Why Payments Are the Biggest Barrier (and Opportunity) in Emerging Markets

Zaki Farooq, Chief Technology Officer and Co-Founder of PayFuture

Expanding into emerging markets is a massive opportunity, but it’s also a reality check for many online businesses. I’ve seen companies enter these regions with big ambitions, only to find that their usual payment strategies simply don’t work.

As the co-founder of a payments technology business for often overlooked geographies, I’ve seen first-hand how fragmented financial systems can make or break an online business. It’s not just about plugging into a global payment provider and expecting everything to run smoothly. Emerging markets demand local knowledge, flexible technology and a willingness to adapt.

Emerging markets are often seen as ‘challenging’, but I’d call them dynamic. There’s no one-size-fits-all solution, and that’s what makes them interesting.

In Southeast Asia, mobile wallets like GCash and Dana are essential. In parts of East Africa, mobile money services like M-Pesa have long replaced the need for bank accounts. Meanwhile, in Latin America, instant payment systems like Pix in Brazil are setting new standards. Each region is a puzzle that businesses need to piece together carefully.

Take Egypt, where smartphone penetration has soared to over 97%. You’d think digital payments would be a given. But while mobile phones are everywhere, credit card usage is not. Instead, consumers rely on mobile wallets, direct transfers, and cash-on-delivery options. For businesses, that means adapting to what local customers trust, not what’s most convenient globally.

An untapped potential

Across emerging markets, similar trends are unfolding – markets where digital connectivity is high, but traditional financial infrastructure lags behind. This gap is exactly what makes these regions so promising. Emerging markets are increasingly driving global economic growth, fuelled by youthful, tech-savvy populations with rising disposable incomes, creating fertile ground for e-commerce expansion.

According to the International Monetary Fund, emerging markets are expected to grow at 4.1% in 2025, outpacing developed economies significantly. E-commerce in these regions is booming, with countries like India, Brazil and Mexico each experiencing annual growth rates of over 12%.

By 2027, nearly 90% of Millennials and Gen Z consumers globally will reside in emerging markets – digital natives who are comfortable transacting online and eager for better financial access.

Meeting local needs with tailored payment solutions

Many consumers in emerging markets are unbanked, and cross-border transactions often come with high fees and slow processing times. But rather than being a roadblock, this has sparked innovation.

Businesses are turning to mobile-first solutions to meet customers where they are – whether it’s enabling direct bank transfers for everyday purchases or using digital wallets for everything from groceries to utility bills.

Companies thrive by embracing payment methods that fit local lifestyles, from QR codes at market stalls to peer-to-peer transfers that bypass traditional banks entirely. It’s not just about offering more options – it’s about making payments frictionless for people who’ve never needed a credit card.

Tapping into remittances

For many consumers in emerging markets, financial access isn’t just about local transactions – it also means receiving and managing money from abroad. Remittances play a huge role here, acting as both a financial lifeline and a growing part of everyday commerce. In 2024 alone, global remittance flows to low- and middle-income countries reached nearly $670 billion, with countries like India, Mexico and the Philippines topping the list.

This steady flow of funds creates a unique opportunity for online businesses. Consumers who receive remittances often use mobile wallets or digital platforms to access their money – the same channels they prefer for making purchases. By integrating these remittance networks into their payment strategies, businesses can offer customers an easy, familiar way to pay.

I’ve worked with businesses that initially overlooked remittances, assuming they were just for personal transactions. But the companies that recognised their importance – and enabled payments through popular remittance-linked wallets – quickly saw an increase in conversions. Beyond driving sales, this also helps businesses build trust, particularly in regions where digital financial services are still gaining traction.

The power of partnerships

Tapping into local payment habits and remittance channels is essential, but businesses rarely achieve this alone. In emerging markets, partnerships between fintechs and banks have become the backbone of payment innovation. Banks offer regulatory expertise and established infrastructure, while fintechs bring agile technology and local market insights.

At PayFuture, we’ve seen first-hand how these collaborations deliver opportunities that wouldn’t be possible otherwise. In regions with complex regulatory environments, having a local banking partner can mean the difference between smooth operations and endless hurdles.

At the same time, fintechs introduce new payment methods, improve user experiences, and help businesses adapt quickly.

For businesses entering these markets, choosing the right payment partner isn’t just about technology – it’s about leveraging local connections, understanding regional regulations, and ensuring that payments work seamlessly for customers.

Partnerships that blend traditional banking strength with fintech innovation are proving essential in overcoming challenges, from infrastructure gaps to fraud risks.