If you are a business looking to move into emerging markets, it is important to have a full grasp of the regulations which cover card payments in those regions. We explain how this can be a minefield and how working in partnership with an expert payment provider will give you a competitive advantage.
The concept of the global marketplace has been around for some time. To a large degree, the emergence of genuine global supply chains can be dated back to 26th April 1956. This date saw the maiden voyage of the Ideal X, and more importantly, the first use of a custom-built modern commercial shipping container.
What may look like a simple metal box was created by one Malcom McLean in response to his frustration at the slow loading times for cargo being shipped overseas, and is now the standard method for shipping items around the world quickly and affordably.
Despite the efficiency of shipping containers, however, there were still huge barriers to entry for smaller businesses wishing to enter the global marketplace until more recently, and the emergence of digital technology.
The online marketplace means that any business with the ambition to do so can now sell goods as easily thousands of miles away as they can on their local high street.
One of the few issues which might impact on this ability is the varied nature of the regulatory regimes in specific markets. Navigating this hugely complex set of rules and legislation is just one the things that NOIRE can do for your business.
The use of cards and varied forms of digital payment both online and in-person is still a developing practice, as is the shifting regulatory regime.
As consumer habits, not to mention the activities of fraudsters and criminals, adapt to take advantage of the flexibility of cashless payment systems, so the authorities responsible for regulating those systems have to alter the framework within which they operate.
Keeping track of those changes is a full-time job, and here at NOIRE we understand that anyone running a business simply won’t have the time to stay on top of every new shift.
The need to be on top of the rules surrounding the use of cards in various markets is underlined by the degree to which the use of these cards is growing, particularly in emerging markets.
Driven partly by the switch to contactless payment which the COVID-19 pandemic has prompted, the Asia-Pacific region now accounts for 32.8% of the global market in cards and payments, putting it ahead of Western Europe and North America.
In the future, the fastest areas of growth for cards and payments is set to be the Asia-Pacific region, with a 13.2% annual growth rate and Africa, with an 11.7% annual growth rate, while the region which will see the biggest growth in terms of sheer financial weight will be China, where the size of the cards and payments market is expected to rise by $55.83 billion.
Any business which wants to move into these and other emerging markets in the immediate future, will have to make sure that they have a full grasp of the regulations which cover card payments in those regions or, better yet, are working in partnership with a payment partner on top of the market regulations in each part of the global market place.
To put the issue and the data involved into perspective, the following are brief summaries of the state of the card payment market in a range of different market places:
Payment cards represent the most frequently used method of payment in Australia, with the year 2018/19 seeing 10 billion credit or debit card payments worth $678 billion being paid. One thing which should appeal to the full range of businesses wishing to enter the Australian market, is the fact that the average value of card transactions in Australia has fallen from $103 in 2009 to $66 in 2019.
The newest regulations in Australia mean that card payments, rather than automatically being processed via Visa and MasterCard, will now have the option of being put through the local EFTPOS network, with the advantage being lower processing costs for the merchant in question.
The banking sector in Brazil has historically had only a sporadic reach, with as many as a third of the population of Brazil having no access to a bank account. Against this backdrop fintechs have thrived in Brazil, particularly when it comes to offering ‘unbanked’ members of the population the ability to make online payments.
The government has responded in recent years with a number of regulations from the Brazilian Central Bank and National Monetary Council, designed to increase competitiveness whilst strengthening governance and risk management. These included the creation of PIX, an instant payment scheme designed to allow 24/7 transactions between all digital E-wallets.
The scheme is to be given a ‘soft launch’ in November 2020, enabling transactions through reading a QR code or entering a person’s phone number, and seem likely to become an integral part of the payment landscape for millions of Brazilians.
The Indian government is keen to promote the use of card and digital payments within the country.
One manifestation of this eagerness was the launch of One Nation One Card, which is supported by RuPay. This followed the launch of the Indian Post Payments Bank in 2018, which provided mainstream banking facilities for those areas of rural Indian which until then had been neglected.
The rise in digital and card payments in India saw a corresponding rise in the incidence of credit card fraud, with the 2016 Global Consumer Fraud Report ranking India as one of the top five countries in the world in terms of fraud of this kind. As a response to this threat, any new cards issued in India from March 16th 2020, whether physical or virtual, will have features enabling online or contactless payments disabled.
The same will apply to any cards issued prior to this date which have previously not been used to make payments of this kind.
Card holders wishing to make use of these facilities will need to contact their providers and select the options they need. In addition, banks will have to enable all cardholders to switch on or off certain types of transactions, as well as setting transaction specific limits.
The main regulator of payment systems in Indonesia is Bank Indonesia. Under the national regulations, any payment system service providers operating in Indonesia have to obtain a Payment System Service Provider licence from the regulator, as well as complying with anti-money laundering and combatting the finance of terrorism requirements, usually referred to as AML/CTF.
Regulating payment systems in Malaysia is the responsibility of Bank Negara Malaysia (BNM), and anyone dealing with E-payments has to have approval from BNM and comply with the regulator’s published guidelines.
In the Philippines, regulation is the responsibility of the Bangko Sentral ng Pilipinas (BSP), and anyone operating payments within the country needs to register as an Operator of Payment Systems (OPS). This covers anyone who maintains a platform, system or network to enable payments or transfer funds, or provides a system to process payments on behalf of an individual or the government.
In Thailand the agency responsible for payments is the Bank of Thailand (BOT), working alongside the Digital Government Development Agency (DGA). Payment card networks are licenced and regulated by the BOT and must comply with AML, customer due diligence (CDD) and know-your-customer (KYC) requirements.
In Vietnam the regulatory body for all payment activities is the State Bank of Vietnam (SBV). Any payment service providers operating in Vietnam have to obtain either a banking licence or an Intermediary Payment Services (IPS) Licence.
Under the auspices of the latest e-commerce law to be introduced in China, overseas sellers have to designate a Chinese resident to be the ‘responsible party’, someone directly accountable to the Chinese authorities for issues such as product recalls, consumer complaints and quality and safety obligations.
As a market leading boutique payment services provider, we’re used to providing seamless payments and risk technologies, with an unrivalled knowledge of the operating conditions in both established and emerging markets.
We keep our finger on the pulse of regulation so you don’t have to.
To find out more, contact us today.