Fintech Report: Advanced Payments & 2025

Advanced Payments &
Fintech Report
2025
EDGAR, DUNN & COMPANY: Advanced Payments & Fintech Report 2025 1
Edgar, Dunn & Company is a global
consultancy specializing in payments
and financial services.
Since 1978, we have partnered with clients
across the globe and developed an unrivalled
depth in specialist expertise.
Fintech, Payment Strategy, M&A, and Litigation Support

• Independent London
Frankfurt
• +250 Clients in 55 countries and 6 continents San Francisco Paris
• 6 Office locations worldwide

Dubai
• +2,500 Projects completed
For inquiries regarding this report, please contact: Sydney
Tue To
Head of Fintech
[email protected]
Tue To
Note from our Head of Fintech
Welcome to EDC’s Advanced Payments The payments sector is in the midst of a profound transformation. One of this year’s key trends
& Fintech Report 2025. In this edition, is the rise of generative AI, which is revolutionizing financial services. From enhancing customer
interactions to driving operational efficiencies, AI is optimizing processes and enabling businesses
we delve into 14 key topics that capture to scale more effectively. Additionally, the emergence of Central Bank Digital Currencies (CBDCs) is
the latest trends shaping the payments reshaping global monetary systems, establishing new frameworks for digital payments and further
and fintech landscape. Our aim is driving change across financial networks.
to provide valuable insights into the
critical developments, challenges, As we move toward 2025, cutting-edge technologies are fundamentally changing how transactions
are conducted. The seamless connectivity offered by IoT devices, the democratization of financial
and opportunities that will define the services through Open Banking and blockchain, and the rising popularity of mobile wallets all signal
future of the industry. a shift toward more integrated, frictionless, and efficient systems.
2024 has been a pivotal year. The ongoing Nevertheless, the road to widespread adoption—especially in emerging markets— remains
recovery from the COVID-19 pandemic has challenging. Regulatory barriers, infrastructure gaps, and evolving consumer preferences continue
sparked new economic dynamics, paving to shape the pace of progress. Looking forward, the future of payments will depend on finding the
the way for innovation across sectors. right balance between innovation, inclusion, and regulation. As industry leaders capitalize on new
Simultaneously, geopolitical tensions and opportunities, it will be crucial to ensure these advancements are secure, accessible, and designed
climate-related disruptions have added layers to meet the diverse needs of consumers, all while fostering trust and ensuring long-term stability.
of complexity and uncertainty to global markets.
I would like to extend my gratitude to the EDC team for their contributions to this report. Our mission
is to guide our clients and partners through these dynamic times, helping them leverage new
opportunities while navigating the complexities of the evolving landscape.
Report Contributors
Samee Zafar Amine Saidi Beatrice Save Charlotte Piron

CEO Senior Consultant Consultant Consultant
Davide Villa Elisabetta Nadal Euan Jones Julia Callejo

Senior Consultant Associate Consultant Associate Consultant Senior Consultant
Louis Wapler Rawad Nasser Rohan Shaju

Manager Consultant Associate Consultant
Contents
Introduction 6 08 Consumer Digital Banks 59
Advanced Payments Survey Results 7 09 Digital Disruption in P2P Remittances 66
Emerging Technologies 12 10 Expanding Financial Inclusion through Payment Solutions 71

01 AI’s Role in Revolutionizing Payments 13
11 Insurtech 77
02 Blockchain’s Expanding Influence 18
Consumer Trends 82
03 Internet of Things (IoT) and Payments 24 12 Innovations in e-Commerce & In-Store Payments 83
04 The Rise of Alternative Payment Methods (APMs) 31 13 Adapting to the Marketplace and Gig Economy 89
05 Central Bank Digital Currencies (CBDCs) 37 14 Future of Cash 95
Financial Services Inclusion and Innovations 42 Forward View 100

06 Accelerating Growth of B2B Cross-Border Payments 43
Glossary and notes 101
07 Open Banking 51
Introduction
In an era of rapid technological 1. Emerging technologies

advancements and shifting consumer Artificial intelligence (AI), the Internet of Things (IoT), blockchain, and Central Bank Digital
Currencies (CBDCs) are revolutionizing payment systems. The growing adoption of Alternative
expectations, the payments industry is
Payment Methods (APMs) is also reshaping how transactions are conducted.
undergoing a profound transformation.
2. Financial services inclusion and innovations Open banking, financial inclusion initiatives, digital
This report examines three critical banks, and B2B cross-border payments are driving innovation across the financial ecosystem. Peer-
areas driving the latest trends in to-peer (P2P) remittances and insurtech are expanding access to financial services for underserved
populations and emerging markets.
payments and fintech, offering insights
into emerging technologies and the 3. Consumer trends
evolving needs of businesses and Consumer preferences are shifting, with innovations in e-Commerce, in-store payments, and the gig
consumers. economy prompting the industry to deliver more seamless and convenient solutions. Despite the
decline in cash usage, it is unlikely to become obsolete anytime soon.
Looking ahead, the convergence of technological advancements, financial inclusion, and evolving
consumer preferences will continue to reshape the payments and fintech landscape. This report
explores 14 key topics within these critical areas, providing a comprehensive outlook on the trends
set to define the industry’s future.
Advanced Payments Survey Results
Advanced Payments Survey Results
As with previous reports, we conducted an industry-wide survey between The survey revealed the most pressing challenges and opportunities
May and July 2024, gathering insights from 100 senior payments currently shaping the payments industry.
professionals across the globe.
Q: What are the growing use cases of AI and machine learning in Q: W

hich segment of the cross-border payments market do you think has
payments? the greatest potential for innovation?
85%
17%
54% 55%
51%
45% 45% 52% 13%
44%
10%
28%
23% 9%
10%
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Demand for instant payments and mobile solutions Growth verticals
A notable 68% of respondents identified the rising demand for instant Retail and e-Commerce are projected to experience the fastest growth in
payments as a key trend, while 61% highlighted the growing adoption digital payments, with 65% of respondents designating these sectors as
of mobile payment solutions. This aligns with the prediction that digital top priorities. International remittances (48%) and travel and hospitality
wallet usage will surge, with 88% of professionals expecting increased (46%) are also expected to undergo substantial digital transformation.
demand over the next 1 to 3 years.
Q: What are the most influential trends shaping the future of the Q: Which industry verticals will likely see a steep digital payments growth
payments industry? over the next 5 years?
Increased demand for instant payments 68% 65%
Increased adoption of mobiles payments
solutions 61%
Accelerated integration of AI and machine
learning in payment processing & fraud detection 55%
Increase linkage of domestic payment systems 48%
for cross-border payments 43% 46%
Continued growth of fintechs disrupting
traditional banking and payment models 42%
39%
Business seeking faster and more accurate B2B 35%
payment solutions 37%
33%
Increased outsourcing of payment processing
activities 28%
Emphasis on financial inclusion through innovative
solutions: embedded finance & open banking 22% 21% 21%
20%
Introduction of central bank currencies & their
impact on traditional financial systems 21% 14% 15%
12% 12% 13%
Other 9% 10%
13%
Rise of insurtech solutions transforming 5%
insurance-related payments & risk management 7%
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Digital Bank Buy now, Debit Credit Crypto Prepaid Direct Cash
wallets transfers pay later cards cards cards carrier
billing
Emerging payment methods and technologies Regional innovation hubs
Instant payments (74%) and in-app payments (64%) are forecasted to The Asia-Pacific (APAC) region is expected to lead payment innovations
see the most significant growth in the next 1-3 years. Respondents over the next 3-5 years, with 50% of respondents identifying it as the top
emphasized the increasing importance of digital wallets and bank region, followed by Europe at 23%. APAC’s dynamic growth is fueled by
transfers, while Buy Now, Pay Later (BNPL) continues to gain traction. advancements in mobile and instant payment solutions.
Technologies such as instant payments (75%), open banking APIs (68%),
and tokenization (57%) were cited as essential in today’s market.
Q: Which areas of payments do you expect the greatest growth over the Q: Which region do you think will drive the most significant innovations
next 1 to 3 years? in payments over the next 3 to 5 years?
74%
64%
Asia Europe Middle Latin
Pacific East America
50% 23% 9% 8%
40% 40%
36%
28%
Africa North Caribbean
America
4% 5% 4% 1%
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Security and functionality in mobile banking apps Growth trajectory
Enhanced security features, such as advanced biometric authentication The industry’s growth trajectory is closely tied to advancements in
(63%), and real-time payment capabilities (57%) are driving the growth of technology, consumer demand for convenience, and the development of
mobile banking apps. Expanding mobile wallet functionality to include secure, adaptable payment solutions. By focusing on innovation, digital
P2P payments and loyalty programs (47%) is also seen as essential for integration, and regional expansion, stakeholders are well-positioned to
increasing the appeal of digital banking. capitalize on these trends and drive future growth.
Q: What are the key technology-related drivers for the growth of mobile Q: Which technologies are the essential winning payment solutions in
banking apps adoption? today’s market?
Instant payments 75%

63%
Open Banking APIs 68%
Tokenization 57%
47% 57% Mobile payments 56%

43%
41% 48%
Biometric authentication
37%
35%
AI and machine learning 45%
QR code payments 41%

24%
Banking as a service 22%
IoT-enabled payments 18%
Blockchain & cryptocurrency 11%

2% 2%
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Emerging Technologies
01
AI’s Role in Revolutionizing Payments
AI has the potential The application of AI It requires

to transform can be viewed from addressing privacy,
payments with two key perspectives bias, transparency,
efficiency and and compliance
security
AI’s Role in Revolutionizing Payments
Online marketplaces and gig economy platforms must adapt to the evolving needs of their
users to remain competitive
AI has the potential to transform The application of AI can It requires addressing privacy,
payments with efficiency and be viewed from two key bias, transparency, and
security perspectives compliance
s technology advances, AI, including

A rom a process-oriented perspective, AI
F o effectively leverage AI in payments,
T
generative models, is set to revolutionize the enhances internal operations by improving businesses must tackle critical challenges
payments industry by significantly improving efficiency and accuracy in risk management such as enhancing data privacy protections to
fraud detection, enhancing customer (e.g., advanced fraud detection, streamlined secure customer information and addressing
experiences, and optimizing operational KYC processes, and sophisticated predictive algorithmic bias to ensure equitable treatment
efficiency. With sophisticated algorithms, analytics) and payment optimization (e.g., across diverse user groups.
AI can identify and prevent fraudulent intelligent transaction routing and automated
transactions in real-time, thereby minimizing reconciliation). urthermore, organizations need to navigate
F
financial losses and bolstering security. the complex regulatory landscape governing
n the client-oriented front, AI revolutionizes
O AI in finance, ensure seamless integration of
dditionally, AI’s capability to deliver
A customer interactions by enabling AI solutions across various platforms, and
personalized services and recommendations organizations to gain deeper insights into prioritize ethical considerations to balance
enhances customer satisfaction and loyalty, customer behavior, efficiently resolve service innovation with social responsibility in the
strengthening the relationship between issues, provide tailored guidance, and deliver payments ecosystem.
businesses and their clients. By automating highly personalized financial solutions. This
previously time-consuming tasks, AI includes the use of generative AI to enable
streamlines operations, reduces costs, and more sophisticated personalization and create
markedly improves overall efficiency. dynamic customer interactions.
his dual approach allows financial institutions

T
to simultaneously optimize their internal
processes and enhance their customer-
facing services, driving innovation and
competitiveness in the industry.
The application of AI can be viewed from two perspectives
Process-side applications Client-side applications
Fraud detection and Payment optimization Predictive analytics Personalized advice Enhanced customer Targeted promotion
prevention AI algorithms use AI provides AI-powered virtual support offers
AI algorithms, predictive analysis of comprehensive data assistants analyze Generative AI-driven AI enables the delivery
including generative transaction patterns, analysis to anticipate individual spending chatbots provide of personalized
models, analyze location, time, trends and behaviors, patterns and financial instant, 24/7 support, promotional offers
transaction patterns historical data, and enabling financial goals to offer tailored handling queries about based on user data,
in real-time to identify payment method to services to make budgeting tips, savings transactions, account helping businesses
and prevent fraudulent dynamically route informed, data-driven plans, and investment balances, and payment increase engagement
activities. By detecting transactions to decisions on risk advice, helping issues by using natural and conversion rates.
unusual behavior the most efficient assessment and customers manage language processing
and anomalies, AI networks, reducing management. their finances more to understand and Trade-offs:
alerts businesses and processing times and effectively. generate human- – May intrude on user
customers to potential costs while enhancing Trade-offs: like responses, privacy and lead to
fraud, reducing overall efficiency. – Accuracy depends Trade-offs: significantly improving data misuse.
financial losses and on the quality and – Requires access to service efficiency and
enhancing security. Trade-off: completeness of sensitive financial customer satisfaction. – Offers may not
– Potential to data. data, raising privacy always align
Trade-offs: inadvertently concerns. Trade-offs: with individual
– Potential for false incorporate biases – Potential biases – Limited in handling preferences or
positives, which present in historical in data can lead to – Recommendations complex or nuanced needs.
can inconvenience data, resulting in unfair or inaccurate may not always customer issues.
legitimate customers. unjust or inefficient risk assessments. align with user
payment routing. preferences or – May frustrate
– High computational circumstances. customers who
costs due to the prefer human
need for real-time interaction for
processing. certain queries.
Examples of companies using AI to detect fraud, optimize operations,
and enhance customer experiences
Amazon leverages AI extensively, particularly Mastercard enhances cybersecurity with Fiserv is leveraging AI to enhance customer
in logistics and supply chain management. its “Scam Protect” suite, which combines AI, service, fraud prevention, and operational
AI optimizes warehouse operations, inventory biometric, and open banking technologies to efficiency. It uses AI-powered chatbots and a
management, and delivery routes, leading guard against various scam types. Mastercard’s Virtual Banking Assistant for improved support
to significant cost savings and increased AI-driven Consumer Fraud Risk solution across multiple channels and plans to offer
efficiency. Generative AI is also being integrated helps banks in the UK intervene in real-time AI-driven insights to merchants by fall 2024. AI
into various aspects of Amazon’s operations, to stop fraudulent payments, with account is also being integrated into point-of-sale and
enhancing predictive capabilities and enabling validation further strengthening security against real-time payment solutions, with ongoing tests
more sophisticated decision-making processes. sophisticated scams and identity theft. through its Clover credit card processing service.
Google integrates AI across various products, JP Morgan Chase uses AI for fraud detection Tesla uses AI in its self-driving technology, which
including Google Search and Google Ads. AI and risk management in financial transactions. enhances vehicle safety and performance. This
algorithms enhance search results, enable AI algorithms process vast amounts of data in technology also opens new revenue streams
targeted advertising, and optimize ad campaigns, real-time to identify and prevent fraud, reducing through mobility services and subscription-
directly contributing to revenue growth. financial losses and enhancing security. based autonomous driving features.
Square integrates AI across its ecosystem to PayPal uses AI to boost security, personalize Visa leverages AI to enhance customer
enhance business operations with advanced user experiences, and streamline operations. AI experiences by sharing shopping preferences
tools. AI features include personalized email systems detect fraud in real-time, offer tailored with merchants for more personalized
generation, team announcements, and customer recommendations, and enhance customer interactions. The company plans to use its
communication suggestions, improving support with chatbots. These AI-driven tools proprietary token service to securely deliver
efficiency and productivity. Additionally, AI improve decision-making, risk management, AI-generated insights based on a consumer’s
assists with business setup through tools like and overall efficiency, reinforcing PayPal’s transaction history, providing merchants with
the Menu Generator and Photo Environments, competitive edge in digital payments. this data only with user consent.
helping businesses streamline processes and
boost their online presence.
Netflix employs AI to personalize content Starbucks leverages AI in its mobile app to offer FICO uses AI and machine learning for predictive
recommendations, boosting user engagement personalized recommendations and predictive analytics in credit scoring, risk management, and
and retention. This tailored approach has been a ordering. This has increased app engagement, fraud detection. It emphasizes responsible AI,
crucial factor in Netflix’s success. improved customer satisfaction, and driven focusing on explainability and ethics. While AI
higher revenue. is heavily utilized for fraud detection, it’s applied
carefully in credit scoring due to regulatory
transparency requirements.
02
Blockchain’s Expanding Influence
Blockchain can Banks and DeFi Regulations

