Payment, as we have seen, is one of the main functions of currency, and understanding how this environment is transforming is essential. What can we expect going forward? What differences exist between numerous countries/regions? These are topics addressed annually by the GPR (Global Payments Report) from Worldpay from FIS6, a reference report in this market that is produced annually.
The 2023 report brought the following trends as the main payment trends for the coming years: 'Peer-to-peer' payments are growing, anchored by instant payment systems. The implementation of Open Banking and Data Protection Laws in several countries in recent years addresses the two major obstacles for this to occur, namely the security and privacy of payments. Examples in this regard are the LGPD and Open Banking, or in the Brazilian case, Open Finance, which has already been properly implemented.
• Credit cards continue to be one of the main sources of payment;
• Digital wallets are on the rise;
• The use of paper money continues to decline! (If you've made it this far in the book, this should not come as a surprise). However, it is believed that although there is this real decline, paper money is still important in several countries, and we will not have a world without paper money in the near future;
• BNPL (Buy Now, Pay Later – a solution very present in some countries where Fintechs finance the end consumer) has reached an important level and is expected to have lower growth rates in the coming years;
• Crypto is still in its infancy in terms of payments. There is an ocean of opportunities in this aspect, in my opinion;
• E-commerce is growing in all regions.
Some topics mentioned in previous versions of this report also pointed to important insights. One of them is the prominence that Southeast Asia will have in payments. With approximately 660 million people, numerous unbanked individuals, a rapidly growing middle class, and one of the highest smartphone usage rates in the world, this region is expected to lead payment growth globally.
Unlike much of the West, where migrations to digital wallets and payment methods were preceded by a shift from cash to cards (credit and debit), in the case of Southeast Asia, there is a direct migration from cash to digital wallets, similar to what happened in China.
Obviously, there are some differences between the countries in the region, but in general, Asia as a whole today has the highest rate of digital payment adoption in the world. This is an important trend for all of us in the West to watch, as it is very likely that, with some delay, the same will happen here. Just to cite one example, the use of QR codes, which became popular in Brazil since 2021 with the introduction of PIX, had already been a widely used payment method in various Asian countries for over five years.
Next, we have an important generational issue, although there is no clear division; it is called Generation Z, those born between the late 1990s and early 2010s, who today make up about 26% of the global population. They are the first generation to be born fully digital, having to make no migration or learning process for it.
I have children in this generation and writing this reminded me of when my youngest, at three or four years old, climbed onto a stool and started touching the flat-screen TV we had in the living room, trying to 'turn the page,' as he did on his iPad.
This is a generation that demands its participation to be always collaborative, quite critical, and expects a high degree of personalization and quality in everything offered to them online. Unlike previous generations, which accepted some mass-produced alternatives, this generation has already experienced the possibility of personalization in the digital realm we have today and will not renounce it.
This generation also expects a high level of interaction and alignment of its values with the values of the brands it consumes, and that the distance between commercial and social experiences becomes increasingly smaller.
This, in itself, makes it necessary for brand strategies to be longer-term.
And perhaps most importantly, this generation does not have the same ties to traditional financial systems as the previous generation, making it more open to financial experiences and payments that offer convenience and practicality.
Digital wallets, 'peer-to-peer' payments, flexible payment terms (like those offered by 'buy now, pay later' options), and personalized shopping experiences are clearly demands of this generation.
Another trend raised by previous reports is what they call Social Commerce. As we spend more and more time on social media (and Brazil is one of the leaders in this regard, it should be noted), why would we need to leave them to buy the things we want? China leads the way in innovations and acceptance of this global trend with WeChat, but examples like TikTok Coin in India and Elenas in Bolivia also follow the same recipe of combining social media with e-commerce.
It is worth highlighting the case in Brazil's retail segment (Ponto Frio and Casas Bahia), which during the pandemic implemented 'Contact me on ZAP,' organizing its sales force, previously in-person, to sell via social media.
The combination of social media and e-commerce brings numerous benefits for companies, which will know their customers better, being able to offer them the best product, in the best place, at the best time.
Fast, simple, secure, and reliable payment methods are the foundation for this interaction, which, in global terms, is still crawling and has enormous potential.
Finally, we have the change that this proliferation of artificial intelligence will bring, making items like voice commerce possible, which could enhance our experience even more.
In conclusion, what I see is a proliferation of payment solutions in the digital space accompanying this digitization that is happening with currency, and only a few small signs of the transformation that tokenization can bring to this process. And speaking of tokenization, I will now present one of the most interesting possibilities I envision for the future.