How People Pay P2B Payments
From P2P to P2B
The new ways to pay merchants in emerging economies
In a nutshell
P2P-born payments such as instant transfers, digital wallets, and mobile money are now the go-to method for online purchases in many emerging markets, bringing more people in and accelerating the growth of digital commerce.
Instant is the new cash: payments like India's UPI and Brazil's Pix provide convenience and speed that mimics cash transactions, contributing to the digitization of both consumers and companies.
In all macro-regions, alternative payment methods are set to surpass cards in online sales by 2027 while also evolving to provide a user experience more akin to cards: instant, seamless, and fundamentally online.
The uptake: A2A (account-to-account) transfers are fueling a more open and fast money movement and transforming how people engage with financial transactions, ushering in new opportunities for digital commerce in emerging markets.
Payment methods for day-to-day purchases are becoming go-to options for digital commerce in rising markets
The recent growth of new payment methods, largely driven by emerging economies, signals significant changes in global consumer behavior.
The rising popularity of P2P (person-to-person)-born payment systems —either instant transfer methods, digital wallets, or Sub-Saharan Africa's ubiquitous mobile money— indicates a major cultural shift within the digital payments landscape.
These methods, characterized not only by their real-time transfer capabilities but also by their seamless, mobile-born, and digital-first operations, are redefining how people engage with financial transactions and fostering the growth of digital commerce.
Though many of these alternative payment methods (APMs) weren’t initially designed for paying merchants, their deep integration into daily life makes them the dominant choice for online purchases in many countries. This is particularly true in regions with limited access to cards and bank accounts.
Now, these APMs are poised to achieve significant milestones in the digital commerce realm.
According to projections by Payments and Commerce Market Intelligence (PCMI), the coming years will bring significant growth to digital commerce in several emerging markets. The compound annual growth rate (CAGR) for 2023-2027 is estimated at 19% across the 20 largest markets in Latin America, Africa, and Asia. This far surpasses the global average CAGR of 9.5% projected for 2022–2027, as forecasted by GlobalData.
Alternative and P2P-originated payment methods push this growth, accounting for most online transactions in markets such as Brazil, India, Argentina, Nigeria, and Egypt.
"P2P-born transactions are changing the way people consume online across the globe," states João Del Valle, CEO and Co-Founder at EBANX.
"P2P-born transactions are changing the way people consume online across the globe."
João Del Valle
CEO and Co-Founder at EBANX
The increasing popularity of these APMs has clear ties to the demographic characteristics of emerging markets, where a significant portion of the population is unbanked or underbanked, with limited or no access to credit or debit cards.
Many of these consumers have mobile phones and/or internet access, making them more inclined to adopt mobile-native payment solutions. Therefore, in many locations, those A2A (account-to-account) transactions also play an important role in financial and even digital inclusion.
83%
of people in developing countries have a mobile phone – a higher penetration than bank accounts (71%) or cards (46%), per the World Bank
Companies looking to unlock the full potential of these markets should closely monitor emerging local payment methods, deeply rooted in P2P-born transfer of funds, which are driving new consumers toward digital commerce.
"It's not only about offering more options. It is also about bringing people in," says Del Valle.
Who are the new consumers, and what are their preferred payment methods?
A large number of people are expected to enter the consumer market over the next decade, marking a significant shift in economic participation.
In many emerging economies, the remarkable growth in digital commerce can be largely attributed to the overall expansion of the consumer class, as the World Data Lab (WDL), a global data analytics company specializing in spending and demographic data, points out.
697M people
will join the consumer class in rising markets until 2034, per the World Data Lab
WDL indicates that 60% of Latin America's population belongs to the consumer class as of 2024. In the top African markets (Kenya, Egypt, Nigeria, and South Africa), this group represents 29% of the population, while in Asia, it accounts for 44%.
Per WDL, the consumer class comprises individuals who can afford to purchase goods and services beyond their basic needs. By the same parameters, this group includes those who spend at least USD 12 daily.
The expansion of the consumer class is particularly significant in Asia, which has experienced an annual growth rate of 5.4% since 2016. According to WDL, this region is projected to have 67% of its population classified as part of the consumer class by 2034, surpassing Latin America.
This shift is especially noteworthy, as Asia had the lowest share of the consumer class among the regions analyzed in 2016. By 2034, it is expected to claim the highest share, posing a huge opportunity for global companies.
Naturally, these emerging consumers are set to drive a significant rise in overall consumption levels by 2034.
In Asia, spending is projected to grow by an impressive 122% within 10 years despite a modest population growth of 7%. Spending in Africa is expected to increase by 103%, even as the population grows by just 19%. In Latin America, spending growth is projected at a more moderate rate of 57%.
The impressive growth in consumer spending in Asia is driven by its youthful, tech-savvy population and expanding digital ecosystem. According to Statista data, online sales are expected to grow by 14% annually across emerging Asian countries by 2027, with India leading the charge. This surge in e-commerce transactions is one of the primary drivers of rising consumer spending in the region.