enhance security, platforms are are evolving to
reduce costs, and leveraging blockchain address blockchain
expand financial for efficiency compliance and
inclusion privacy issues
Blockchain’s Expanding Influence
Blockchain is transforming the financial landscape by boosting security, efficiency,
and inclusivity, while introducing new compliance and privacy challenges
Blockchain can enhance security, Banks and DeFi platforms Regulations are evolving to
reduce costs, and expand are leveraging blockchain for address blockchain compliance
financial inclusion efficiency and privacy issues
lockchain technology enhances fraud

B o stay competitive, banks are investing in
T overnments and regulatory bodies, such
G
prevention and security through its blockchain to streamline payments, boost as the European Union with its Markets in
decentralized, immutable ledger system. security, and enhance transparency. They Crypto-Assets (MiCA) regulation, are creating
Ripple’s XRP Ledger showcases this by are also exploring its use in trade finance, comprehensive frameworks for blockchain-
enabling near-instant, transparent settlements, securities issuance, and settlements to reduce based payment systems, emphasizing
minimizing fraud risk. costs and improve efficiency. For example: transparency, investor protection, and financial
stability.
y removing intermediaries, blockchain
B NP Paribas is exploring blockchain
B
streamlines financial processes, cutting costs applications for currency funds and order lockchain companies face significant hurdles
B
and transaction times. Visa’s B2B Connect processing. in meeting Anti-Money Laundering (AML) and
utilizes this technology for direct, secure Know Your Customer (KYC) requirements, as
bank-to-bank transactions, reducing fees and ank of America holds more than 80
B per guidelines from the Financial Action Task
speeding up cross-border payment. blockchain-related patents. Force (FATF), which differ by jurisdiction.
lockchain also broadens financial inclusion in

B BS has established a dedicated blockchain
U he General Data Protection Regulation
T
underserved areas. Stellar’s partnership with lab for exclusive research. (GDPR) in Europe also poses challenges
IBM on World Wire illustrates how blockchain for blockchain’s immutability, especially
can transform cross-border transfers, offering itigroup has developed several blockchain
C concerning the “right to be forgotten,”
faster, more affordable financial services to projects, including its own cryptocurrency, as regulatory efforts strive to balance
unbanked populations in developing regions. CitiCoin. transparency with privacy and data protection.
eFi platforms like Uniswap and Aave are

D
expanding, offering decentralized exchanges
and lending services, improving access and
rates by removing intermediaries.
The evolution of blockchain has progressed from a niche technology to a potentially
transformative force with the capacity to reshape multiple industries
2008 – 2013 2014 – 2017 2018 – 2020 2021 – Present

Blockchain 1.0 Blockchain 2.0 Blockchain 3.0 Blockchain 4.0
P2P Digital currency Smart Contracts Corporate Adoption Advancements
Origins of blockchain technology Smart contracts FIs embracing blockchain Growth of DeFi
Blockchain’s foundational concepts This is a self-executing agreement Major institutions like JPMorgan DeFi expands peer-to-peer financial
originated in the early 1980s. It is with terms encoded in immutable Chase and Fidelity are adopting services, offering automated
a decentralized, secure database code and recorded on a blockchain, blockchain to enhance trading, lending and trading that reduce
system characterized by auditable, enabling automatic execution when payments, and asset management, costs and enhance accessibility.
immutable, and pseudonymous predefined conditions are met, with JPMorgan’s Onyx leading in
data storage. thus enhancing transparency and asset tokenization. Combining blockchain with AI
efficiency. This enhances investment
Bitcoin as a use case Emergence of blockchain-as-a- strategies through better risk
Introduced in 2008, Bitcoin was Programmable blockchains service (BaaS) assessment, predictive analytics,
the first successful application of The introduction of smart IBM and Microsoft offer BaaS and automated compliance,
blockchain technology, showcasing contracts has led to programmable platforms, simplifying blockchain improving efficiency and
its potential for a decentralized, blockchains like Ethereum, adoption by providing necessary personalization.
peer-to-peer digital currency which allow developers to build infrastructure and tools
without central authorities. decentralized applications (dApps) Global Regulatory Developments: The creation of decentralized
that leverage smart contracts for Governments are developing metaverse platforms
diverse functions across various regulations for cryptocurrencies, It enables user ownership and
industries. ICOs, and blockchain to ensure control of digital assets, enhancing
protection, integrity, and innovation. security and transparency while
fostering a vibrant digital economy
through NFTs and blockchain-based
Bitcoin ETF assets.
The main catalyst behind BTC’s adoption growth was the development of Bitcoin exchange-
traded funds (ETFs) and the introduction of the Bitcoin Ordinals protocol, which enabled
non-fungible tokens (NFTs) and fungible tokens to be minted on the Bitcoin network.
With around 300 million global users, the blockchain market has seen significant growth,
drawing increased investor interest and substantial funding
Global blockchain technology market size Global blockchain funding and deals
The market size is based on expected revenue generated by companies Global blockchain deals
offering blockchain solutions. This includes software and platform sales,
Blockchain-As-A-Service, Transaction Fees from blockchain networks.
$162.8B $26.8B
$25.7B 1,828
1,423
Global blockchain funding (B USD)

%
70
GR
CA
7 $94.9B
-2
23
20
917 910
$55.5B
713
$32.7B
$4.9B
$19.4B $3.2B $3.2B
$11.5B
$4.2B $6.9B
$1.0B $1.6B $2.6B
2017 2018 2019 2020 2021 2022 2023 2024f 2025f 2026f 2027f 2018 2019 2020 2021 2022
Sources: Statista; CB insights; EDC Analysis
Blockchains provide cross-vertical solutions and offer several advantages over traditional
payment systems
Use cases
Cross-border payments and remittances Merchant payments Other verticals
RippleNet enables financial institutions Companies like Overstock and Shopify, Airline: Blockchain improves ticketing and
to efficiently handle B2B cross-border through integrations with BitPay, enable passenger data tracking, minimizing errors
payments at lower costs by using Ripple’s merchants to accept cryptocurrencies such and preventing overbooking while enhancing
XRP token for liquidity. Competitors in this as Bitcoin, reducing reliance on credit card security and transparency (e.g., Blockskye).
space include Visa B2B Connect and IBM’s networks and their associated fees.
Blockchain World Wire. Insurance: Blockchain automates and
transparently processes claims via smart
Platforms like BitPesa and Stellar offer low- contracts, reducing fraud and accelerating
cost cross-border remittances, benefiting Loyalty programs and rewards settlements (e.g., Axa).
migrant workers by leveraging blockchain
technology to speed up transactions and Digital identity: Blockchain offers a secure,
reduce fees, making international payments Companies like American Express are decentralized approach to digital identity
more accessible and affordable. exploring blockchain to develop more verification, giving individuals control over
transparent and flexible loyalty programs, their data and reducing identity theft (e.g.,
allowing for seamless transfer and exchange Civic ID).
of rewards points.
Peer-to-peer payments
Apps like Circle and Cash App use

blockchain to facilitate direct peer-to-peer
payments, bypassing banks and payment
processors.
Comparison between traditional and blockchain payment systems Key disadvantages of using blockchain
technology in payments
Aspect Traditional Payment Systems Blockchain Payment Systems Scalability: Blockchain networks can experience
slower transaction processing times as the
number of transactions increases.
Transaction speed Slower (days) Faster (minutes / seconds)
Environmental impact: As financial institutions
increasingly commit to net-zero emissions, their
Intermediaries involved Multiple None / minimal support for blockchain networks that consume
large amounts of energy could be viewed as
contradictory.
Transaction costs Higher Lower Potential illicit activities: The anonymity (or
pseudonymity) offered by blockchain can be
exploited by criminals. Regulatory frameworks
like KYC and AML are being adapted to address
Transparency Limited High (Public Ledger) these concerns.
Strong encryption,
Security Vulnerable to fraud
decentralized
Presence of challenges
Geographic barriers Borderless / global
or limitations
03
Internet of Things (IoT) and Payments
IoT payments are IoT device adoption IoT payments will

expected to drive will soon reach create opportunities
significant net new ‘critical mass’ for the entire
transaction volumes ecosystem
Internet of Things (IoT) and Payments
The Internet of Things is reaching widespread adoption and is poised to revolutionize
the payments ecosystem
IoT payments are expected IoT device adoption will IoT payments will create
to drive significant net new soon reach ‘critical mass’ opportunities for the entire
transaction volumes ecosystem
I nternet of Things (IoT), a term coined in 1999, I oT payments are reaching an inflection he rise of IoT payments is set to disrupt and
T
refers to the growing network of physical point, driven by technological advancements, redefine the traditional checkout experience by
devices embedded with sensors, software, consumer demand for seamless digital enabling seamless and invisible payments that
and internet connectivity that allows them experiences, and an increasingly supportive are contextualized to the buyer’s needs.
to collect and exchange data, enabling regulatory landscape. These factors
automated actions and optimizations. are collectively accelerating the rapid stablished industry players can maintain a
E
development and adoption of new IoT competitive advantage by fostering a culture
Today,
IoT-connected devices are increasingly Payments use cases across various sectors. of continuous innovation, embracing strategic
integrating payment capabilities, enabling partnerships, and promoting an ecosystem of
machine-to-machine transactions and new he IoT payments market is estimated to total
T transparency.
IoT payments use cases where devices can $711 billion in 2024 and is forecast to sustain
directly initiate payments without human fast growth with large untapped potential to
intervention. digitize and automate a significant volume
of C2B and B2B transactions through IoT
payment-enabled channels.
The most transformative advantage of IoT Payments lies in its ability to empower IoT-enabled
devices to autonomously initiate and dynamically contextualize transactions
Internet of Things payment pyramid
Level 0
Foundation | Access only
At the foundation level, devices can connect to and access the user’s
Level 3 financial institutions (i.e. asking about bank account status, credit card
balance, and latest transactions).
Level 1
IoT | Authentication
Level 2 The IoT device requests explicit consent and authentication from the
user to complete a transaction (e.g., email or mobile push notification).
Examples include paying for fuel.
Level 2
Level 1 IoT Payments | Conditional
The device is able to make payments automatically when certain
conditions are met, as defined by the user. This is a seamless process
Level of Innovation
that does not require human confirmation or authentication. Examples

include a printer ordering ink when low, self-service store transactions,
Level 0 or toll payments.
Level 3
Smart IoT Payments | Automated IoT payments
IoT payments are when smart devices are able to initiate transactions
without human involvement, taking into account user behavior, needs,
special instructions (as in Level 2). Examples include retail stores
automatically ordering inventory based on demand and supply, or a
smart fridge ordering groceries.
Sources: Agilie; Worldline
Current State Future State
oday, any device that connects to the internet is

T he market is moving towards creating a network
T
considered an IoT, regardless of functionality and of connected devices that automate processes and
capability. take actions based on real-time data.
rimary examples include voice-activated home

P he evolution is occurring across all industries,
T
assistants and smart home appliances that connect with some progressing faster than others:
and operate via a mobile app.
Wearables (watches, rings, glasses)
se cases are emerging and evolving as enabling
U
factors increase: Automotive (fuel, insurance, tolls)
Availability of IoT devices (number and costs) Healthcare (billing data)
Internet broadband and 5G availability Retail (self-service stores / machines)
ommunication & Interoperability

C Industrial (inventory)
(i.e. RFID, NFC, tokenization)
S mart cities (transit fare collection)
Consumer habits (i.e. authentication)
S mart Finance (personalization)
I nfrastructure to enable IoT (self-service stores,
toll payments, smart fuel pumps)
The IoT market is near an inflection point, with many connected smart devices reaching
the market and supporting infrastructure to facilitate payments
The market for IoT devices and IoT Payments is set to experience fast growth in the coming years,
once a critical mass of IoT devices is adopted by users
Global adoption of IoT for Payments, 2018 – 2028 Number of connected devices
More and more devices are released with internet
$6,000 45 connectivity features.
$5,400
40 These features initially appear in premium
40
$5,000 products but eventually become standard across
all devices (with different products at varying
Number of IoT Connected Devices (in Billions)

IoT Device transaction volume (in $ billions)
33 35
stages of connectivity).
$4,000 28 30
Emerging tools and technologies, such as
machine learning / AI, 5G, and token-based
$3,254 25
23 card chips, are facilitating the embedding of IoT
$3,000 capabilities into devices and decreasing costs,
19 20 making IoT more accessible.
15
$2,000 $1,960 15 Transactions through IoT devices
12
Once adoption and usage rise and demand
9
$1,181 10 for greater functionalities linked to payments
7 7
$1,000 emerges, we expect these IoT devices to
5
$711
5 climb the Pyramid to reach full IoT Payment
$429 capabilities.
$258
$94 $156
$34 $56
$0 0
IoT payments will experience rapid exponential
2018 2019 2020 2021 2022 2023 2024e 2025f 2026f 2027f 2028f growth as appropriate infrastructure, such
as smart fuel pumps and EV chargers, is
Transactions Number of IoT devices
implemented.
Sources: Statista; Introspective Market Research; EDC Analysis
IoT can create new opportunities for businesses, payment providers,
and governments to leverage data to enhance the user / customer experience
Businesses / retailers These gateways integrate AI and machine

