Payment Market Research Articles

The role of public-sector-led inclusive instant payment systems for growing the digital payments industry in Africa

Digital payments are the most popular financial service in Africa, having been adopted by half of all adults. Nevertheless, there remain significant barriers to access in Africa’s digital payment sector, stymieing growth. Cost and distance to a branch or agent are chief among them, exacerbated by the fact that many economies in Africa have small financial services markets, with payment sectors dominated by private sector financial service and payment system providers that have invested in proprietary, closed-loop digital payments processing infrastructure. These closed-loop systems can be inefficient and therefore expensive to operate, leaving payment services out of reach for millions of end users. With the goal of calling out fruitful approaches for expanding and maturing Africa’s payments market, this paper highlights lessons from four public or public–private instant payment systems (IPS) initiatives that aimed to build affordable and inclusive digital public infrastructure to enable broader access and therefore growth in Africa’s digital payments sector. Using case studies from Ghana, Malawi, Zambia and the Central African Economic and Monetary Community, this paper highlights lessons from these initiatives, including the need for enabling regulations, the need to craft a compelling business case for incumbent payment service providers, central bank involvement to ensure a focus on inclusive access, and customer-centricity to ensure the IPS can process high-demand payment types through the channels that end users prefer.

Do CBDCs promote financial inclusion and strengthen the monetary regulations?

Digital currencies are impacting the financial lives of people and countries around the world; particularly developing countries see the retail Central Bank Digital Currencies (CBDCs) as an opportunity to increase financial inclusion and introduce new monetary policy implementation mechanisms. The decision to launch a digital currency mainly depends upon the goals and objectives being set by the Central Bank of any respective country. Digital currencies help to implement monetary policy more effectively to achieve the financial system stability. Kazakhstan is the leading economy in the Commonwealth of Independent States region; the digital payments market is changing rapidly in Kazakhstan, being driven by fintech innovations and public investments in payment technologies. In this article, we thoroughly discussed how launching of “Digital Tenge” is promoting financial inclusion and strengthening the monetary regulations across Kazakhstan. We took the case of Kazakhstan because it’s the first country from Central Asia which took the initiative of launching digital currency, and the National Bank of Kazakhstan has already announced that implementation of “Digital Tenge” would be completed in Kazakhstan by the end of 2025. The implementation of a “Digital Tenge” as a CBDC in Kazakhstan would expand the range of financial services being available to the nation. Having direct authority over the digital currency will empower the National Bank of Kazakhstan to adopt more efficient monetary policy, exerting influence over interest rates, money supply, and general economic stability. Furthermore, by providing digital financial services to marginalized communities, the digital Tenge would also help to solve the difficulties of financial inclusion in Kazakhstan. The article provides the possible policy routes for the governments of developing countries and the financial regulators about adopting CBDCs for promoting financial inclusion and to strengthen the monetary regulations.

Trends and prospects for the development of e-commerce in the Republic of Kazakhstan

In recent years e-commerce has begun to play a significant role in the development of a market economy. Every year, its influence grows, changing the surrounding market infrastructure and people's attitude to the new conditions of digital commerce. The purpose of the article is to determine the features and prospects of the development of e-commerce in the Republic of Kazakhstan. The domestic online sales market is considered as an object of research. The paper analyzes the current state of the e-commerce market, identifies the main trends and prospects for its development. The dynamics of the development of e-commerce in the period from 2016-2022 is presented, the main factors that have a positive impact on the growth of e-commerce, such as a high level of digitalization, the development of new digital technologies in the market of non-cash payments and others are considered. The factors that have a negative impact on the domestic online sales market have been identified: underdevelopment of the logistics infrastructure, rising inflation, an insufficiently effective mechanism for regulating online commerce and consumer protection. To assess consumer behavior in regions with a less developed e-commerce market, a survey was conducted among residents of the Abai region, which allowed to determine the prospects for the development of this market. Measures have been proposed to develop the logistics infrastructure and introduce innovative delivery methods that will contribute to the growth of the industry. The results of the work can be used in the development and implementation of programs in the field of stimulating the development of the e-commerce market and improving its infrastructure.

Why does mobile payment promote purchases? Revisiting the pain of paying, and understanding the implicit pleasure via selective attention.

