India is set to outperform global powerhouses, such as the US, regarding impending increases in consumer spending – which is set to surpass $5.4trillion by 2034, up from a current figure of $1.8trillion, according to data from the World Data Lab analysed by EBANX, the tech firm focused on payment services for emerging markets.
With India looking set to experience a growth of around 12 per cent per year in consumer spending, it looks likely to significantly beat the growth of the US at four per cent, and over double the global average of five per cent.
EBANX explained that this boost will place India as the third-largest market in the world in consumer spending, behind only the US and China.
“India has recently achieved unprecedented levels of financial inclusion and is actively promoting the adoption and growth of the online sector,” explains Rashmi Satpute, country director of India at EBANX. “The forecast for consumer spending will be felt in digital commerce as well, in all verticals.”
EBANX has also delved into two other fast-growing regions, Latin America and Africa, where countries are experiencing some of the fastest acceleration in the world. It found that Egypt is expected to accelerate growth by triple-digits in consumer spending over the next decade – by 167 per cent. Meanwhile, Ethiopia’s smaller economy is estimated to experience a huge 429 per cent growth.
Other countries in Latin America and Africa expected to experience significant growth in consumer spending are:
- Kenya (115 per cent)
- Morocco (107 per cent)
- Ghana (106 per cent)
- South Africa (42 per cent)
- Brazil (62 per cent)
- Mexico (54 per cent)
“While in India and across Latin America, digital commerce has driven digital payments, in Africa we are seeing the opposite, with digital payments driving digital commerce,” says Juliana Etcheverry, director of country growth – Latin America at EBANX. “The context and challenges of each impact the means, not the end, because the result of this digital revolution is very similar in all these regions: economic development, financial inclusion, and innovation.”
Embracing instant payments
Due to the low penetration of credit cards, barriers related to banking access, and consumer behaviour, fintechs and governments began seeking solutions to simplify consumers’ lives and enable them to purchase products and services using local payment methods.
In India, the country with the most widely used instant payment system in the world, UPI is the preferred method for online purchases, accounting for 55 per cent, (30 per cent points higher than credit cards). For recurring purchases, UPI AutoPay has about 10 million scheduled payments per month, with an average approval rate of 92 per cent, according to data from the National Payments Corporation of India (NPCI).
In Latin America, Brazil’s instant payment system Pix is following the same path and will surpass credit cards in digital commerce by 2025, when the Brazil Central Bank plans to launch Pix Automático (Automatic Pix in free translation) for recurring payments.
African countries are other examples of how emerging markets have been leading in payment innovation. It has been seventeen years since the continent embraced mobile money, a financial service that enables users to pay and exchange values through a cellphone, with no need for an internet connection or a bank account.
It accounts for nearly half of the total digital commerce in Kenya, ($2.3billion, or 48 per cent of the market). Including mobile money, APMs will represent around 63 per cent of African digital commerce by 2025.
“This landscape is promising, but there are still challenges that need to be addressed, such as high market fragmentation and a lack of interoperability,” concludes Wiza Jalakasi, director of Africa market development at EBANX.