Value chain Disruption caused learning to analyze, process, and present
IoT is not just a consumer-facing technology
component by IoT on status quo IoT transaction data to businesses through
but will add huge value to business back-end
processes and front-end customer sales. dashboards.
Consumer Medium
Examples like the Nymi band, designed to Authentication processes will change and require
authenticate employees, are just early examples robust fraud prevention systems to handle
of how IoT could help employees keep track of transactions.
Businesses /
High corporate expenses.
retailers Gateways need to support different levels of
Inventory management is another area with clear authentication and processing models based on
benefits for IoT technology – inventory attached payment methods.
Payment providers High
with RFID tags is scanned at different points in the
supply-chain and allows for smart management There is a significant upside in processing large
and reordering based on sales data. volumes of transactions once IoT payments
Governments High become commonplace.
Sales is an obvious area where IoT can improve
the customer experience, especially in retail Governments
stores (self-service stores, and online via IoT Government agencies can leverage the IoT
device orders). wave to promote cashless payments and foster
economic growth.
Payment providers
There is potential for payment gateways to IoT provides governments with tools to promote
develop solutions for IoT-based technologies their agendas, such as:
and payments, as developing new infrastructure
is costly, and payment providers with a – I mproving public transportation and
microservices cloud infrastructure are at an multimodal journey fare collection.
advantage. – Providing new payment options for government
services and taxation.
– I mplementing new strategies and pricing for
Sources: Nymi; Intellias; Introspective Market Research; Bernard Marr & Co;
Impact of Internet of Things (IoT) on Inventory Management: A literature Review (2022) parking, traffic management, and tolls.
Key aspects in evaluating IoT implementation
User experience Privacy and security Costs Data

IoT can be designed to provide Regulations in Europe, such as While costs can be high to Data is central to the success of IoT.
enhanced and customized journeys PSD2 and similar laws, will enforce implement industry-leading
tailored to the user / shopper. high-security standards, leading to technologies, they are expected Smart devices collect and access
secure data collection. to decrease with increasing data, enabling detailed customer
Businesses / retailers can provide competition. and user profiling.
contextual promotions / offers to There are 3 key authentication
upsell or cross-sell. protocols that can help IoT Developing interoperability 90% of all user data was generated
authentication: i) FIDO UAF; ii) standards (via APIs) will support between 2021 and 2023,
A well-designed IoT shopper or EMVCo 3DS; iii) OpenID Connect. this, allowing cheaper options in highlighting the critical challenge
user journey can build loyalty and the market. This will be an area of data collection and storage
encourage repeat sales. For IoT to succeed, regulatory scrutinized by regulators, as seen in for businesses involved in IoT,
authorities must establish the payments and tech sectors. where vast volumes of data are
Unattended stores / checkouts can data privacy standards and key continuously generated.
provide better experiences to users. authentication protocols need to be
adopted.
04
The Rise of Alternative Payment
Methods (APMs)
Alternative Alternative Payment Alternative Payment

Payment Methods Method usage trends Methods will not
are dominating the vary significantly completely replace
global e-commerce across markets physical cards
transactions
The Rise of Alternative Payment Methods (APMs)
Alternative Payment Methods have been revolutionizing the way we pay
APMs are dominating the global APM usage trends vary APMs will not completely replace
e-commerce transactions significantly across markets physical cards
PMs refer to any means of making a

A PM adoption varies across different regions
A PMs are not expected to completely replace
A
payment other than cash or credit / debit / and countries. physical cards or traditional payment methods.
prepaid cards from major card networks.
egions with advanced digital
R owever, many consumers are increasingly
H
PMs include mobile wallets, Buy Now,
A infrastructure, such as Asia-Pacific, North choosing APMs, particularly digital wallets,
Pay Later (BNPL), bank-to-bank transfers, America and Europe, have already seen a as their preferred payment method, indicating
cash-based payments (e.g., Boleto in Brazil), significant shift towards digital payments. a shift from card-centric payment models to
and cryptocurrencies. Asia-Pacific boasts the highest APM digital solutions.
penetration, pushed by mobile wallets which
he main benefits of APMs are
T accounted for 70% of the mobile wallet he role of digital wallets is also expanding
T
convenience, higher conversion rates, speed global transaction value in 2023. beyond payment-related services to include
of transactions and enhanced security. non-payment-related services such as
In contrast, other countries may need loyalty programs, satisfaction surveys, and
PMs have been gaining popularity worldwide
A more time to transition due to factors such authentication.
and are expected to continue growing, as technological limitations or cultural
reducing the share of payment cards in both preferences.
transaction volumes and values. APMs hold a
dominant position in the global e-commerce
landscape and are expected to reach 77% of
global transaction value by 2028.
2030
By 2030, the choice of digital wallets will continue
to grow with increased consumer adoption.
As the payment landscape continues to evolve,
merchants and consumers will continue to demand
innovative and convenient payment methods that
meet their specific needs.
Sources: Payments Journal; WorldPay; Juniper Research; EDC Analysis
Despite some factors contributing to a slowdown in their growth rate, APMs are
expected to become the leading payment method both online and in-store by 2028
Over the next four years, APMs will e-Commerce global value of payments In-store global value of payments
further solidify their dominance
among e-commerce payment 2024 2028 2024 2028
methods and become the leading 2% 1%
10%
payment method at in-store points 15%
of sale, representing 51% of global 32% 22% 35%
transaction values 66%

51%
41%
77% 49%
his growth is primarily driven by mobile
T
wallets, which account for 53% of global
e-commerce transaction value in 2024 and
34% of global in-store transaction value.
Cash Cards* APMs**
However, traditional payment methods will
not disappear, particularly among certain
demographics, such as the elderly, and in
countries where digital infrastructure is less *Cards include credit, debit and prepaid cards
developed or cash remains prevalent. **APMs include mobile wallets, Account-to-Account (A2A), BNPL, others
Changing needs
This could lead to the development of new wallets
with different features and capabilities – or the
evolution of existing wallets to better meet the
changing needs of the market. The payment function
is only the tip of the iceberg for digital wallets.
Sources: WorldPay; EDC Analysis and Predictions
Factors contributing to a high growth rate of APMs Factors contributing to a slow-down in APM adoption
Benefits for consumers and businesses Cultural and demographic factors

– Secure transaction environment: APMs offer advanced security Some cultures and demographics prefer traditional payment methods,
measures (e.g. biometric identification). such as cash and payment cards, due to a lack of trust in new payment
methods or insufficient education about them.
– Reduced online payment friction: APMs minimize the need to re-enter
payment details for every purchase. Remaining technological barriers
Some regions still face limited access to smartphones and internet
– Increased revenue due to a higher conversion rate. connectivity.
– Improved cash flow: APMs facilitate faster and more efficient For some businesses, integrating multiple APMs can be both expensive
transactions. and complex.
Advancement in technology
Proliferation of smartphones and internet connectivity: consumers are
increasingly embracing mobile technology and seeking streamlined
payment experiences. As a result, APMs continue to evolve and gain
prominence in the market.
Among all APMs, mobile wallets are experiencing the most significant growth,
with the Asia-Pacific region driving it
Transaction value through mobile wallets accounted for Adoption of mobile wallets varies significantly across regions
$15.5 trillion in 2024 and is expected to reach $23.0 trillion
by 2028 The Asia-Pacific boasts the highest mobile wallet penetration, accounting
for 70% of the mobile wallet global transaction value. This dominance is
Mobile wallets are primarily rolled out by financial institutions, mobile largely due to the region’s advanced digital infrastructures and the extreme
network operators, and third-party fintech companies, each with distinct popularity of mobile wallets among consumers.
strategic rationales.
– The widespread adoption of mobile wallets in the region has been
significantly driven by China, where platforms like AliPay and WeChat Pay
Global mobile wallets evolution account for more than 90% of digital payments.
Both in Europe and North America, mobile wallets are leading the
Mobile Wallet Value of Transactions (USD Trillions)
$25
$23.0
e-commerce payment landscape. The long-standing reliance of these
$21.5 regions on card-based payments has made the shift slower at the POS.
1.2%
R: 1 $19.6
$20 C AG
$17.5 In the Middle East and Africa region, mobile money stored value wallets
$15.5 like e& money, M-PESA, MTN MoMo, and Orange Money are increasingly
$15 $13.7 $13.4 $14.0 gaining popularity.
$10.8
In Latin America, credit cards continue to dominate the e-commerce
$10 $8.8
payment landscape. The region also leads in A2A payments, driven by
the success of solutions like Pix in Brazil. While cash remains the primary
$5 payment method at POS, mobile wallets are experiencing the fastest
growth among payment options.
$0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Sources: GlobalData; PYMNTS; WorldPay; EDC Analysis and Predictions
The mobile wallet competitive landscape is highly fragmented, with hundreds of solutions available
at national or regional levels
This fragmentation leads to significant interoperability The dominance of these global players highlights the
challenges, as mobile wallets cannot seamlessly potential for more standardized mobile wallet solutions.
communicate or transact with each other.
As consumer demand for seamless and secure payment
Among the numerous mobile wallets, a few have achieved options grows, the industry may move toward greater
near-global reach. These are Amazon Pay, PayPal, Apple Pay, collaboration and integration, reducing the current
Google Pay / Android Pay. These platforms are distinguished fragmentation and improving the overall user experience.
by their extensive user bases and ability to facilitate
transactions, even across borders.
– PayPal stands out as a leading mobile wallet for

e-commerce in several countries, such as Germany (where
it will reach 24% of e-commerce transaction values in 2024).
e-Commerce mobile wallet transaction values on total (2024)
30%
24%
20%
12%
10% 10%
6% 7%
3%
0%
Australia France Germany UK Japan US
05
Central Bank Digital Currencies
(CBDCs)
CBDCs are being Current retail CBDC Wholesale CBDCs

explored globally, deployments are are shaping up to
offering diverse showing signs of low provide a stronger
transaction adoption proposition
capabilities
Central Bank Digital Currencies (CBDCs)
Central Bank Digital Currencies are being researched and piloted.
The outcome has formed a divisive set of opinions
CBDCs are being explored Current retail CBDC Wholesale CBDCs are shaping
globally, offering diverse deployments are showing up to provide a stronger
transaction capabilities signs of low adoption proposition
s of early 2024, 135 countries are actively

A nly 3 countries’ CBDC programs are currently
O any central banks are now prioritizing the
M
exploring the use of Central Bank Digital in a launched state: Bahamas (Sand Dollar), wholesale use of CBDCs, recognizing that
Currencies (CBDCs). Nigeria (eNaira), and Jamaica (Jam-Dex). retail applications may not be suitable for
every market.
nlike cryptocurrencies, CBDCs are
U urrent retail CBDC solutions are struggling
C
centralized, created, and regulated by central with adoption, facing challenges like low holesale CBDCs could offer significant
W
banks. They differ significantly in terms of public uptake, privacy concerns, and limited long-term benefits for numerous countries,
centralization, creation process, technology, merchant acceptance. Each of these initiatives including faster transaction settlement times
supply control, privacy considerations, and has failed to gain more than a 1% share of and reduced costs for interbank and cross-
regulatory frameworks. currency circulation since their inception. border payments.
BDCs are designed for a broad range of

C hile CBDC research continues globally, some
W
use cases, including P2P, B2C, and B2B central banks are proceeding more cautiously
transactions. In contrast, cryptocurrencies in with retail CBDC plans due to implementation
practice are often being used to facilitate P2P difficulties, public skepticism, and debates
transactions. around necessity and risks.
CBDCs are heavily researched, with few retail initiatives launched so far
CBDCs are a response to the rise of decentralized digital currencies like CBDCs differ significantly from cryptocurrencies
Bitcoin and Ethereum. They are still in the early stages, with extensive
research being conducted by most international central banks.
Cryptocurrencies CBDCs
CDBCs in relation to other forms of currency
Location Decentralized Centralized
CDBCs sit in the centre of three core currency concepts. They are
universally accessible, electronic and issued centrally. This sets them
apart from all other forms of currency. Issued and
Mining or
Creation distributed by
cryptographic rules
central bank
Crypto- Underlying Blockchain or

currencies Centralized database
technology distributed ledger
Bank
account money
Universally
Electronic Central Bank
accessible Supply Limited
controlled
CBDCs
Very private Central Bank can
Anonymity & privacy
and anonymous monitor transactions
Physical cash Bank reserves
Operate outside Subject to regulation

Regulation
traditional regulation and oversight
Central Bank issued
Intended for
Primarily used
domestic and cross-
for investment,
Use cases border P2P, B2C
speculation, P2P
and B2B payments,
transactions
financial inclusion
Sources: Ole Bjerhg ‘Designing New Money – The Trilemma of CBDC; Atlantic Council
Current retail CBDC solutions face adoption challenges; wholesale CBDCs may offer greater
long-term value
The global CBDC landscape The three live CBDC solutions
As of early 2024, 135 countries Bahamas: Sand Dollar Nigeria: eNaira Jamaica: Jam-Dex
are exploring the use of CBDCs,
representing 98% of the global GDP.
Major economies are included The Sand Dollar project was the The eNaira was launched in 2021 Launched in 2022 with the slogan
in this ongoing research – with first retail CBDC use case to go live with the aim of aiding financial ‘No cash, no problem!’.
concepts such as: in 2020. inclusion across Nigeria.
– Digital € Euro Around 8.3% of the population are
– Digital £ Pound Since its launch, $2.1 million USD Despite alarming levels of cash users of the CBDC; however, Jam-
– Digital ¥ Yuan worth of Sand Dollars have been shortages across Nigeria, public Dex circulation stands at only about
distributed, which accounts for uptake of the digital currency has 0.1% of Jamaica’s total currency
At the moment, 3 countries’ CBDC significantly less than 1% of the been very low. circulation.
programs are in a launched state: GDP.
– Bahamas: Sand Dollar (launched This is attributed to a weak Jamaica plans to fund PoS terminal
2020) The Sand Dollar project aims awareness campaign. upgrades to increase Jam-Dex
– Nigeria: eNaira (launched 2021) to increase financial inclusion acceptance nationwide. Until this is
– Jamaica: Jam-Dex (launched nationwide, but this goal has yet The pilot phase of eNaira for complete, promotion efforts for the
2022) to be achieved. diaspora remittances is poised to digital currency have been stalled.
expand the adoption of the digital
An additional 36 nations are in a currency and its associated wallet.
pilot phase.
Sources: Bank of Jamaica; Atlantic Council; Bahamas Central Bank
The future for CBDCs
Retail usage Wholesale usage Examples of cross-border wholesale CBDC

