85% of the population lives in emerging markets, where approximately 90% of all transactions are cash-based.

1. Fundamental
Considerations for
Cashless Payments
in Emerging Markets
85% of the world’s population lives in emerging markets, where as many
as 90% of transactions are cash-based. However, the future of paper-
based payments in these areas is changing due to growing demand
for financial inclusion among increasingly tech-savvy populations and
government initiatives to increase tax revenues and stimulate economic
growth. These and other driving forces are behind the move towards
cashless payments (or “less cash”) in developing markets today.

2. 1
Fundamental Considerations for Cashless Payments in Emerging Markets
While there is a seemingly endless variety of technologies for merchants to accept cashless transactions,
there is no “one size fits all.” This can make finding the right payment solution a daunting process—especially
in emerging markets where many obstacles can stand in the way of digital commerce.
This four-part series highlights the following variables that stakeholders in developing markets should
consider when introducing or expanding cashless payment technologies, as well a look at some of the
cashless projects taking place today:
I. Infrastructure
II. Merchant and Consumer Trends
III. Processing and Acquiring Capabilities
Considering these variables can increase the chances of successful payment technology deployment and the
ability to manage, service and grow cashless payment assets in the future.
Part I: Infrastructure
“Accepting” cashless payments—whether credit/debit, contactless, pre-paid, mobile wallets, person-to-person
(P2P) or NFC—is merely one piece of the puzzle. Payment acceptance devices must be able to relay data to
all parties involved in the payment system, and electricity and internet access are crucial. While obvious and
often taken for granted in many parts of the world, both demand special consideration as their strength and
availability can sharply vary among developing countries.
Internet Access
The internet can be accessed through wired or wireless connections. Common wired connections include
high-speed DSL, cable and fiber optics, as well as and telephone lines that support relatively slow dial-
up modems. Different types (generations) of wireless connections, such as 2G, 3G and 4G, and WiFi, are
supported by satellites and cellular towers. Internet connectivity can present a serious obstacle to cashless
ecosystems in certain parts of world that, according to the Center for Strategic & International Studies, are
home to more than 60 percent of the global population that doesn’t have regular internet access.
Regional internet connectivity should be considered in terms of type, strength and availability, since many
payment technologies have specific bandwidth requirements and internet connection configurations.

3. 2
Fundamental Considerations for Cashless Payments in Emerging Markets
This consideration was important during Egypt’s modernization of its entire retail petroleum system with
digital payment acceptance capabilities—an initiative aimed at gaining market transparency for better control
over domestic petroleum pricing and distribution. Certain regions had reliable internet access, while others
only had dial-up or limited wireless networks. With this in mind, the vendor in charge of the project selected
payment devices featuring Ethernet, dial-up and dual
3G and WiFi connection capabilities. Many were also
configured to automatically recognize and switch to the
strongest available network—helping to ensure optimal
performance and fast processing times.
In addition to multiple connectivity options, some
payment technologies also have “store and forward”
capabilities, which allow them to accept—and
sometimes even validate—cashless payments when wired or wireless networks are down. Payment data is
stored in these devices and can be relayed accordingly once networks are back online.
Global internet accessibility and usage. Source: http://www.prototypingengineer.com/elon-musk-international-interplanetary-internet/
Internet connectivity can present a serious
obstacle to cashless ecosystems in certain
parts of world that are home to more than
60 percent of the global population.

4. 3
Fundamental Considerations for Cashless Payments in Emerging Markets
Electricity
Electrical infrastructure is another obvious, yet important consideration, as 1.3 billion people around the world
do not have access to electricity. In India, for instance, more than 300 million people do not have power, and in
Africa and certain Asian countries such as Burma and Cambodia—those without electricity represent as much
as 70 percent of the population, according to a 2015 Washington Post report.
Even those with power are prone to frequent outages due to problems with local grids. This is the case in
much of the Middle East, North and Sub-Saharan Africa, the Arabian Peninsula, and South Asia—where
businesses experience as many as 26 power outages each month. Outages can result in “dropped”
transactions—just like cellular network interruptions can result in dropped calls. Unfortunately, lost revenues
from failed transactions can quickly add up for merchants, and the inconvenience can be very frustrating for
their customers.
0
5
10
15
20
25
30
South
Asia
M
iddle
East
North
Africa &
Arabian
Peninsula
Sub-Saharan
Africa
East Asia &
the
Pacific
Caribbean
Nations
Latin
America
Approximate Number of Monthly Outages
Source: http://www.worldatlas.com/articles/power-outages-in-places-of-business-around-the-world.html

5. 4
Fundamental Considerations for Cashless Payments in Emerging Markets
In regions prone to blackouts, technology searches should focus on devices with A/C electrical connections
in addition to re-chargeable batteries that can provide back-up power. “Knuckle busters” could also be issued
as safeguards. Once standard in developed countries, merchants can use knuckle busters to manually
imprint customers’ card information on slips of carbon paper. These devices can also give card acceptance
capabilities to merchants in areas that do not have electricity whatsoever.
Up Next
Infrastructure is critical to the successful deployment of cashless technologies, which can bring financial
inclusion to consumers and increased commerce and annual savings for merchants. However, deployment is
futile if merchant and consumer adoption does not occur.
Part II of this series will highlight key merchant and consumer trends that stakeholders should consider to
help ensure cashless payment adoption by both audiences.