In the world of finance, there always seem to be some very strange evolutionary trends. Developing markets, which have an excellent opportunity to skip traditional payment methods altogether, somehow are flocking to payment cards. In this day and age of mobile device usage, that seems like an odd choice, but is it that strange of a development?
Developing Regions Favor Card Payments
Whenever a nation starts showing signs of development, it is only a matter of time until investors start showing up. Moreover, as countries develop their economy, it becomes more convenient for consumers to pay for goods and services. Unfortunately, using cash is not a viable option in the long run, as currency is very annoying to deal with.
Contrary to what some people would expect, retailers in developing nations are not interested in going all-in on mobile payments. Instead, they favor payment card acceptance, thanks to favorable regulation and new technologies. In Asia-Pacific, for example, the number of merchants accepting card payments rose by 29% in 2015. This is not only a staggering number but also a sign of things to come.
Regulation plays an integral part in the growth of payment card acceptance for these developing nations. Although the majority of payment methods is hindered by harsh regulation, this doesn’t seem to be the case in these developing regions. Malaysia reformed its interchange fees last year, which encourages merchants to deal with payment cards.
Some countries do things very differently when it comes to regulation, though. In Kazakhstan, for example, it is forbidden to refuse payment cards; merchants and enterprises can face legal punishment. Although this is an effective way to enforce card payment adoption, it is not the best business practice.
That being said, dealing with payment cards opens up international trading routes as well. Although there are currency conversion fees to take into account, accepting payment cards gives merchants an option to immediately expand their customer base on an international level. This may only be a minor selling point in developing countries right now, but it shows that there are advantages to dealing with this rather insecure payment method.
It seems inevitable that the world will transition into mobile and contactless payments over time. The vast majority of those payment options rely on using payment cards in some form, though. All of this still leaves plenty of room for growth for other global payment options, including Bitcoin and other cryptocurrencies.
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