The future of retail use for CBDCs remains CBDCs provide an opportunity to improve projects
uncertain, with growing concerns about privacy settlement times between wholesale entities and mBridge: Thailand, China, Hong Kong, UAE
and spending control associated with these reduce operational costs for participants.
centralized digital currencies. Project Dunbar: Australia, Singapore, Malaysia,
Wholesale participants are likely to have fewer South Africa
None of the three current live CBDC solutions privacy concerns about CBDCs compared to their
have managed to achieve significant user uptake. retail counterparts, and the benefits of secure Project Mariana: France, Switzerland, Singapore
central bank networks will also appeal to them.
As other central banks and nations observe Project Jasper: Canada, UK, Singapore
the progress of CBDC initiatives, it is becoming Securities settlement and cross-border FX
apparent that the value of CBDCs is not well payments present complex challenges for the Project Aber: KSA, UAE
appreciated by many individuals. CBDC community.
While time will tell, it seems unlikely that many If development and innovation continue at
additional nations will launch their CBDC the current pace, CBDCs could emerge as
initiatives in the near future. a compelling and competitive solution for
interbank payments in the future.
Sources: Bank of Jamaica; Atlantic Council; Bahamas Central Bank
Financial Services
Inclusion and Innovations
06
Accelerating Growth of B2B
Cross-Border Payments
B2B cross border Businesses face Fintech offer

payments will recurring pain interesting value
continue to grow points when dealing propositions to
with cross border mitigate the pain
payments points
Accelerating Growth of B2B Cross-Border Payments
B2B cross-border payments face delays, high costs, and FX issues with traditional methods,
driving a shift to faster, cost-effective fintech solution
B2B cross border payments will Businesses face recurring pain Fintech offer interesting value
continue to grow points when dealing with cross propositions to mitigate the pain
border payments points
2B cross-border payments are crucial for
B
facilitating international trade and commerce. usinesses face several recurring pain points
B raditional payment rails rely on a
T
when sending and collecting cross border complex, multi-layered network where
s globalization and international sourcing
A payments. These pain points can significantly payment instructions pass through several
strategies continue to expand, the volume of impact operational efficiency and profitability. intermediaries, processing data sequentially
B2B cross-border payments is expected to The primarily issues include. and in batches. This results in costly and time-
grow at a CAGR of 5.6% reaching $56 trillion consuming procedures.
by 2030. elays in transaction processing due to
D
complex international banking networks, intechs offer a streamlined, cost-effective,
F
time zone differences, and varying regulatory and faster alternative to traditional SWIFT
requirements. payments. By leveraging a global network
of local currency accounts, providing virtual
ost of processing due to multiple
C account capabilities, enabling instant currency
intermediary banks, currency conversion fees, conversions at competitive rates, and
and compliance checks. processing transfers through internal ledger
balances, fintechs are revolutionizing the
anaging foreign exchange (FX) operations
M landscape of B2B cross-border payments.
can be complex and challenging.
Sources: FXC Intelligence; Worldbank; Our World in Data; AgileIntel Research; Digital Commerce 360; ECB, Mordor Intelligence
B2B cross-border payments are expected to grow at a CAGR of 5.7% to $56 trillion by 2030
Macroeconomic factors fuelling Industry-level factors fuelling B2B

Assumption caveat
B2B cross border payment volumes cross border payment volumes
Global economic growth B2B e-commerce sales While the impact of macroeconomic and
The global economy has demonstrated AgileIntel Research estimates the B2B industry-level factors will most likely boost
remarkable resilience in the face of geopolitical e-commerce Gross Merchandise Value to have global trade, the introduction of reshoring
tensions and is expected to surpass $100 reached $23 trillion (representing 60% policies (e.g. the US CHIPS and Science
trillion GDP in 2024. Powered by a compounded of today’s B2B cross border payment value) in Act, China’s dual circulation strategy and
annual growth rate (CAGR) exceeding 2.9%, this 2023 and expects that value to exceed $33.7 the US Inflation Reduction Act) as well as
growth continues to promote trade across global trillion by 2026. the potential fragmentation of trade along
markets as well as economic activity worldwide. political lines—as evidenced by increasing
Growth of B2B marketplaces trade barriers, corporate discussions, and
Increased globalization of businesses Providing businesses with a wide array of the ECB’s 2023 survey results published in
World merchandise trade volume is projected to international sourcing options, B2B marketplaces Economic Bulletin, Issue 1 (2024) — may
grow 2.6% in 2024 and 3.3% in 2025, following a are the fastest-growing digital sales channel. hamper part of the forecasted growth.
larger-than-expected decline of -1.2% in 2023. Over 130% more B2B marketplaces were created
between 2021 and 2023.
Digital globalization
The rapid digitalization of business processes Rise of international sourcing strategies
has enabled the growth of digital B2B The trend of outsourcing goods and services
marketplaces and e-commerce platforms, is expected to continue growing, with the
fostering global sourcing, optimized due IT segment leading the charge. Global IT
diligence, and increased pricing competition. outsourcing is projected to reach $617.7 billion
in 2024 and $805.5 billion by 2029, representing
a CAGR of 5.48% over the next 5 years.
While goods outsourcing drove 20th-century
globalization, service outsourcing will continue
fueling globalization.
Expected growth of B2B cross border transactions
Macroeconomic factors fuelling

B2B cross border payment volumes
2024 5.6% 2030
$401 trillion CAGR $561 trillion
Industry-level factors fuelling
B2B cross border payment volumes
1. E
xcluding volumes from C2B and B2C fund transfers or any cross-border transactions originating from wholesale banking,
institutional investors, hedge funds or proprietary investors.
Despite the growth, organizations face the same recurring pain points when leveraging
traditional rails to operate / collect their cross-border payments
Illustrative example showcasing the 3 major pain points organizations face when operating / collecting cross-border
payments through traditional banking system*
Cross-border payment flow landing on Cross-border payment flow departing from

John Doe LTD Accounts Receivable John Doe LTD Accounts Payable
Swiss based John Doe LTD
with CHF account
EU buyers China vendors
€ ¥
1. Delays
3. Managing the foreign exchange
China buyers ¥ € EU vendors
(FX) / regulations
AR AP
2. Managing the foreign exchange $ $
US buyers US vendors
(FX) / regulations
4. Costs of processing
£ £
UK buyers UK vendors
Notes
Names, currencies, and flows are fictional and Traditional rails typically refer to wire transfers *In 2023, Rapyd surveyed 715 businesses based
are intended to showcase the existing cross- (SWIFT network) or correspondent banking in Brazil, Canada, Germany, Mexico, Singapore,
border payment pain points. network. the UK and the US to understand the main
hurdles when sending and receiving international
payments through traditional banking rails.
Sources: Rapyd; Financial Action Task Force; Bank of England
1. Delays 2 & 3. M
anaging the foreign exchange (FX) / 4. Costs of processing
regulations
Cross-border payments through traditional banks By involving multiple intermediaries, traditional
often involve multiple correspondent banks and Currency reconciliation processes, exchange B2B cross-border payment operations often lead
intermediaries, leading to longer processing rate transparency and cost, FX regulatory to increased transaction expenses (excluding
times, sometimes taking several days. Divergent compliance, and accounting / tax implications FX management and fee costs). Correspondent
Anti-Money Laundering (AML) and Combating are among the most cumbersome processes banking fees, SWIFT fees, and high funding
the Financing of Terrorism (CFT) standards organizations face when dealing with cross- costs (banks must pre-fund accounts in various
were identified as the two main challenges border payments. Currency fluctuation and currencies or secure forex market access) are
when processing cross-border payments in a market volatility were two of the top four among the most prevalent operational expenses
survey among 173 industry players (banks, PSPs, concerns mentioned in the Rapyd survey when (opex) banks face when transferring a payment
electronic money issuers, etc.) conducted by the organizations are dealing with FX. instruction on the SWIFT system.
Financial Action Task Force (FATF). One question
in the Rapyd survey demonstrates recurring
delays organizations are facing when collecting /
sending cross-border payments.
Q: Typically, how much delay is involved in sending or receiving cross-border payments?2

2%
17% 43% 29% 8% 1%
Same day 2–5 Days 5–10 Days 10–15 Days More than 15 days Don’t know
2. Extracted from Rapyd research report “The state of B2B cross-border payments”
Fintechs are transforming the cross-border payment ecosystem by streamlining processes,
eliminating intermediaries, and reducing FX costs
The traditional system value proposition is subpar compared to market needs Average premium charged by region
and expectations on currency conversion (USD to foreign)
1. Delays
Average 2.50%
4. Costs of processing
LATAM 5.04%
1. T
raditional banking systems heavily rely on 4. While SWIFT charges messaging fees, it
SWIFT within a complex and multi-layered does not handle the FX. NA 4.55%
network where a payment instruction can
transit through a chain of 3 to 5 correspondent 4. Banks often negotiate FX rates for each Middle East 0.76%
banks and can be subject to fragmented and transaction and view FX as a service and
truncated data formats. key profit generator. In the SWIFT network, a
Europe 2.06%
complex interchange process may be applied
1. E
very intermediary in the sequence processes for certain currencies exacerbating the high
payments sequentially and in batches, sending FX fees (below is an example of average APAC 1.50%
them only a few times daily. Time zones can regional fees quantified by Corepay in 2021.
also be an issue as banks operate on their Africa 2.86%
local business days. 1&4. E
ach bank in the network performs its
own verifications, compliance checks, and
1. W
ith 10% of payments still requiring manual processing. Fees are charged for each of
review for errors and compliance issues, these services. Evolved timings
further delays are often added to the process.
SWIFT GPI’s (Global Payments Innovation)
new 2-hour settlement time frame will
improve the speed of traditional cross-
border payments. Yet, this does not
offer near-instantaneous transfer times,
nor is this new feature live globally.
Sources: Rapyd survey; Capital Monitor; SWIFT; Corepay
The fintech value proposition is to Cross-border B2B payment flow: from
Caveat
enable cost-effective and fast payments pay-in to pay-out via Fintech FX JD4
closed loop network
Fintechs hold accounts across the world, Traditional players have begun introducing
in multiple currencies. They maintain bank bilateral agreements to settle FX transactions
accounts in 50-100+ countries in local via blockchain based solutions. Wells
currencies. Fargo and HSBC have partnered in 2021 +/-
to use a shared settlement ledger to $ €
They provide Virtual Account (VA) capabilities, process USD, CAD, EUR and GBP in real
enabling corporates to collect funds as if they time. Such partnerships may be seen
+/- +/-
were a local entity when operating abroad. as a response from traditional players
to match fintechs’ value proposition.
Leveraging multi-currency wallets and the £
VA (single account), fintechs offer instant
conversions between currencies at very
competitive rates.
Transfers are then processed through ledger Fintechs with cross border FX value 1. US buyer sends $50K to FX JD’s USD
balances, settling the various accounts account (pay-in)
propositions
according to the transactions registered during
the defined timeframe in a single settlement. 2. $50K converted to €45K in EUR sub-
These transactions happen in a “closed loop” account
environment and are instantaneous.
3. €
45K moved to German vendor’s FX JD’s
How? EUR sub-account
Fintechs can do so by matching offsetting
currency needs (swap funds) within their 4. €
45K transferred from German vendor’s FX
network. They operate currency position netting JD’s EUR sub-account to his treasury bank
to convert the unmatched amount, leveraging account in EUR (pay-out)
their institutional rates (access interbank rates),
have no intermediary bank fees and no brick-and-
mortar branches (reduced opex costs).
Fintechs can also wait for favourable rates to

convert currencies held by clients.
4. Not a real name, used for illustrative purposes.
The legend describes a typical cross border transaction flow
between a US buyer and a German vendor. Fintech FX JD is a
fintech with FX capabilities. The flow chart represents a wider
Sources: Rapyd survey; Capital Monitor; SWIFT; Corepay Not an exhaustive representation network than the use case description in the legend.
07
Open Banking
Open Banking Open Banking evolves Open Banking’s

boosts innovation by globally, expanding progress has
granting access to scope and benefits been hindered by
financial data across markets insufficient adoption
Open Banking
Open Banking, developed to drive competition and innovation, is now evolving into broader
Open Finance and Open Data initiatives
Open Banking boosts innovation Open Banking evolves globally, Open Banking’s progress has
by granting access to financial expanding scope and benefits been hindered by insufficient
data across markets adoption
pen Banking was developed with the

O owever, the implementation and adoption of
H espite the advancements in Open Banking
D
objective of encouraging market competition, Open Banking have varied significantly across since its launch, the adoption of its intended
driving innovation, and increasing the different markets worldwide. use cases has not met initial expectations.
availability of services within the financial
ecosystem. ome markets are extending their data-
S arious factors, including technological
V
sharing efforts by introducing regulatory and limitations, consumer behavior, business
o achieve these objectives, Open Banking
T technological frameworks for Open Finance strategies, and banking regulations need
initiatives led to the “opening up” of data and Open Data initiatives. addressing to facilitate progress, adoption,
owned by financial institutions. With users’ and the potential evolution towards Open
consent, this data can be accessed and hese three data-sharing models - Open
T Finance and Open Data.
leveraged by third party providers. Banking, Open Finance, and Open Data - each
have distinct scopes, leading to diverse
use cases that benefit both consumers and
businesses.
The global deployment and adoption levels of Open Banking, Finance, and Data initiatives
vary significantly
Data-sharing and implementation model
USA (Open Banking – OB) Legend definitions

The CFPB released the OB regulation for public Data-Sharing Model
Open Banking (OB)
comment in October 2023.
Users consent to share their account data, held by their
Population (2023, Millions): 335m bank or FIs, with third-party providers (TPP).
No. of Participants / TPPs: Unknown due to the
Open Finance (OF)
lack of centralised registry
Users consent to share their wider finance data, such
Total A2A Payments (2023)1: $1,119 Tr as related to mortgages, savings, pensions, insurance
or credit.
Open Data (OD)