The past years have witnessed a phenomenal growth of the mobile payment market, but how mobile payment affects purchase behavior receives less attention from academics. Recent studies suggested that lower pain of paying may not fully clarify the relationship between mobile payment and increased purchases (i.e., mobile payment effect). The current research first introduced price level in Study 1 and demonstrated that the pain of paying served as an underlying mechanism only in the high-price condition rather than the low-price condition. As such, Study 2 was conducted in a low-price context to address the uncovered mechanisms. We propose a new concept of "pleasure of payment" that is defined as an implicit and consumption-related hedonic response based on the cue theory of consumption. By tracking spontaneous attention to positive attributes (i.e., benefits) of products, Study 2 demonstrated this implicit pleasure as a psychological mechanism for the mobile payment effect when the pain of paying was not at play. These findings have important implications for mobile payment in research and practice by identifying price level as a boundary condition for the role of pain of paying and understanding the positive downstream consequences of mobile payment usage on consumer psychology.

Current trends in the development of digital financial and payment market in Azerbaijan

Aim. To consider the key aspects of digital transformation of the financial sector in the context of large-scale changes taking place in the digital financial sphere.Objectives. To determine the sequence of actions of the Central Bank of Azerbaijan in the direction of cashless economy; to study the change in the architecture of the financial sector in connection with advanced financial technologies; to study the problems of FinTech providers of new financial technologies as a result of the introduction of the concept of open banking.Methods. The dialectical approach to analyzing the key phenomena and regularities contributing to the development of economic relations, as well as a systematic approach to revealing the main factors of development of digital transformation of the financial and payment sector served as the methodological basis of the research. Along with this, such methods of scientific analysis of socio-economic phenomena and processes as statistical, comparative, fundamental and functional analysis, expert assessments and modeling were used. The theoretical basis was formed by the final results of fundamental and applied research, reflected in periodicals, a number of monographs, materials of scientific conferences.Results. The Central Bank of the Republic of Azerbaijan with the purpose of expanding the process of application of innovative financial technologies on the basis of advanced technological solutions and thus supporting FinTech activities has started to implement measures on formation of appropriate legislative bases for introduction of open banking and technological infrastructure. The main reason for people’s decreasing attachment to traditional banking is the availability of digital banking services in a convenient and easy way, without wasting time and waiting in long queues.Conclusions. Azerbaijan has formed a positive trend in the development of digital banking, which can be considered one of the main challenges of modernity. Today, digital banking in Azerbaijan is replacing traditional banking services. The emergence of prominent FinTech providers of new financial technologies as a result of the introduction of the concept of open banking, which allows individual banks and customers to share financial information with third parties, is changing the status quo of the financial ecosystem. This new paradigm has the potential to transform the traditional financial services ecosystem into a dynamic and competitive environment where startups and small innovative companies, competing with larger providers, offer new products and services. A positive trend in the development of digital banking as one of the main challenges of modernity has emerged in Azerbaijan. Today digital banking in Azerbaijan displaces traditional banking services.

Towards a Level-Playing Field between Banks and Non-Banks in the European Market for Electronic Payments

Towards a Level-Playing Field between Banks and Non-Banks in the European Market for Electronic Payments

EVALUATION OF THE IMPACT OF FINANCIAL TECHNOLOGIES ON THE FINANCIAL EFFICIENCY OF COMMERCIAL BANKS

The topic of financial technologies (Fintech), which has attracted enormous interest in the last decade, has become one of the most promising niches that allow participants providing services in the payment market to improve the efficiency of financial activity systems. Financial industry players such as commercial banks have begun to pay special attention to the development of this new niche. In order to maintain or occupy higher market positions, they must take into account the potential of financial technologies and their possible exploitation by integrating new solutions into already functioning banking systems. This article aims to reveal the influence of financial technologies on the financial efficiency of commercial banks. After highlighting the importance of financial technologies for commercial banks in the theoretical part of the study, the analytical part examines the financial indicators of Lithuanian commercial banks (SEB, Swedbank, Šiaulių bankas, and Citadelė) in the period 2017–2021. Correlation and regression analysis will be used to determine the impact of financial technologies on the financial efficiency of commercial banks. The results of this study determines how financial technology impacts the financial performance of commercial banks.

