-founded two startups with his friend Orewole whom he met at an online crypto platform, however, the two businesses failed.
He started his career as a graphic designer, got a job with an Australian company before moving to Busha as Design Lead where he met Anisere. He had worked in different capacities across the fintech space, from product designer at TeamApt, Design lead at Yellow Card Financial, product designer at Interswitch, and finally Head of Africa at Binance P2P.
Payourse, the parent company has three core functionalities that power its infrastructure: wallets, remittances and liquidity.
Talking about the conception of Coinprofile, a subsidiary of Payourse, he said the idea struck him while working as a product designer in Busha. He saw the need to build a simple platform that collects wallet addresses and generates shareable links, this idea was shared with his colleague Anisere who was working as a front-end engineer at Busha. Anisere welcomed the idea and the project ‘Coinprofile’ was launched in 2019.
Coinprofile was launched to bring a seamless transaction experience to crypto traders. Aminu noticed the tedious process traders encountered while sending digital assets from one wallet to another.
He said, “I used to be an OTC (over-the-counter) trader, so anytime someone wants to send me crypto, and I always have to go to my wallet address and copy wallet address and send it to them. It was a very tedious process”. Coinprofile created a platform for traders to create an account and store all their wallet addresses, creating unique links leading to a landing page.
“In May 2020, after acquiring a handful of users and considering the feedback and requests we’ve pulled, we added a remittance functionality that allows users to make payment with their wallets,” Aminu said.
When asked about the sudden emergence of Payourse, he revealed that the company has been in existence the same year Coinprofile was founded. He said, “well, we actually created Payourse, a long time ago, in 2019 as a parent company, but we never really announced it to the world. But it’s always been the parent company. And we’ve always had this long term vision of a company which would build user-friendly products on top of crypto”
Speaking on the new investment, Bashiru Aminu said the team is proud of the quality of their investors. “This new funding will help us improve our existing use-cases and then build more as we extend into new markets and accelerate crypto adoption on the continent.”
“I worked closely with Bashir as a visiting Partner at Flori Ventures. I’ve spent 4 batches at YC and rarely do I see a company with this kind of knockout performance and a founder who is willing to put in the hard work to continue to nurture it. Bashir is capable of meeting the demands of a crazy growth startup and also ramp up fundraising”. Holly Liu, Visiting Partner at Flori Ventures, said.
Also speaking about Payourse, Olumide Soyombo, Managing Partner at Voltron Capital, said: “We are excited to back the Payourse mission as we believe this team is a super technical team with subject matter expertise. The team is solving an important problem by providing the key infrastructure for Africans and African businesses to adopt crypto”.
Payourse believes the future of finance in Africa will be defined by crypto and its positionig itself to help more African businesses and individuals get on board. The company is targeting Ghana and Kenya market as it expands its operations.
GlobalData Predicts Future Fintech Unicorns
Whether to enhance the efficiency in the usage of financial services provided by existing financial companies or to increase customer retention through speed and convenience, startups are transforming the financial services and allied sectors by tech driven solutions. Against this backdrop, the Unicorn Prediction Model of GlobalData, a leading data and analytics company, has released a list of 50 fintech startups that have the potential to become unicorns (valuation > US$1bn).
Apoorva Bajaj, Practice Head of Financial Markets at GlobalData, says: “Ranging from digital payments to insurtech, from mobile banking to cross-border payments, startups aim to disrupt finance using modern technologies and innovative business models to attract various new-age consumers. The COVID-19 has certainly provided tailwinds to the industry, as more consumers turned to fintech solutions to manage their finances. New opportunities keep emerging in the fintech sector across the globe, which bodes well for the startups working in the space.”
GlobalData’s latest report ‘Future Unicorns in Fintech‘, reveals that in Q3 2021, the fintech industry reported investment in excess of US$27.2bn spanning 650 deals globally. During the period, North America (primarily the US) accounted for nearly 40% of overall venture capital (VC) deal volume, followed by APAC with almost one-fourth of total investments.
When it comes to social media discussions, ‘fintech’ and its use cases in banking-as-a-service, insurtech and digital payments are increasingly being mentioned by social media influencers. Key mentions on social media include Klarna launching ‘Pay Now’ option in US, Mastercard offering SMEs digital cash-flow solutions via strategic partnerships and Russian food retailer launching X5 Bank to offer financial services.
Some of the fintech startups in GlobalData’s list of potential unicorns include Boost Insurance, Open, XTransfer, Moneytree and Ocrolus.
Boost offers an API-driven infrastructure-as-a-service platform for property and casualty insurers, which reduces the cost of building and managing an insurance company by packaging the necessary operational, compliance, and capital components and making them accessible.
Open is Asia’s first neo-banking platform for SMEs and startups that develops and offers an online platform for banking and intercompany settlement. It offers services ranging from deposit accounts, money transfers, debit cards for online/offline purchases, expense management, to invoice management. It currently serves more than 15,00,000 SMEs and processes US$24bn in transactions annually.
XTransfer is a one-stop cross-border platform offering financial and risk control services for foreign trade enterprises, dedicated to helping SMEs to greatly reduce the threshold and cost of global exhibition industry and improve global competitiveness.
Moneytree is a financial data aggregation platform offering personal financial management solution, an expense tracking tool for small businesses, and a customer database software for financial enterprises. It aims to bring people and institutions closer together, help them find balance and discover new opportunities to grow personal wealth.
Ocrolus is a document automation platform powering digital lending ecosystem, automating credit decisions across banking, fintech, and mortgage.
Bajaj concludes: “The adoption of ‘fintech’ is increasing as is evident by latest tech innovations in the banking, financial services and insurance sector, massive surge of digital-only banks, increase in number of related mentions in corporate filings and continued increase in jobs posted to hire talent in this space. With all the emerging trends in fintech, it will be interesting to see how future shapes up for companies investing in digital transformation of the traditional banking, investment and insurance services.”
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