Users link their account and finance data with data from
other sectors such as utilities such as energy, telecom,
health, government, etc.
Implementation Model
Regulatory-driven
Initiative introduced by regulatory entities.
Brazil (Open Finance – OF) Market-driven
OF regulatory framework implemented in 2021 Initiative introduced by stakeholders / players in the
(Phase 4) market.
Population (2023, Millions): 204m Hybrid
No. of Participants / TPPs (Q1 2024): 195 Collaboration between regulators and market.
Total A2A Payments (2023)1: $19 Tr
TPP = Third Party Provider
A2A = Account-to-Account
CFPB = Consumer Financial Protection Bureau
JROC = Joint Regulatory Oversight Committee
1. T
otal value of A2A consumer and commercial
payments, including credit transfers, direct debit and
instant payments. Potential total addressable market
Sources: Konsentus; Global Data; IMF; Frollo; EDC Research & Analysis; other national sources for OB payments.
UK (Open Banking – OB) Legend definitions

OB initiated in 2017. In 2024, JROC has Data-Sharing Model
Open Banking (OB)
published about the “Future Entity” that will
oversee the standard-setting for OB & OF bank or FIs, with third-party providers (TPP).
services.
Open Finance (OF)
Population (2023, Millions): 68m
No. of Participants / TPPs (Q1 2024): 206 as related to mortgages, savings, pensions, insurance
Total A2A Payments (2023)1: $134 Tr or credit.
Open Data (OD)

Regulatory-driven
Market-driven
EEA (Open Banking – OB) Initiative introduced by stakeholders / players in the
market.
PSD2 was introduced in 2018. The proposal
for OF regulation (PSD3) has been published in Hybrid
2024. Collaboration between regulators and market.
No. of Participants/TPPs (Q1 2024): 367 A2A = Account-to-Account
Total A2A Payments (2023)1: $348 Tr CFPB = Consumer Financial Protection Bureau
1. T
for OB payments.
Japan (Open Banking – OB) Legend definitions

OB regulatory framework implemented in Data-Sharing Model
Open Banking (OB)
2018.
Population (2023, Millions): 125m bank or FIs, with third-party providers (TPP).
No. of Participants / TPPs: Unknown
Open Finance (OF)
Total A2A Payments (2023)1: $25 Tr
as related to mortgages, savings, pensions, insurance
or credit.
Open Data (OD)

Regulatory-driven
Market-driven
Australia (Open Data – OD) Initiative introduced by stakeholders / players in the
market.
The Consumer Data Right was first published
in 2019, then expanded from OB to Energy in Hybrid
‘22 and plans to expand into OF in ‘24. Collaboration between regulators and market.
No. of Participants / TPPs (2023): 113 A2A = Account-to-Account
Total A2A Payments (2023)1: $12 Tr CFPB = Consumer Financial Protection Bureau
1. T
for OB payments.
Open Banking use cases are well-advanced, whereas Open Finance and Open Data use cases
are in early stages of development and adoption
Open Banking, Finance & Data key use cases

Digitalized economy
Many governments worldwide aim to achieve a
digitalized economy, emphasizing the crucial role of data
Government data
accessibility and flow. This has led to the development
of regulations opening access to consumers’ and
businesses’ data while ensuring trust and security. Enhanced KYB / KYC
A2A P2M online payments
Payment initiation
Cash-flow management
“Open banking exists within the context of Tax data
A2A P2P payments
the more recent Open Finance movement.
And, both Open Banking and Open Finance
A2A P2M
sit within a broader landscape of Open Data.” In-store payments Credit assessment
Payment NZ, 2023, “Looking Ahead – Open
Banking in Aotearoa New Zealand” Variable recurring
payments Utilities data
Investment & saving (e.g., telecom, energy)
Account verification account payments
Account aggregation
Finance data aggregation
Health / medical data
Scope of data-sharing
Open Banking Open Finance Open Data

(Account & Payment Data) (Financial Data) (Any other Personal Data)
Source: EDC
Open Banking Open Finance Open Data (OD)
pen Banking Payments, also known as

O he foundation of Open Banking, providing
T hile data security and privacy regulations are
W
account-to-account (A2A) payments initiated access to user account information, unlocks well-established globally, their application may
by a TPP, have been pivotal in measuring Open opportunities for a wider range of financial vary depending on market maturity.
Banking adoption across different markets. services. Open Finance aims to enhance this
Primarily driven by P2P payments followed link and provide users with increased visibility owever, Open Data frameworks linked to
H
by online P2M transactions, the adoption of for comparing financial products. Open Banking and Open Finance are still in
in-store P2M payments through point-of-sale early stages of development, with markets like
terminals remains underdeveloped. ey use cases within Open Finance have
K Australia and New Zealand leading the way
the potential to enhance access to financial (though not yet fully implemented). Despite
ariable Recurring Payments (VRP) represent
V services for underserved low-income offering broad data scope, the adoption of
a recent innovative use case introduced in consumers and micro, small, and medium- Open Data infrastructure and use cases
the UK. This feature enables customers to sized enterprises (MSMEs), facilitating remains limited.
link authorized Payment Initiation Service savings, investments, and access to lending
Providers (PISPs) to their bank accounts, products.
facilitating a series of payments, such as
recurring transactions, within predefined
parameters.
Sources: Open Banking Exchange; Payments NZ; EDC Research & Analysis
Overall, the adoption of Open Banking has fallen short of initial expectations.
Several factors could enhance its progress in coming years
Technology perspective Consumer perspective Business perspective Banks / FIs perspective
Coordination Consumer awareness & concerns Business awareness Incentives

In many markets, Open Banking There remains a significant lack Similar to consumers, businesses Banks and Financial Institutions
(OB) regulations mandate banks of consumer awareness about must be made aware of the (ASPSPs) are mandated to provide
to provide standard APIs for the benefits of sharing their data potential benefits of initiatives their data via APIs to TPPs free
third-party providers (TPPs) to (account, financial, or other) like Open Banking and Open of charge to promote new market
access account data via bilateral and concerns persist regarding Finance, such as reduced payment entrants and foster competition.
integrations (e.g., UK, EU). As data security and protection. acceptance costs, improved cash However, the lack of incentives
the number of TPPs and use Governments, banks, and TPPs flow, and greater access to financial for ASPSPs has hindered further
cases grows, scalability and should take proactive steps to services. These benefits are innovation within Open Banking and
standardization issues may arise, educate consumers. particularly crucial for micro, small, Open Finance frameworks.
especially with the potential and medium-sized enterprises
development of non-mandated Payment adoption (MSMEs) that are currently Payment acceptance
or premium APIs. New models Despite overall growth in OB underserved by traditional banks The adoption of OB Payments is
are emerging to tackle these Payments, consumer adoption and financial institutions. heavily influenced by the availability
challenges; for example, the UAE remains limited and primarily focused of solutions from ASPSPs for
has implemented an API Hub as on specific transaction types (e.g., Payment acceptance consumers and businesses. The
part of its Open Finance Regulation. P2P transfers, funding accounts). The adoption of OB Payments less favorable economics for
To encourage broader use for day- among businesses and merchants ASPSPs regarding OB Payments
Payment technology to-day transactions and in-store requires balanced growth from compared to other methods, such
The adoption of OB Payments for P2M payments, a seamless user both the payer (consumer) and as card payments, has slowed
day-to-day in-store transactions experience is essential. Additionally, payee (business / merchant) sides. market adoption.
heavily relies on the evolution of incentives should be provided to Businesses are unlikely to adopt
mobile payments and technologies encourage the transition from other new payment methods until there
such as tokenization, point-of-sale payment methods like cards, such is significant demand from their
kernels, and mobile SDKs. as matching existing benefits like customers. Despite the advancements in Open Banking
since its launch, addressing several key
loyalty programs or chargeback
factors is crucial to ensuring its continued
mechanisms (e.g., APP in the UK). progress and potential evolution towards
Open Finance and Open Data.
Sources: Open Banking Exchange, The Banker, NatWest, Oxera, Raconteur, Arab Monetary Fund, EDC Research & Analysis
08
Consumer Digital Banks
Digital banks Despite rapid Digital banks must

are disrupting customer acquisition, convince consumers
traditional banking most digital banks to switch their
remain unprofitable primary relationships
to them
Consumer Digital Banks
Digital banks have gained market share by offering superior services, but now
face the challenge of prioritizing profitability amid a tougher economic climate
Digital banks are disrupting Despite rapid customer Digital banks must convince
traditional banking acquisition, most digital consumers to switch their
banks remain unprofitable primary relationships to them
igital banks, also known as neobanks or

D igital banks have acquired customers at
D hile most consumers currently use digital
W
challenger banks, are online-only banks rates uncommon among traditional banks, but banks for secondary accounts, ensuring
without any physical branches. Globally, they profitability has often been overlooked. As of future success requires convincing them to
operate under different models depending H1 2023, nearly 95% 3 of all digital banks were switch to a primary account. This transition
on their product strategy as well as regional not profitable. necessitates focusing on value proposition
regulations; some have full banking licenses, enhancement and customer engagement,
while some work alongside their banking They
attracted large customer bases by ensuring platform stickiness and increased
partners. offering services at lower costs and relying wallet share.
on external capital, with plans to monetize
igital banks have disrupted the banking value
D at a later date. Abundant venture capital igital banks can achieve long-term growth
D
chain, capturing market share from traditional funding allowed them to prioritize geographic and profitability by focusing on interest-
banks at a rapid pace (in some countries more and product expansion over profitability. bearing lending products, expanding into
than others), targeting tech-savvy, unsatisfied However, as funding becomes more expensive diverse financial services, innovating with
or underbanked users. and scarce in the current economic climate, personalized offerings, leveraging AI for
achieving profitability has become a key operational efficiency, and prioritizing
igital banks are primarily accessed via mobile
D challenge. immersive customer experiences.
(growing smartphone usage contributed
immensely to their popularity), though The few digital banks that have become
incumbents are now offering similar features. profitable have done so through various
Consumers are choosing digital banks over methods tailored to their operating models,
their traditional counterparts because of level of maturity, and the specific unmet needs
better user experience, quicker onboarding, of their target segments.
faster access to credit, multi-currency,
personalization, or a lower fee structure.
3. Simon-Kucher & Partners (Neobanking 2023 report)
Digital banks have been revolutionizing banking industry for some time,
and their growth is poised to accelerate as consumer trust continues to increase
Number of digital banks and Value of customer deposits Consumer preference for digital
transaction values in the market in digital banks are increasing banks when opening a new account
are growing % Share of total consumer deposits
2023 vs 2020
6%
(digital and traditional banks)
53%
18-24
Deposits in digital banks (USD trillion) 5% 43%
2024: 300+ 2024: $4.9Trillion 4%

Active digital banks ~21x 44%
35-54
~3x 35%
3%
2017: 2017: 2% 31%
109 $0.23T 1% 55-64
1% 24%
0.8 1.4 2.4 4.3 7.3 9.5 12.5

Number of digital banks Transaction value in USD 20%
65+
(Worldwide) (Estimated worldwide) 2017 2018 2019 2020 2021 2022 2023 15% 2020 2023
he digital banks sector has seen significant

T Digital banks experienced an increase in deposit 2023 survey by Global Data revealed that,
A
growth in recent years, with more than 300 active values since 2017 holding between 7% to 13% of digital banks have gained popularity across all
banks in 2024. Around 90 new launches occurred overall deposits as of 2023. age segments compared to 2020, with a stronger
in 2020, driven by the pandemic. preference among younger users.
A larger deposit base provides a more stable
This growth was driven by consumer demand funding source and can signal trust and The increasing interest from older age groups is
for a better banking experience and lower satisfaction among customers, enhancing the significant because they are wealthier, and more
fees, coupled with increasing smartphone bank’s reputation and credibility in the market. suited toward higher-value products such as
penetration, easier access to funding, and credit and investments.
improved fintech infrastructure. Digital banks have also typically found it
easier to attract users. For instance, Webank Consumers using digital banks in the US had a
Transaction value in the digital bank market (China) and Nubank (Brazil) have 360m and satisfaction rate of 79% compared to 66% for
reached around 5 trillion USD in 2023 as per 100m users respectively as of 2024, adding traditional bank users as per Galileo research. The
Statista insights and are projected to continue users at acquisition rates that are rare among majority (61%) indicated that they are somewhat
growing at 16% CAGR through 2028. incumbents. or highly likely to switch to a digital-only bank in
the future.
Sources: Statista (Accessed June 2024); Global data financial services survey 2023; Galileo; EDC Research & Analysis
Despite the global surge in popularity of digital banks, only a few have cracked the code
to profitability, while many others continue their quest
North America Asia Pacific region Middle East and Africa

The North American market closely mirrors trends Asia has the most profitable banks, with China In Africa, alongside the longstanding dominance
observed in the US. US digital banks, such as being a key contender. All five of China’s initial of mobile money, digital banks are gaining
Chime, have attracted customers by offering no-fee digital banks, who obtained licenses in 2015, traction as mobile penetration rises and more
accounts and high-yield savings, while also building became profitable within five years of their people seek credit. While banks like Fairmoney
trust through their affiliation with traditional launch. Unlike their Western counterparts, Asian and TymeBank have recorded monthly profits,
banks (The Bancorp Bank and Stride Bank). digital banks such as WeBank (by Tencent) and much of the ecosystem remains in the red.
MYBank (by Alibaba) operate on a consortium
US banks such as Dave achieved their first model. Pure-play
digital banking entered the Middle
quarterly profits in Q3 2023, and others are likely Eastern market a bit late, but the region is
to follow. Southeast Asia represents a significant growth fostering a favorable regulatory environment
market for digital banking, particularly in by providing full banking licenses to UAE-based
European Union countries such as Thailand, India, and Vietnam, neobanks like Wio, which became profitable
Most European banks have struggled with where large proportions of the population remain within a year of launch.
profitability, relying solely on interchange fees unbanked. Regional players are expected to
and subscriptions to generate revenue. This continue gaining market share in these countries
model heavily depends on constant growth in the due to substantial hurdles for foreign players
customer base. associated with cost and regulatory challenges.
A recent shift towards building stronger lending Latin America and the Caribbean
portfolios has yielded significant income for the I n LATAM, Brazil stands out with the most
likes of Bunq, Revolut, and Starling, which have extensive fintech ecosystem. Giants like Nubank,
focused on lending, especially mortgages. offering a range of services including credit
cards, personal loans, and wealth management,
ECB interest rate hikes over the past few years are already profitable. Similarly, Brazil’s Banco
have also benefited EU digital banks. These Inter has also achieved profitability in 2023, and
have opened up more lending opportunities and both institutions are now expanding into other
reduced losses from holdings of reserves with markets.
the ECB.
Sources: Bank annual reports; Global data (Digital challenger banks: the dawn of profitability report 2024); Various news articles; EDC Research & Analysis
Variation in profitability timeline for selected digital banks Many digital banks have also
ceased operations
Reasons: They offered too high-interest

accounts, lacked product differentiation,
Years to
Est. 2017 crowded regional market and failed to raise
profitability Profit 2019 1
Year funding.
2 Having relied heavily on external equity funding