The Stackelberg duel between Central Bank Digital Currencies and private payment titans in China

This study presents an in-depth analysis of the rapidly evolving mobile payment market, focusing on the competition between Central Bank Digital Currencies (CBDCs), as exemplified by China's Digital Currency Electronic Payment (DCEP), and well-established private digital payment platforms. This research builds on economic theories, including Metcalfe's Law and the Capital Asset Pricing Model (CAPM). It employs the Stackelberg game model as a strategic framework to dissect these payment systems' interactions and potential equilibrium outcomes. A notable innovation of this study is the application of advanced simulation techniques, as it uses Matlab2018a to model and predict variations in profit margins contingent on the size of the user base for each payment method. This approach yields three insightful and nonintuitive results that deepen our understanding of market dynamics. First, the study underscores the indispensable role of government support, particularly in the nascent stages of DCEP implementation, as a catalyst for competitiveness against entrenched third-party systems. Without proactive and substantial backing from the government, the DCEP might struggle to gain a foothold in a market dominated by private entities. Second, this study highlights the critical interconnectedness among the various user groups. It posits that for DCEP to effectively penetrate the market and challenge the dominance of third-party platforms, it must strategically align itself within the existing networks of these platforms. This aspect emphasises the importance of understanding and leveraging the complex web of relationships and dependencies within the mobile payment ecosystem. Third, the study identifies mutually beneficial cooperative strategies between the DCEP and third-party platforms. Drawing on the concept of Nash equilibrium, this suggests that collaboration, rather than competition, could lead to optimal outcomes for both parties. This cooperative stance can manifest in various forms, such as shared technological infrastructure, joint ventures, and cross-platform compatibility, ultimately enhancing the value proposition for end users. These findings have significant implications for policymakers, financial regulators, and market strategists, as they suggest that a balanced approach that harmonises the strengths of state-led digital currencies and private payment solutions is crucial for the sustainable development of the digital finance sector. This study also provides strategic insights for CBDCs and private payment platforms, guiding them to make informed decisions in a market increasingly characterised by technological innovation, regulatory shifts, and evolving consumer preferences.

Development of a Universal Platform for Managing Payment Operations on a Global Scale: Methodology and Implementation Examples

The article discusses the main trends and processes in the field of digital finance. The purpose of the research is to analyze the functioning of electronic payment systems as a key element of the digital financial sector, with a focus on identifying the main threats to user security and developing recommendations to improve their security. The author analyzes the functioning of electronic payment systems as an important segment of the digital finance sector. Statistics on the global electronic payments market and forecast indicators are presented. Main security issues for users of electronic payment systems are listed and described. It is noted that customers conducting transactions through an electronic payment system have to disclose some personal and financial information, which exposes them to the risk of data leakage. The use of electronic payment systems is associated with several risks, which vary depending on technology, provider company, and user awareness. A list of major risks is presented, focusing on the stage of authorization and authentication of the client within the system. Ways, methods, and technologies to enhance client security during entry into the payment system, as well as main methods of ensuring security (secure Internet connection, client identification and access control, technical protection, payment system certification), are discussed. Advantages and disadvantages of password-based technologies are presented, including one-time passwords (OTPs), single sign-ons (SSOs), OAuth, OpenIDs, One Identity, and One Key, and the Cyber Source platform.

CBDC and Card Payment Market

CBDC and Card Payment Market

THE IMPACT OF DIGITAL PAYMENTS ON THE GROWTH OF CASHLESS PAYMENTS AND THE FACTORS LIMITING ACCESS TO FINANCIAL SERVICES

Most countries worldwide are undergoing digitalization, with the adoption of non-cash payment methods accelerating. In recent years, the population and economic entities in our country have readily embraced the use of digital technologies. Organizing new methods of innovation is a key priority in the pursuit of strengthening the financial stability of the banking system. The introduction of new technologies serves as an effective tool for improving production potential, providing financial support, and stimulating entrepreneurship. Ensuring the reliability and security of the payment system, enhancing the efficiency and speed of payment operations, expanding financial inclusion by providing the population with access to payment services, minimizing the volume of cash circulation, and organizing and promoting new methods of innovation in the payment market. The application of financial technologies, especially in payment services, enables market participants to conduct their payments conveniently, safely, and at low cost. It allows for a broader involvement of economic cycles in the banking sector, limits the informal economy, and increases banks' credit resources and financial intermediation.

The Impact of User Experience and Use of Mobile Payment Services in China on the Domestic Mobile Payment Market: Focusing on Alipay and WeChat Pay

The Impact of User Experience and Use of Mobile Payment Services in China on the Domestic Mobile Payment Market: Focusing on Alipay and WeChat Pay

Analysis of the Current Situation, Opportunities, Challenges and Countermeasures of China's Digital Payment System in the Post-epidemic Era

