NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, October 21, 2014

Apple Pay could certainly be the nail in the wallet’s coffin, similar to what the iTunes model was for music when it was introduced in 2001. And this on the heels of the Twitter “buy” button, another move by a major tech titan to occupy the payments space via a mobile device. These payment systems are built to integrate with daily activity for many consumers, a useful approach that however will not work in developing nations. As Apple Pay is rolled out over the coming months, the service will essentially encourage consumers t0 expedite purchases by making credit card payment a process that can be done entirely via one’s mobile device.

Western nations’ consumers have easy access to banking facilities, but this is not the case for emerging markets. An often overlooked barrier to entry is that payment structures can pose an obstacle to an interested consumer. Upstream’s “The Next Mobile Frontier Report” revealed that more than one in five (21%) consumers in developing nations do not have access to credit or banking facilities, negating the possibility of a typical credit card payment service. These nations clearly hold great opportunities, but require a vastly different approach. Given that Apple Pay is designed to tie to credit card companies and accompanying banking facilities, Apple Pay in emerging markets would likely need to also focus on service providers and billing cycles on a location-by-location basis, since one credit card or service does not uniformly work for all consumers.