Years to amass their extensive customer base, digital
banks face the challenge of retaining investor
3
Est. 2008 Years interest. They must demonstrate profitability or
Profit 2013 Est. 2015 at least a viable path toward it, and have hence
Profit 2016
been forced to shut down.
5
Years Profitability concerns have caused more than
25 digital banks, including Orange, and Volt, to
6 Est. 2018
Est. 2014 Years cease operations in the past 2 years.
Profit 2022 Profit 2021
8
Years
9 Est. 2015
Est. 2012 Years Profit 2021
Profit 2023
Orange Bank
11
Years
Est. 2013
Profit 2022 Not an exhaustive representation
Digital banks can focus on implementing best practices to ensure a path towards
profitability and sustain long-term growth, positioning themselves as leaders in the
evolving financial sector
Emphasize on lending Extend a full-suite Constantly innovate

services and deposits of financial products product offerings
Banking is and will always be a balance-sheet- Becoming a one-stop financial marketplace, At the core of a digital bank’s attractiveness
driven business. Most digital banks that have offering diverse services like investment, lies its capability to innovate and offer hyper-
achieved profitability as of today have based insurance, trading, etc., will be pivotal for digital personalized products and value-added
their success on selling interest-bearing lending banks – to convince customers to switch from services. Maintaining a constant rate of
/ credit products. their traditional primary banking provider. innovation that aligns with consumer pain
points is crucial to remain relevant.
Kakao Bank was profitable within 2 years of Revolut launched trading in its platform since NuBank has announced the launch of NuViagens,
launch due to its lending-focus from day one. 2019 and as of 2024 even offers a Robo-Advisory a portal for travel bookings (in partnership with
In 2024, it recorded profits of $267m driven by service in the EEA region. Revolut also offers FX hopper). They also ventured into offering eSim’s
expansion of loan refinancing services. transfer, crypto, savings and cards. earlier this year for their premium customers.
UK-based Starling bank has shifted its focus N26 added to their suite a travel insurance Chime’s offers MyPay, which lets consumers
towards lending products especially mortgages, offering for its “metal” (premium) account unlock some of their earned wages for free
which now constitute over 70% of its lending holders and their traveling companions. within one to two days of making a request.
portfolio.
Sources: Various news articles; Annual reports; EDC Research & Analysis
Harness the Elevate the overall
Target niche segments
potential of AI banking experience
Leveraging AI allows digital banks to streamline Niche targeting has been a persistent challenge In addition to commercial incentives,
operations and personalize services, ultimately for traditional banks. Successful digital players successful digital banks need to invest
improving customer experiences. The speed of concentrate on creating offerings for their target heavily in and prioritize immersive consumer
AI adoption will set winners apart from both their segments, while also considering mass markets experiences to cultivate loyalty and retention.
digital-only peers as well as traditional banks. to ensure these offerings have the potential for
broader appeal.
US based Bank Dave uses AI-driven credit Monese specializes in serving thin-file customer ZA Banks gamification strategy with
underwriting, reducing its 28-day delinquency bases, like students or migrants, providing them ‘Powerdraw’ (Virtual slot machine) has increased
rate from 2.60% to 1.83%. the ability to open an account in less than 2 mins. its engagement among Hong Kong’s youth.
Bunq launched a Gen AI tool called Finn on their Panacea Financial offers deeply integrated suite Up Bank’s Maybuy is a Save Now, Buy Later
app, which replaced generic search allowing of financial products and services for doctors, (SNBL) solution allowing customers to add
consumers to plan their finances, budget, their practices, and ultimately the broader products and start a savings schedule to
navigate the platform and find transactions. healthcare industry. purchase them.
Not an exhaustive representation
09
Digital Disruption in P2P Remittances
Global remittance The remittance space Digital technologies

flows are increasing is highly lucrative are reshaping
at a slowing rate but increasingly remittance channels
competitive
Digital Disruption in P2P Remittances
The digital remittance revolution is disrupting costs and transfer methods
Global remittance flows are The remittance space is highly Digital technologies are
increasing at a slowing rate lucrative but increasingly reshaping remittance channels
competitive
emittance volumes have seen strong growth

R emittance volumes, while growing more
R he growing prominence of international
T
since 2000 growing at a CAGR of 8.6% (2000 gradually, remain significant. fintechs and their competitive business
– 2024). However, a number of factors are models, is causing more consumers to opt for
likely to cause this rate of increase to slow to a owever, as more players have entered
H these digital-only remitters. The number of
forecasted CAGR of 5.1% (2024 – 2028). the market competition has grown. Digital consumers able to opt for these remitters is
remitters in particular have been able to also increasing as unbanked populations fall.
he primary factors that are likely to lead to
T reshape the competitive landscape in a short
this slowdown are a reduction in global GDP period of time, due to advanced technologies urthermore, traditional money transfer
F
growth, aging populations and changing local and processes and low dependency on operators (MTOs) are increasingly offering
immigration laws. physical locations. digital remittances. The comparative
convenience of the online offering is causing
he growing competition has in turn caused
T many consumers to alter the way in which they
noticeable and continuing reductions in remit money through these entities.
remittance costs.
ther macroeconomic factors such as the
O
hese costs are expected to fall further, in line
T Covid-19 pandemic and rapid technological
with the UN’s goal to reduce the worldwide advancements have further accelerated the
costs of remittances to 3% by 2030. shift to digital remittances.
GDP growth rates

Remittances will continue to increase
however at a slower rate.
Sources: International Monetary Fund; United Nations; KNOMAD / World Bank; EDC Analysis
Although historical global remittance flows have been consistently increasing
over the past 2 decades, the rate of increase is likely to slow in the coming years
Past & Forecast Future

Historical and forecasted global remittance flows Factors contributing to a slowing remittance flow growth rate
1,200 Slowing GDP growth rates

Globally high inflation rates caused by a number of macroeconomic factors
including war and trade disruption, have caused economic and GDP growth
GR rates to slow in some markets. Reduced GDP growth rates typically equate
1,000 CA 0 28
% 2 to less spending power in the population. Subsequently, workers around
5.1 4 –
20
2 the world are likely to have less disposable income to send back to their
Global remittance flows (billion USD)
families abroad.
800
Aging populations
Broadly speaking, the global population in richer markets from where
600 GR remittances originate is aging meaning there are fewer people of working
C A 0 24
% 2
6
8. 0 – age. This translates to a smaller pool of people in employment overseas,
0
20 sending money to their families back home.
400
Aging populations are also positively correlated with a country’s prosperity.
Greater domestic prosperity likely means there is a reduced need to
venture overseas in search of higher paying work.
200
Changing local laws

Immigration laws vary significantly by country however recent changes
$0 in some markets may cause remittance volumes to increase at a slower
rate. In the UK for example, it has become harder to obtain a visa thanks
2000a 2004a 2008a 2012a 2016a 2020a 2024f 2028f
to minimum income requirements, thus reducing the growth in migrant
numbers and the need for remittances. In Saudi Arabia, overseas workers
are allowed to bring families with them, which is likely to reduce the growth
in remittance volumes.
Sources: International Monetary Fund; United Nations; KNOMAD / World Bank; EDC Analysis
The remittance landscape is undergoing transformation with increasing digitalization,
declining remittance costs and the rising influence of fintech disruptors
Remittances are becoming increasingly The number of disruptors in the remittance industry is growing
digitalized
here is a gradual shift from cash-based to

T I nternational fintechs are increasingly able to countries, enabling them to receive
digital C2C international transfers, a trend compete with traditional banks and exchange payments in matching currencies and avoid
accelerated by the COVID-19 pandemic. While houses due to several key characteristics: exchange rate concerns.
some corridors are expected to remain cash-
based, technological advancements, like tate-of-the-art digital apps: These apps
S
mobile money and wallets are increasingly are highly convenient and user-friendly,
enabling the unbanked population to access allowing customers to be onboarded quickly
digital international money transfers. through advanced know-your-customer
verification processes.
oney Transfer Operators are also shifting
M
towards digital channels. Although cash- apid transfers: One of the key advantages
R Example disruptors
based transfers still dominate for players such of using fintech solutions for international
as Western Union, MoneyGram and Ria, the remittance is speed. Where a bank can take
volume of transactions via digital channels up to a few days to transfer money, fintech
increases every year due to their efforts to applications can take just hours.
introduce digital solutions (e.g., mobile apps).
ompetitive and transparent fees: Many
C Not an exhaustive list
I n many advanced markets, fintech disruptors remittance fintech companies offer free
are progressively capturing market share processing for selected regions and avoid
from Money Transfer Operators and banks. extra charges such as amendment fees.
Consumers are increasingly opting to use new, When fees are applied, they tend to be more
accessible, digital-only fintech players to remit transparent compared to traditional banks.
money, further driving the digitalization of the Remittance prices
remittance market. ulticurrency accounts: Fintech companies
M
Remittance prices include both cash and digital
provide multicurrency accounts that
remittance prices. Fluctuations between corridors
offer users account details from various could be due to differing weighting between cash
and digital remittances.
Sources: World Bank; EDC Research & Analysis
Decreasing remittance prices worldwide Average remittance corridor prices – examples ($200)
Average global cost of a $200 remittance USA Mexico

4.7%
7.3% 7.2%
7.0%
6.8% 6.7%
6.2% 6.2% 6.2% USA India
Average global cost of a $200 remittance (%)
4.2%
USA Guatemala
4.1%
UAE India
3.1%
2016 2017 2018 2019 2020 2021 2022 2023
Digital only fintechs

Customers increasingly choosing digital only fintechs over
banks and money transfer operators to remit money, particularly
in developed markets, means that the remittance market as a
whole is becoming increasingly digitalised.
10
Expanding Financial Inclusion
through Payment Solutions
Financial inclusion The number of Financial inclusion

is expanding payment solutions solutions play a
globally, albeit at for the financially crucial role in the
varying rates across excluded is steadily digitalization of the
different regions increasing payment ecosystem
Expanding Financial Inclusion through Payment Solutions
Financial inclusion has surged due to the growing availability of innovative payment solutions
that offer viable alternatives to traditional banking
Financial inclusion is expanding The number of payment solutions Financial inclusion solutions play
globally, albeit at varying rates for the financially excluded is a crucial role in the digitalization
across different regions steadily increasing of the payment ecosystem
he percentage of individuals with accounts

T o cater to this segment, various payment
T I n emerging markets, the shift towards a
at financial institutions or mobile money options have emerged over time, including digital payment ecosystem depends on several
service providers rose from 51% in 2011 to mobile money, agent networks, stored-value factors, including the adoption of digital
85% in 2024. However, regions such as Latin wallets, prepaid cards, and digital banks. payment methods by financially excluded
America and the Caribbean (LAC), South Asia, consumers.
the Middle East and North Africa (MENA), and hese solutions have different starting points
T
Sub-Saharan Africa continue to lag behind the (e.g., parent company, technology), success ther key factors include merchant
O
global average. factors, and characteristics, such as their acceptance, technology availability, the
acceptance network. maturity of payment infrastructure, and the
he primary reasons consumers do not
T regulatory landscape.
have accounts, regardless of the region,
include insufficient funds and the high costs
associated with financial services.
Financial inclusion is increasing over time; however, 24% of the global population remains
financially excluded, largely due to insufficient funds
Evolution of account ownership Reasons why consumers do not own an account

This metric shows the proportion of the population over 15 years of age The data below only includes responses from proportion of the population
that owns an account at a financial institution or a mobile-money-service that do not own an account and excludes high-income markets.
provider.
66%
No account
100% because of
insufficient
funds
90%
36%
80% 85% No account
76%
because 28% 27%
financial Financial Lack of 23%
70% services are institutions are necessary Lack of trust
% Of population ages 15+
too expensive too far away documentation in financial

62% 68% institutions
60%
51%
50%
Financial inclusion is on an upward trend; however, in 2024, 15% of the
world’s population remains financially excluded, with South Asia, the
40% Middle East and North Africa, and Sub-Saharan Africa having rates that
exceed the global average.
30%
There are various reasons why consumers do not have an account,
20% but the primary reason across all regions is a lack of sufficient funds.
Consequently, there is a clear correlation between financial inclusion and
10% macroeconomic factors such as market economic stability, personal
consumption levels, education, access to technology, and the prevalence of
2011 2014 2017 2021 2024f the informal economy.
World East Asia & Pacific South Asia Furthermore, financial inclusion is linked to cash usage – higher financial
North America Latin America & Caribbean Sub-Saharan Africa inclusion leads to greater consumer access to digital forms of payment,
Europe & Central Asia Middle East & North Africa thereby reducing the reliance on cash.
Sources: World Bank: Global Findex Database; EDC Analysis Sources: World Bank: Global Findex Database 2021; EDC Analysis
To address the needs of financially excluded consumers, several payment solutions
have emerged over time, each with different starting points and acceptance networks
Key payment solutions for financially excluded consumers by acceptance network
Closed oop Restricted Loop
Mobile money Agent networks Stored-value wallets
– Mobile money enables users to store, send, – Agent networks consist of a distributed group – S tored-value digital wallets allow users to store
receive, and manage money through their of individuals or businesses that operate funds and make payments or withdraw cash
mobile phone network, typically provided by on behalf of FIs or MNOs to offer financial via a smartphone app.
Mobile Network Operators (MNOs). services to consumers.
– These wallets originate from a variety of
– Its success lies in its accessibility for low- – Consumers primarily use these agents for sectors, including telecommunications, fintech,
income consumers and the extensive reach of CICO, P2P, and bill payments, which are delivery and ride-hailing services, and social
independent locations. typically closed-loop transactions. media companies.
– However, it primarily supports payments within – However, as the ecosystem and consumer – In emerging markets, the evolution of these
the mobile phone network, such as Cash-In demand evolve, agent networks like Fawry wallets typically begins with closed-loop
/ Cash-Out (CICO) and peer-to-peer (P2P) in Egypt and Moniepoint in Nigeria are functionalities, such as CICO, P2P transfers,
transactions. increasingly expanding their services to include and bill payments. Over time, they may expand
open-loop retail payments by leveraging to include restricted-loop payment acceptance,
–M
obile money is particularly widespread traditional payment rails such as cards and such as QR codes, and in some cases, evolve
among consumers in the Africa, especially in bank transfers. into open-loop systems that support payments
markets like Kenya, the home market of leading via cards or instant payment rail.
provider M-Pesa, and Tanzania.
Examples
Sources: CGAP; World Bank; Investopedia; Tmob; BusinessFinancing.co.uk; EDC Research and Analysis
Open Loop
Prepaid cards Digital banks
– Prepaid cards are payment cards that must be – Digital banks are online-only institutions with
preloaded with funds before they can be used, no physical branches. They either hold full
as they are not linked to a bank account or banking licenses or operate in partnership with
credit line. traditional banks, such as through subsidiary
arrangements.
– Their acceptance depends on the card network
they operate on. International networks like Visa – Their presence has grown in emerging markets
and Mastercard, as well as domestic networks in tandem with rising internet and smartphone
such as Meeza in Egypt and Verve in Nigeria, penetration.
enable open-loop transactions. However,
prepaid cards can also be issued for restricted – Key factors contributing to their success
and closed-loop payments, such as gift cards. include more accessible eligibility criteria,
streamlined documentation requirements,
– The growth in prepaid card usage is largely lower fees, and a simplified user experience.
driven by wallets and digital banks that offer
them to facilitate open-loop payments for users.
Financial inclusion solutions can advance the digitalization of payments in emerging
markets, particularly when supported by favorable ecosystem conditions
Historical background Consumers demand change Payment ecosystem conditions
merging markets in regions like LAC, MENA