In recent years, under the influence of the COVID-19 pandemic, China's digital payment system has encountered significant opportunities, challenges, and changes. The digital payment system mainly includes three parts: electronic currency, electronic payment, and digital currency. This paper takes the perspective of the post-pandemic era and integrates the previous research on the digital payment system. It comprehensively analyzes the current situation, challenges, and development opportunities of China's digital payment system from different angles by examining the development of China's digital payment market. It is found that the pandemic has stimulated the continuous development of digital payment, gradually replacing cash settlement. In the post-pandemic era, emerging industries have shown strong vitality for digital payment. However, digital payment also has risks of inadequate information security, digital divide, and private enterprise monopolies. In the post-pandemic era, digital payment has more development opportunities and presents a sustainable development trend with the promotion of legal digital currency, stimulation of emerging industries, and support of government policies. This article proposes corresponding forward-looking suggestions from the perspectives of governments, companies, and individuals to further promote the development of China's future digital payment system in response to the above risks. Specifically, it should improve risk control and data security protection mechanisms, help vulnerable groups cross the digital divide and mobile payment dilemma, and accelerate the promotion and use of China's legal digital currency.

The payments industry in Germany: Status and further developments or a triangle of scale, complexity and low fees

The German payments market is sizeable, handling almost one-quarter of the non-cash transactions conducted in the euro area, and benefiting from structurally lower cost levels. At the same time, it is characterised by a highly complex and intense competitive set. These two factors seem to result in low fee levels. The COVID-19 pandemic has accelerated structural change (and digital payments adoption) in a market with distinctive institutions and consumer preferences. This paper reviews both the key players shaping the overall payments market, as well as the characteristics of key payment solutions and situations. In doing so, the paper identifies and explains the idiosyncrasies of the German market, linking back to the aforementioned factors shaping the German payments market.

Digital payment services in Poland as assistive technology and empowering tool for consumers with disabilities

The retail payments market is developing, and the implementation of digital payments has been one of the trends in consumer finance worldwide. This is the first study to jointly examine the perception of digital payment methods and financial services’ role, for consumers with and without disabilities. First, based on a nationwide survey on Internet users in Poland, the authors compared the popularity of selected financial services among consumers, then the perception of characteristics of payment methods. The results revealed that consumers with disabilities use a wide range of payment services, and they are included in digital finance. Moreover, contactless payment cards are used by consumers with disabilities even more often than by consumers on average. The results suggest that the control over finances make digital payments an important empowering tool for consumers with disabilities. Finally, the paper provides recommendations for the banking sector, on strategies for offering digital financial services.

Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design

Many central banks are considering issuing a central bank digital currency (CBDC). How will the CBDC affect the macroeconomy? Will its design matter? To answer these questions, we theoretically and quantitatively assess the effects of a CBDC on consumption, banking, and welfare. Our model captures the competition between different means of payments and incorporates a novel general equilibrium feedback effect from transactions to deposits creation. The general equilibrium effects of a CBDC are decomposed into three channels: payment efficiency, price effects, and bank funding costs. We show that a cash-like CBDC is more effective than a deposit-like CBDC in promoting consumption and welfare. Interestingly, a cash-like CBDC can also crowd in banking, even in the absence of bank market power. In a calibrated model, at the maximum, a cash-like CBDC can increase bank intermediation by 10.2% and welfare by 0.059%, and it can capture up to 23.3% of the payment market. We also discuss some lessons for designing a CBDC. This paper was accepted by Will Cong, Special Section of Management Science: Blockchains and Crypto Economics. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.02763 .

What explains the sudden surge in cryptocurrency? A consumption value theory perspective

PurposeCryptocurrency has emerged as a significant component on the surface of the financial industry. With its growing popularity and blockchain as an underlying technology, cryptocurrency has the potential to disrupt the digital payments market. In light of this, this study aims to identify and empirically validate factors that influence the continuous intention of customers toward the adoption of cryptocurrency.Design/methodology/approachThe study extends consumption value theory by incorporating additional variables – monetary value, perceived trust and perceived risk – to enhance the predictive power of the proposed model. The data were analyzed using the partial least square technique on the sample of 285 customers.FindingsThe results indicate that trust is the most significant factor to influence customers’ intention to use cryptocurrency, followed by conditional value, epistemic value, emotional value and monetary value. The authors also found the significant moderating effect of personal innovativeness on behavioral intention and actual usage of cryptocurrency.Practical implicationsThe analysis of the study gives policymakers valuable information for the establishment of the regulatory framework that supports innovation while protecting the rights of the consumer.Originality/valueThe study embeds great theoretical and practical significance by generating a new technical thread that will facilitate multiple players to use their resources optimally.

