September’24 WTM fintech digest: India’s boom, Middle East’s rise, and de-dollarization
What the Money
Fintech consultancy bureau: industry insights, trends and deep dive-in expertise
This September 2024 WTM fintech digest is about shifts in global financial systems, payment technologies, and regulatory landscapes as well as the increasing interconnectedness of global financial systems. In this issue, we'll explore the growing momentum behind CBDCs, analyze the Middle East's emergence as a digital payment powerhouse, delve into India's booming fintech sector, witness a major antitrust lawsuit in the US payments industry, and highlight important steps towards de-dollarization in Asia.
Join us as we unpack these critical stories and their potential impact on the future of finance.
Growing Momentum for Central Bank Digital Currencies
A recent study by the Bank for International Settlements (BIS) reveals a significant surge in the development of central bank digital currencies (CBDCs) worldwide. The research shows that 93% of central banks (or 134 countries) are now actively engaged in CBDC-related work, with the proportion of those in advanced stages of development doubling since 2022. Approximately 60% of central banks are conducting CBDC experiments or proofs-of-concept, while about 24% have progressed to pilot or launch phases. The most notable developments this year have been the significant growth in the Bahamas, Jamaica, and Nigeria's CBDCs—the only three countries that have already launched them.
Middle East Leads in Digital Payment Innovation Amid Regional Tensions
Despite ongoing geopolitical tensions, the Middle East is emerging as a global leader in digital payment innovation. According to the research by Mastercard, key developments include the UAE's rapid adoption of digital wallets, with 84% of consumers using them regularly, Saudi Arabia's push towards a cashless society, aiming for 70% of transactions to be non-cash by 2025, and Egypt's growing fintech sector, with over 100 active companies and significant investment inflows. These advancements are driven by factors such as high smartphone penetration, government support for fintech, and changing consumer preferences. The region's progress in digital payments highlights its resilience and adaptability in the face of broader regional challenges.
India’s Boom of Digital Payments and Crypto
India's growing influence in the global fintech sector and its efforts to promote its digital payment solutions internationally and domestically. On a global scale, India's National Payments Corporation (NPCI) is planning to expand its Unified Payments Interface (UPI) system to Africa and South America. This move aims to facilitate cross-border transactions and promote the adoption of India's digital payment technology globally. The NPCI is in talks with several countries and has already launched UPI services in countries like France, UAE, and Singapore.
Internally, India is considering relaxing market share limits for UPI payment operators. The National Payments Corporation of India (NPCI) is contemplating easing the 30% cap on market share for UPI apps, a move that could significantly benefit major players like Google Pay and PhonePe. This potential policy change would allow these companies to process more than 30% of UPI transactions, promoting innovation and competition in India's digital payments sector.
Meanwhile, according to a recent report by Chainalysis, India led the way in global adoption of cryptocurrencies for the second consecutive year. This occurred despite the country's tough regulatory stance and steep trading taxes, which investors boldly navigated.
领英推荐
US DOJ Files Antitrust Lawsuit Against Visa
The U.S. Department of Justice has filed a civil antitrust lawsuit against Visa, alleging that the company has monopolized the online debit card market. The lawsuit claims that Visa has been using anticompetitive practices to maintain its dominant position and prevent emerging competitors from gaining market share. Specifically, the DOJ accuses Visa of:
This legal action aims to promote competition in the online debit card market and potentially lead to lower fees for merchants and consumers. The outcome of this lawsuit could have significant implications for the payments industry and Visa's market position.
Indonesia and South Korea Sign Currency Agreement to Reduce Dollar Dependence
Indonesia and South Korea have signed a new currency agreement aimed at reducing their reliance on the US dollar in bilateral trade and investment. The Local Currency Transaction (LCT) framework allows for direct exchanges between the Indonesian rupiah and the Korean won, potentially lowering transaction costs and exchange rate risks. This move is part of a broader trend of dedollarization efforts among Asian economies and could significantly impact regional trade dynamics. Bank Indonesia has now established LCT frameworks with several other countries, including India (Reserve Bank of India), Malaysia (Bank Negara Malaysia), Thailand (Bank of Thailand), Japan (Japan Ministry of Finance), China (People's Bank of China), Singapore (Monetary Authority of Singapore), and South Korea (Bank of Korea).
Last but not least
As usual, we have collected a bunch of insightful papers from industry players we trust, here are the links to the new reports, open knowledge in our FREE FinTech Wikipedia, and original op-eds by fintech experts accessible via our Telegram and LinkedIn:
What the Money is an international fintech consultancy bureau that advises on doing business across the globe and talks about digital innovations, payment landscapes, and financial technologies. WTM releases news digests and analytics, country reports, and op-eds on hot topics in digital industries.
Find available reports on the website. Follow WTM socials to learn more fintech insights and news: official blog, LinkedIn community, and Telegram channel.