E he proportion of financially excluded
T he digitalization of a payment ecosystem
T
and Sub-Saharan Africa, have historically consumers is decreasing, driven by the requires a dual approach, addressing both
faced low levels of consumer financial growing variety of alternatives to traditional consumer needs (payment issuance) and
inclusion. Traditional banks often avoided banking. merchant demand (payment acceptance).
serving low-income consumers, focusing The proliferation of affordable and accessible
instead on the smaller segment with higher s consumers become more interconnected
A POS terminals, such as mPOS and softPOS,
incomes. and engage in more online transactions, is essential for increasing digital payment
there is an increasing demand for digital acceptance among merchants, particularly in
o address the needs of the financially
T payment solutions that are interoperable both emerging markets where most businesses are
excluded, mobile network operators and non- domestically and internationally. This shift is micro and small enterprises.
bank entities developed mobile money and moving from closed-loop systems to open-
agent banking networks. These systems allow loop solutions that utilize traditional payment he presence of advanced payment
T
consumers to deposit cash, make payments, rails, such as cards. infrastructure—such as real-time gross
and withdraw money via mobile phones settlement (RTGS) systems, national payment
through a network of agents. I n less developed markets, however, many switches, instant payment networks, domestic
consumers still use digital payment solutions card schemes, and digital ID systems—along
ith technological advancements, including
W primarily for accessing cash (CICO and P2P with payment technologies like QR codes, NFC,
increased internet access and the proliferation transfers). To encourage a transition towards and tokenization, can significantly accelerate
of smartphones, companies from diverse everyday digital payments, it is essential to the evolution of the payment ecosystem.
sectors—such as fintech, delivery and ride- identify use cases that address existing needs
hailing services, social media platforms, and or pain points and offer incentives to promote dditionally, the regulatory landscape plays
A
even some traditional banks—have introduced adoption. Effective strategies might include a critical role in driving or hindering payment
additional digital solutions. These include nation-wide applications such as mass transit digitalization. Central banks or national
stored-value wallets, digital banks, and prepaid or government payments, which can drive payment companies typically control this
cards, all of which have furthered financial broader awareness and usage. aspect, setting legislation and spearheading
inclusion and broadened access to financial initiatives to enhance the payment
services. infrastructure and technology available in
the market.
Source: EDC Research & Analysis
11
Insurtech
The insurance Insurtech leverages The Insurtech

industry is ripe new data streams to industry is
for disruption and price premiums more experiencing
innovation accurately significant growth
Insurtech
Insurtech companies are poised to disrupt the traditional insurance industry by leveraging
advanced technologies and enhanced data analytics to optimize existing processes
The insurance industry is ripe Insurtech leverages new data The Insurtech industry is
for disruption and innovation streams to price premiums more experiencing significant growth
accurately
I nsurtech refers to the use of new technologies he insurance industry has relied on basic
T I n 2022, the global consumer Insurtech market
to transform the current insurance landscape, or limited data, leading to end users paying was valued at $5.4 billion and is expected to
delivering cost savings and efficiencies. significantly more than necessary and minimal reach $152 billion by 2030.
differentiation between insurers.
Historically,
the insurance sector has been eading examples of high-growth Insurtech
L
slow to innovate and relatively untouched by I nsurtech companies leverage data from businesses include Lemonade in the US and
the sweeping changes fintech has brought to internet-enabled devices, such as cars, ZhongAn in China.
other industries. geolocation services, and activity trackers,
among other sources, to offer customized and hese companies, along with others in
T
I nsurtech companies are emerging, delivering competitively priced insurance products. specialized insurance verticals, also employ
enhanced customer experiences, process robotic process automation (RPA), machine
efficiencies, personalization, flexibility, his results in lower prices for customers who
T learning (ML), and artificial intelligence
lower costs, and improved security. These are willing to share data about their behavior (AI) to analyze alternative data streams,
businesses are set to disrupt the existing to receive better rates. and enhance internal tasks such as sales
insurance business model. and claims processing. This technological
integration leads to more competitive prices
for customers.
Sources: Grand View Research; EDC Analysis
Trends in the payments industry, including embedded finance and open banking,
are significantly impacting the success of Insurtech companies
There are 4 key payment trends in the Insurtech industry Examples of Insurtech companies
1. Embedded Finance handling microtransactions based

Insurtech solutions are integrating on customer behavior or events. Insurtech Focus Geography
into the checkout process through
Payment processors must support Renters; Homeowners;
seamless, real-time transactions. Lemonade United States
flexible, usage-based billing cycles Car; Pet; Life
For example, travel insurance can
be embedded within the booking to accommodate UBI.
Bdeo Motor home Spain
flow for airlines, hotels, or car
rentals, and product protection 3. Open Banking Insurance infrastructure
Insurance companies are utilizing Ethersic Germany
insurance can be incorporated into on blockchain
e-commerce checkouts. open banking to collect payments
directly from bank accounts, Route E-Commerce / Shipping United States
Payment service providers (PSPs) bypassing card networks and
benefit from partnering with reducing transaction fees. Dacadoo Health Switzerland
insurance providers to enable
4. Claims Payouts Spot Injury & Travel United States
a smooth, one-click insurance
purchase at checkout. Policyholders increasingly expect
Vouch General Liability United States
instant claim payouts similar to
2. Usage-Based Insurance (UBI) e-commerce refunds, necessitating High Definition
instant payout methods via digital Fleet Insurance United States
UBI is gaining popularity by Vehicle Insurance
analyzing new data streams for wallets.
insurance calculations, such as pay- Pumpkin Pet insurance United States
per-mile auto insurance or dynamic This is a pain point for many
health insurance based on fitness traditional insurance companies, ZhongAn Health; Accident; Car China
data. Implementing UBI requires which do not have instant payout
capabilities to different payment Oscar Health United States
dynamic, real-time payment
processing systems capable of methods.
Insurtech companies
The US is the largest insurance market Some of the Insurtech listed above work
globally, and is thus home to the most to embed themselves into larger insurance
successful Insurtech companies. companies and organizations.
Sources: The Ascent; Built In; Company websites
The global consumer Insurtech market, valued at approximately $5 billion in 2022,
is projected to grow significantly, reaching an estimated $152 billion by 2030
Global consumer Insurtech market size, in $ Billions, 2022 – 2030
The number of insurance claims worldwide is one of the largest factors

contributing to market growth. Among these, auto, life, and home are the most
common insurance claims.
$160
$152
$140 52% CAGR
$120
Size of global insurtech market (in $ billions)
$106
$100
$80
$69
$60
$45
$40
$30
$19
$20 $13
$8
$5
$0
2022 2023 2024f 2025f 2026f 2027f 2028f 2029f 2030f
Sources: Grand View Research; Investopedia; EDC Analysis
Challenges addressed by Insurtech Challenges faced by Insurtech
Insurtech companies have successfully tackled several key challenges Insurtech companies face several significant challenges:
in the insurance industry:
Regulation: The insurance industry is highly regulated, slowing
Claims management: Leveraging advanced technologies to automate innovation and increasing the burden for new entrants to compete with
processes, detect fraud, and expedite claim reviews, processing, and established insurers.
payouts (through instant payout processing).
Dependence on traditional insurers: Due to regulatory and operational
Underwriting: Utilizing data sharing, including through Open Banking, complexities, Insurtech companies often partner with traditional insurers
to automatically collect and analyze data for accurate risk assessments. for underwriting and risk management, leading to potential over-reliance.
Contract execution: Implementing smart contracts and other Data privacy concerns: The value proposition of Insurtech depends on
automation processes to enforce policies and handle payout claims consumers sharing non-traditional data. However, privacy concerns
efficiently. may deter some consumers, limiting the total addressable market for
Insurtech companies.
Risk mitigation: Accessing extensive data, including historical and near-
real-time data, to make better risk decisions, monitor risks, detect fraud,
and reduce exposure.
Consumer Trends
12
Innovations in e-Commerce
and In-Store Payments
Social Commerce Customers seek Unified commerce

serves as a powerful highly personalized elevate retail
growth lever for experiences, experience
retail businesses sometimes outpacing
retailer innovations
Innovations in e-Commerce and In-Store Payments
As shopping and payment experiences rapidly evolve, retail businesses face the critical
challenge of striking an optimal balance between continuously enhancing customer
experience and maintaining operational efficiency
Social Commerce serves as a Customers seek highly personalized experiences,

powerful growth lever for retail sometimes outpacing retailer innovations
businesses
ocial Commerce seamlessly integrates the

S riven by technological advancements
D owever, many retailers are still lagging
H
shopping experience within social media and innovative strategies, personalization in their ability to deliver effective
platforms, allowing customers to discover, has emerged as a critical differentiator, personalization at scale due to data
explore, and purchase products without transcending the boundaries of luxury retail management challenges, organizational
leaving their favorite social apps. and permeating every aspect of the customer silos, lack of analytical capabilities, and
journey, both online and in-store: inadequate technology enablement.
y leveraging social data and user behaviors,
B
businesses can deliver highly personalized ustomers seek personalized interactions
C
product recommendations and marketing with retailers across various touchpoints.
messages to their target audience.
arge retailers are investing heavily in
L
hile Social Commerce has already
W customer data tools and data collection
demonstrated high conversion rates and strategies, both online and in-store to
significant adoption in regions like Asia, it deliver highly personalized offerings,
has primarily served as a traffic driver in the recommendations, and experiences.
Western markets.
etailers are using data, technology, and
R
owever, the launch of TikTok Shop in late
H customer insights to create effective loyalty
2023 has the potential to disrupt the Social programs, enhancing customer engagement
Commerce landscape globally with its massive and fostering emotional loyalty.
user base and innovative features.
hese loyalty programs are evolving to
T
reward actions beyond just purchases,
contributing to long-term revenue growth.
Unified commerce elevate retail
Example of Social Commerce
experience
hile both Unified Commerce and omnichannel

W
strategies aim to provide a consistent experience
across multiple channels and reduce the Launched in 2023, TikTok Shop is a
complexity of multichannel and multiregional comprehensive e-commerce solution
operations, Unified Commerce takes it a that enhances sales and brand
step further by integrating all channels into a growth on TikTok. It enables sellers
single platform, providing better efficiency and to market and sell products directly
smoother experiences for both customers and through in-feed videos, live streams,
retailers. and the Showcase tab. It supports
seamless product discovery, detailed
his integration enables seamless transitions for
T information, checkout, and post-payment
customers between channels and streamlines activities, all within the TikTok app.
retailers’ operations, expediting various tasks
such as bank reconciliation through centralized
payment data in a unified back-office.
ccording to the 2024 Adyen “Retail Report:

A
Unified Commerce Study,” which surveyed 13,177
businesses across over 26 countries, businesses
that implemented Unified Commerce last year
saw an additional 8% revenue growth in 2023.
Additionally, 36% of these businesses reported an
improved understanding of customer behavior,
enhancing their targeting and marketing efforts.
By embracing omnichannel personalization and harnessing the power of social commerce,
businesses can create more engaging customer experiences
ompanies are leveraging sophisticated algorithms

C Examples of highly personalized experiences
and data analytics to offer tailored interactions. For
instance, Amazon recommends products based Amazon uses advanced algorithms to recommend products based on a
on browsing and purchase history, while Sephora customer’s browsing history, purchase history, and items in their cart.
sends personalized product recommendations and The homepage and emails are dynamically tailored with product
offers through email and mobile apps, considering recommendations, special deals, and advertisements based on individual
customer preferences and beauty routines. user data.
nsuring a consistent and unified shopping

E Sephora collects data on customer preferences, skin type, and beauty
experience across digital and physical channels routines to send highly personalized product recommendations and offers
is a priority. For example, Starbucks’ mobile app through email and mobile apps.
allows customers to customize and reorder drinks, Sephora’s Virtual Artist feature allows customers to virtually try on
making the transition between online and in-store makeup products.
experiences seamless and cohesive.
Stitch Fix uses detailed customer profiles and style quizzes to curate and
eal-time customer support and dynamic
R send personalized clothing and accessory recommendations through their
loyalty programs are crucial for building strong subscription service. Each box is tailored to the customer’s unique style,
relationships and increasing retention. Starbucks size, and budget preferences.
sends tailored offers and reward updates based Customers can provide feedback on the items they receive, which helps
on purchase history, encouraging repeat visits and refine future recommendations and ensures a better fit with each delivery.
deeper engagement.
The Starbucks mobile app allows customers to fully customize their drink
mbedding direct purchasing options within social
E orders, save their favorite configurations, and reorder them with ease.
media posts and videos simplifies the path from Based on purchase history and preferences, Starbucks sends tailored
discovery to purchase. Brands are also partnering offers, discounts, and reward updates to customers through the app.
with influencers and content creators to boost This encourages repeat visits and enhances customer loyalty and helps
credibility and reach new audiences authentically. customers earn rewards as well.
This strategy is particularly effective in industries The app tracks user behavior to suggest new products and seasonal
where visual appeal and social proof are key, such offerings that align with individual tastes and habits, making the
as fashion and beauty. experience more engaging and relevant.
Merchants are leveraging innovative technologies to improve customer satisfaction
and streamline operations both in-store and online
6 Key aspects within the innovation cycle transforming the retail industry today
1. In-store experience enhancement 4. Back-end operations