A Study on the Business Model Optimization Strategy of Knowledge Payment Platform: The Example of Zhihu

The rapid development of the Internet has contributed to the continued advancement of the knowledge payment industry. Currently, knowledge payment platforms, as the core force of the knowledge payment market, guide the continuous changes in the direction of content production, enterprise operation and consumer demand in the knowledge payment industry. However, research on knowledge payment platforms in academia is still in its infancy, and in particular, there is a paucity of research that systematically examines the characteristics of successful knowledge payment platforms and strategies to address the problems of business models from the perspective of business models as a whole. Therefore, a systematic and thorough understanding of the essence and richness of the business models of knowledge payment platforms is crucial to an in-depth understanding and grasp of the development rules of the knowledge payment industry.This article focuses on the business models of Internet knowledge payment platforms and their optimisation strategies. Take Zhihu as an example using a case study approach and the perspective of value networks, this paper constructs a business model based on value networks and conducts specific research and analysis on the eight elements of the business model to explore the essence of the business model of knowledge payment platforms and its optimisation strategies under the collaborative competition model, which is equally important in the Internet era. Evidence from this case study finds that value network is the main form of operation of the business model of platform-based enterprises, and the platform achieves the business closure of value acquisition and value maintenance through the engine driven by value proposition and value co-creation.The study reveals that competition and cooperation are equally important business concepts and the whole process of cross-enterprise value co-creation in the Internet era, which complements the research perspective of business model optimization strategy research focusing on competition and provides certain reference significance for the business model optimization of platform-based enterprises.The contribution of this paper is to provide a new perspective for the study of business model optimization strategies. This article is sorting out business model optimization strategies. On the basis of relevant literature, the original theoretical research perspective of enterprise management focusing on competition rather than cooperation is supplemented，From the perspective of “value network”, combined with the theoretical basis of Yuanlei’s business model, a business model based on value network is proposed Model. On this basis, take the knowledge payment industry as the exploration field, and take the typical knowledge payment platform Zhihu platform. In order to study the case, by revealing the key factors for the success of the business model of Zhihu platform, verify the new business model theory Explanations of enterprise practice. Through research, it is found that the theoretical model of the new business model better explains the Internet knowledge. The essence of the business model of the payment platform is a complete value co-creation closed-loop structure, which also reveals the Internet knowledge.

Decisions of Knowledge Payment Product Supply Chain Considering Government Subsidies and Anti-Piracy Efforts: Based on China’s Knowledge Payment Market

Knowledge payment is an emerging business mode that has developed in the era of social media. With the impact of Internet technology, the knowledge payment market is rapidly expanding, especially in China. However, piracy leads to more intense competition and affects the profits of knowledge providers and knowledge payment platforms. Government policies combined with the anti-piracy measures of these platforms have become effective methods to combat piracy. This paper investigates the impact of government subsidies and anti-piracy efforts on a knowledge provider’s and platform’s optimal decisions. We develop a two-stage knowledge payment product supply chain with a knowledge provider and a knowledge payment platform. The platform in the leader position of the supply chain has anti-piracy efforts and the government subsidizes the platform. Stackelberg game models are constructed and compared to examine the equilibrium solution in relation to three modes (no government subsidies and no anti-piracy efforts; only anti-piracy efforts; and both government subsidies and anti-piracy efforts). Our analysis shows that (1) both government subsidies and anti-piracy efforts increase the quality level and unit quality signing bonus of the knowledge payment product. Meanwhile, the product’s retail price increases with anti-piracy efforts but decreases within a certain subsidy range. (2) The knowledge provider’s profit always increases with the anti-piracy effort level, while the platform’s profit is an inverted U-shaped relationship with the anti-piracy effort level. (3) Government subsidy behavior can always increase a knowledge provider’s profit but may not necessarily increase the platform’s profit. Moreover, there exists a certain threshold: when subsidies are lower (higher) than this threshold, it is more beneficial to the knowledge provider (platform). In addition, we also find that the method of high subsidies combined with a low anti-piracy effort level benefits both parties and that the subsidized party will be more sensitive. The results will provide knowledge providers and platforms with new market management insights from the perspective of government subsidies and anti-piracy efforts and guide them to make optimal decisions.

MARKETING STRATEGY OF FOREIGN BIGTECH-COMPANIES IN THE RUSSIAN PAYMENT MARKET UNDER SANCTIONS

In this article the Russian payments market conditions are investigated from the perspective of marketing activities of foreign technology companies in Russia. The fundamental goal of the research is to develop a variant of foreign companies' adaptation to the transforming payment market in the conditions of sanctions. To achieve the goal, the following tasks were set and solved: to investigate the influence of macro factors on the marketing of foreign bigtech companies in Russia, to analyze the change in the balance of power in the market since the beginning of the introduction of sanctions in 2022, to offer development vectors for the marketing strategies of foreign companies.