The new consumer class has an innate digital savvy
Across these macroregions, most of the consumer class is concentrated among individuals under 45. Projections for 2034 indicate that this demographic will remain dominant, with similar proportions persisting.
Although there are various social and regional differences among individuals in these emerging markets, the population within the 0-45 age group is—and will increasingly be—defined by digital savviness and smartphone reliance.
As time passes, this generation will become even more eager to embrace digital solutions in their daily lives, including digital payment methods. Therefore, the new consumer will be digital.
How they pay: instantly, through their phones
Despite diverse cultural preferences and varying social factors across populations in emerging markets, trends indicate that mobile-based payments are poised to either grow in popularity or maintain their dominance.
Indian UPI and Brazilian Pix exemplify the shift toward mobile payments, along with other account-based transfers and, in some cases, digital wallets, which are steadily rising in popularity. Conversely, credit cards are expected to gradually lose some of their market share, although still growing in transaction value.
“A lot of emerging markets are actually ahead of developed markets because they're thinking about more flexible, consumer-friendly payment methods –with QR codes, digital wallets, A2A transfers,” says Andy McHale, Senior Director of Product and Market Strategy at Spreedly, a global open payments platform. “The US, the UK, and parts of Europe are still pretty card-centric and slowly adopting things.”
According to Lindsay Lehr, Managing Director of PCMI (Payments and Commerce Market Intelligence), in Latin America and other emerging markets, this trend is driven by a dual dynamic: banks recognize they don’t need to rely solely on cards for payments at the same time that they are facing growing competition from digital players such as fintech companies and wallets that are increasingly accessing bank rails.
“As a consequence, banks and regulators are pushing for interoperability and faster payments,” explains Lehr. “Once these rails are established, they can be leveraged for payments.”
Lehr also highlights the evolving landscape, noting that: “While these multiple payment players are creating market fragmentation, regulators are responding by working to enable real-time interoperability between bank accounts and digital wallets, creating ubiquitous real-time money movement infrastructure. This results in a more open payment ecosystem where money can move much faster”.
“While multiple payment players are creating market fragmentation, regulators are responding by enabling real-time interoperability. This results in a more open payment ecosystem where money can move much faster.”
Lindsay Lehr
Managing Director of PCMI
(Payments and Commerce Market Intelligence)
The immediate consequence is a “bubbly momentum” for account-based transfers as preferred payment methods, which will replace what was previously done in cash.
“This trend is already well-established for day-to-day transfers and is increasingly moving into digital commerce,” she explains.
The challenge of adapting account-based transfers for digital commerce lies in integration and user experience. “Currently, in most countries, account-based transfers offer a clunky experience compared to cards, which have a long and successful track record. But it's coming. That's the next step”, Lehr concludes.
The leaders of this trend are India's UPI and Brazil's Pix. PCMI's forecast for the 2024-2027 period concluded that UPI will continue to dominate the online market in India, while Pix is following a similar trajectory in Brazil.
In Africa, account-based transfers are set to gain ground, potentially reaching parity with debit cards.
Other rising APMs, such as digital wallets and mobile money, are expected to gain traction. The latter is already an established payment method in many Sub-Saharan African countries.
As shown before, APMs are set to surpass cards in all macroregions by 2027. Most of them are game changers in digital commerce, attracting more customers and accelerating the growth of online transactions.
Instant is the new cash
The rapid growth of digital and instant payment solutions in emerging markets reveals how they provide a viable alternative to cash.
“Instant is the new cash," states Juliana Etcheverry, Director of Country Growth – Latin America at EBANX. She elaborates: "We are talking about payment systems that provide the same level of convenience and speed that, in a way, mimics cash transactions. This is also why instant payments have such success and uptake in emerging economies."
High smartphone penetration and the consequential widespread adoption of digital technologies are key drivers for this shift. Additionally, a large portion of the population remains underbanked, with no card access or usage, pushing them towards A2A transactions. Countries that implemented highly successful instant payments, such as Brazil, India, and Poland, have seen a drop in cash transactions while digital payments have flourished.
"Instant payments provide the same level of convenience and speed that, in a way, mimics cash transactions, and this is also why they have such success and uptake in emerging economies."
Juliana Etcheverry
Director of Country Growth – Latin America at EBANX
An anecdotal payment tale that showcases how digital payment methods have displaced cash comes from Singapore, where transactions via QR codes are thriving. As Lindsay Lehr recalls, "In informal street food stands, [vendors] will say, 'Cash or QR?' You can scan the QR code and make the transfer, and it works, at a very low cost to the merchant."
This trend is increasingly evident in e-commerce, where the share of cash payments in digital transactions continues to decline yearly across all regions, making way for account-based transfers. In Africa, an area historically reliant on cash-based transactions, those A2A payment methods are projected to overtake cash as the dominant payment method by 2026.