– Interactive kiosks – Inventory management including:
– S mart shelves providing real-time inventory – Optimizes stock levels and reduces wastage
tracking, continuously monitoring stock levels 06 – Ensures the right products are available at the
– Facial recognition systems 01 right time
– Augmented & Virtual Reality (AR/VR) – Streamlining of the order processing workflow
2. Omnichannel integration 5. Innovative payment solutions

– Mobile apps – Mobile wallets and contactless payments
– Buy Online, Pick Up In-Store (BOPIS) and 05 – Buy Now, Pay Later (BNPL)
Curbside Pickup – Biometric payments
– Endless aisle – Voice-Activated payments
02
– Consistent cross-channel promotions – Integrated payment systems combining
– Virtual try-on and augmented reality various payment methods into a single system
– Personalized marketing across channels that supports in-store, online, and mobile
transactions, providing a seamless checkout
3. Data Analytics and personalization 04 experience (e.g., Square, Stripe)
– AI for customer behavior 03 – Payment orchestration
– Customer service through chatbots and virtual
assistants 6. Sustainability and eco-friendly practices
– Analyzes shopping patterns to predict – I mplementation of eco-friendly packaging and
behaviors products
–H elps tailor product offerings and marketing – Promotion of recycling and circular economy
strategies initiatives
– Reduction of their carbon footprint
Artificial Intelligence is the breakthrough technology that holds the promise
to truly transforming retail payments
AI is revolutionizing the retail payments industry by addressing key issues around speed,
security, and user experience
AI analyzes transaction patterns in real time to detect and prevent fraud, ensuring secure
transactions for both merchants and payment providers (e.g., PayPal and Mastercard).
AI generates real-time insights from massive transaction data, helping merchants

identify new revenue opportunities, demand trends, spending patterns, and areas needing
improvement (e.g., Amazon and Walmart).
AI predicts customer behavior and preferences in terms of payment,

enabling retailers to tailor product offerings, recommendations, and loyalty programs
(e.g., Starbucks and Alibaba).
13
Adapting to the Marketplace
and Gig Economy
A robust and Instant Payments Embedded Finance

flexible payments are becoming drives growth and
infrastructure is increasingly value for platforms
essential important
Adapting to the Marketplace and Gig Economy
Online marketplaces and gig economy platforms must adapt to the evolving needs of their
users to remain competitive
A robust and flexible payments Instant Payments are becoming Embedded Finance drives growth
infrastructure is essential increasingly important and value for platforms
nline marketplaces and gig economy

O ig workers and SMEs increasingly demand
G mbedded finance can unlock significant
E
platforms must have robust, flexible payment faster access to their earnings, driving a shift growth and provide a competitive edge for
infrastructures that accommodate various towards real-time payments. This demand is platforms.
payment models. These models should fueled by the need for improved cash flow and
include diverse payment options, efficient financial flexibility. latforms like Shopify and Grab are extending
P
cross-border payment solutions, split beyond their initial offerings to include
payments, escrow services, and payment ig workers are willing to pay a fee for
G embedded financial services such as lending,
orchestration to meet the dynamic needs of instant access to their earnings. insurance, and savings products.
sellers, buyers and workers.
MEs rely on fast and efficient fund
S his integration allows gig workers and SMEs
T
ompliance with regulatory standards, such
C settlement for their day-to-day operations. to access a broader range of financial tools
as Know Your Customer (KYC) and Anti-Money within a single platform, enhancing their
Laundering (AML) regulations is paramount he fragmented global landscape, with varying
T overall experience and providing them with the
to ensuring trust and security within these real-time payment (RTP) infrastructures and necessary resources to thrive.
ecosystems. regulations, poses integration and operational
hurdles for platforms operating across
ransparency about payment methods, fees,
T multiple countries.
FX rates and security measures fosters trust
among the players within the ecosystem.
Marketplace vs gig platform

The key difference between a marketplace and a
gig platform lies in what they offer: marketplaces
facilitate the buying and selling of products, while
gig platforms connect individuals and businesses
to exchange services.
Gig Economy workers and SMEs are increasingly demanding instant access to their funds,
however the fragmented RTP landscape poses operational challenges for marketplaces and
gig economy platforms
Gig workers SMEs / vendors RTP landscape
Currently, the payment structure for gig workers Many SMEs experience long settlement times, The global RTP landscape remains fragmented,
varies significantly by platform and country. which impact their cash flow and ability to leading to operational and integration challenges
manage expenses. for marketplaces operating across multiple
– Gig platforms like Uber and Deliveroo offer countries. These countries need to navigate
Instant Pay options, while other platforms – According to Millbrook Business Finance, different systems and standards.
operate on a weekly or bi-weekly payout 48% of SMEs report that cash flow is the
schedule. biggest challenge they currently face. This is The appetite and adoption for instant payments
exacerbated by issues with late payments. vary significantly by country. While some
According to PYMNTS, nearly 40% of gig countries have developed their own domestic
economy transactions are now instant, driven by The adoption of instant settlement for SMEs RTP systems (e.g., Faster Payments in the UK,
demand for faster access to earnings. is still in its early stages, however the trend is Bizum in Spain, PIX in Brazil, UPI in India), others
clearly moving towards faster access to funds. rely on regional solutions (e.g. the pan-European
– According to a Mastercard survey, 64% of gig SCT Inst scheme).
workers prefer to be paid instantly or within a – According to a PYMNTS survey, approximately
few hours of completing a job. 70% of SMEs would prefer instant settlements There are ongoing efforts by governments to
to improve cash flow and financial promote instant payments (e.g. the European
– About 85% of gig workers indicated they would management. The demand is particularly commission has mandated adoption and price
pay a fee (around $1 - $2 per transaction) for high among SMEs that rely on daily income to equalisation of SCT Inst, the FSB has put forward
instant access to their earnings. manage operations and payroll. a roadmap to enhance cross border payments
by 2027, EPI has introduced the Wero wallet in
– 57% of SME surveyed said they are willing to 2024).
pay a fixed fee for instant payment.
Sources: GQ Research; PYMNTS; Fintech Futures Fintech Nexus; Millbrook Business Finance
Europe: SCT Inst Sweden: BIR Russia: Faster Payments System
Denmark: NETS
UK: Faster Payments
Poland: Elixir
Romania: Plati Instant
Czech Republic: CERTIS
USA: RTP, FedNow Hungary: AFR
Spain: Bizum Japan: Zengin
Bulgaria: BLINK
China: IBPS, CHAPS2
Korea: KFTC
UAE: IPI Pakistan: IBFT
Mexico: SPEI Egypt: InstantPayment Network
Qatar: QMP India: IMPS, UPI
KSA: Sarie Thailand: PromptPay Philippines: Instapay
Ghana: GIP Nigeria: NIP Malaysia: RPP, DruitNow
Kenya: IPSL Singapore: FAST, PayNow
Tanzania: TIPS
Brazil: PIX
Australia: NPP
Source: EDC Infographic; Non exhaustive list of RTP across the world for illustrative purposes only
Embedded finance holds extensive potential to enhance the overall user experience,
foster trust and loyalty, and drive growth for all stakeholder
Financial services that can be integrated into online marketplaces and gig economy platforms
1. Financial management & growth 2. Payments and transactions 3. R

isk management & compliance 4. Additional services
Cash flow and budget Digital wallets Insurance products Payment orchestration
management tools Enabling seamless and secure Protecting vendors from income Integrating multiple PSPs to offer
Track income and expenses, predict transactions within the marketplace. loss, equipment damage, and other a wider range of payment options,
seasonality, and make informed risks. optimise processing and reduce
financial decisions. Card issuance cost.
Issuing vendors / gig workers with Onboarding and KYC / AML
Financing and loan options physical or virtual payment cards compliance Early payments / earned wage
Providing gig workers and SMEs for seamless transactions and Streamlining the onboarding access
with access to capital. expense management. process for vendors / workers and Allowing vendors to access
ensuring regulatory compliance. earnings or allowing gig workers
Investment and savings tools Foreign exchange and hedging to access earnings before the
Empowering vendors or gig workers Mitigating currency risk for vendors VAT, tax, and accounting services standard payment cycle.
to save for retirement, taxes, or who operate in multiple countries. Simplifying tax compliance and
other financial goals. Allowing gig financial reporting. Income smoothing tools
workers to invest small amounts of Providing options for gig workers
money into diversified portfolios. to average out income over time,
helping them manage fluctuations
Profit margin management in earnings.
Offering insights and
recommendations to help Credit building services
vendors optimise their pricing Offering tools and services to help
and profitability. vendors / gig workers build and
improve their credit scores.
Source: EDC Infographic
Embedded Finance allows marketplaces and Online marketplaces and gig economy platforms that currently embed finance
gig economy platforms to seamlessly integrate into their offering
financial services into their offerings, creating
new revenue streams, enhancing customer
experiences and increasing loyalty and retention. E-commerce
According to Research and Markets, in 2024,

the embedded finance market is estimated
at approximately $112.6 billion. By 2029, the
embedded finance market is projected a double
and reach a market value of $237.4 billion. Ride-sharing
According to The Paypers, Embedded finance

can enable companies to increase their revenue
potential by 2-5 times.
Professional
services
Food & delivery
Accommodation
Sources: Research and Markets; The Paypers; Dealroom.com Non exhaustive list for illustrative purposes only
14
Future of Cash
Cash usage is Cash usage trends Cash will not

declining as digital vary significantly disappear in our
payment methods across markets lifetimes
continue to grow
Future of Cash
Despite the decline in cash usage, various factors will likely prevent cash
from becoming obsolete
Cash usage is declining as Cash usage trends vary Cash will not disappear
digital payment methods significantly across markets in our lifetimes
continue to grow
ash usage in both retail transactions

C ash usage varies significantly market by
C ash is likely to remain relevant in all
C
and peer-to-peer (P2P) money transfers is market due to contrasting macroeconomic markets for the foreseeable future. Its
declining, and this downward trend is expected factors, government initiatives and adoption of intrinsic characteristics, such as anonymity,
to continue in the near future. Specifically, payment technologies: privacy, and convenience for low-value, day-
over the next four years, the cash proportion to-day transactions, make it virtually
of total transaction volume is expected to eal-time payment networks and the rapid
R impossible to replace entirely in the near
decrease from 14.5% to 10.1% globally. rise of successful fintechs & neobanks and future for most markets.
the services they offer (e.g. BNPL services,
he core reason behind the migration
T real-time payments, cross-border money ash holds particular value for certain
C
towards electronic payment methods is transfer services) are propelling mature segments of the population, including
advancements in payment technologies. markets towards digital payments and away the elderly, the unbanked, those residing
These advancements include the growth of from cash. in rural areas, and those engaged in the
alternative payment methods, the increasing informal economy.
popularity of contactless payments and the owever, in developing countries cash
H
birth of central bank digital currencies. remains relatively resilient due to factors oreover, governments worldwide have
M
that include perceived corruption, large demonstrated a commitment to preserving the
unbanked populations, and significant use of cash if its usage declines significantly,
informal economies. recognizing its importance as a public good
and a contingency measure.
I taly and Japan are also witnessing the
resilience of cash, driven by habitual
customer behavior and, in Italy’s case,
low trust and confidence in financial
institutions.
Sources: Global Data; EDC Analysis
Cash usage varies around the world due to a differing macroeconomic trends,
government initiatives and varying levels of payment technology
Examples of countries with high cash usage
Mexico Italy Japan
The resilience of cash in Mexico is driven Cash remains resilient primarily due Cash has long been popular due to
by several factors: a high unbanked to the privacy it offers and a distrust concern over personal information
population (53%), a significant informal in banks, with 41% of Italians believing leakage and misuse. Its reliability
economy (23% of GDP), a notable their primary bank does not understand during power outages in natural
perception of corruption (ranked 56th their needs or operate transparently. disasters and the extensive ATM
most corrupt) and the large number of network (950 per million inhabitants)
SMEs (99% of all Mexican businesses). Additionally, low levels of computer make it a convenient option.
literacy relative to the rest of
However, government initiatives Europe further contribute to the However, the rise of cashless payment
promoting an interbank electronic continued prevalence of cash. technology (e.g. QR codes), banking
payment system (SPEI) and a fees on cash deposits, rising interest
digital payments app (CoDi) are rates and the government’s ‘Cashless
expected to reduce cash usage. Vision’, including digital salary payments,
are likely to diminish cash usage.
Cash is king
Italy and Japan selected to highlight the fact
that cash usage can still be high in developed
Sources: Global Data; CPI; EDC Research markets where unbanked populations are low.
Examples of countries with low cash usage
Sweden USA Argentina
Initiatives such as the Swish payments The rise of neobanks such as Chime and Argentina’s instant direct debit system
system are contributing to significant Money Lion offering features such as (DEBIN) which supports P2P, C2B and
decline in cash usage. Sweden’s tech- payday advances and no credit checks B2B transactions, along with the real-time
savvy population, the success of has decreased the unbanked population. payment service (Transfarencias) have
fintechs (e.g. Klarna), and merchants’ accelerated the decline in cash usage.
freedom to refuse cash payments Coupled with the growing popularity
further accelerate this trend. of money transfer apps, this has Workers increasingly being paid in
contributed to a decline in cash usage. cryptocurrencies (250% increase
More broadly, as in many other developed from 2022 to 2023) to avoid the
countries, the rise of contactless However, high card transaction fees volatile Argentinian Peso has
payments via physical payment cards and local government initiatives ensure further amplified this trend.
and mobile wallets has also contributed physical currency persists to some extent.
to the decline in cash usage. Government initiatives such as raising
the minimum card-spend amount and
expanding ATM infrastructure will likely
prevent cash from becoming obsolete.
Market usage
Anecdotal examples to illustrate how cash
usage varies by market.
Source: Global Data; CPI; EDC Research
In the near future, the factors driving the decline in cash usage are likely to outweigh
those supporting its resilience
Factors contributing to cash resilience Factors contributing to cash decline The future of cash
Low value day-to-day transactions Improvement in payment infrastructure Cash proportion of global transaction value
Informal economy Adoption of contactless
Unbanked populations Central bank digital currencies 2024: 2.1% 2028: 1.2%
Elderly populations dvance in local / alternative payment

A
methods
Rural populations
Government intervention Cash proportion of global transaction volume
Global cash transaction value (Trillion USD)

$11 Launch of global mobile wallets including
Google Pay and Apple Pay 2024: 14.5% 2028: 10.1%
$10
Contactless cards become
widespread and start to be
$9 accepted on transport services
Covid-19 Pandemic
Number of global neobanks increases

$8 from 60 in 2018 to 256 in 2020
$7
Continued digitization of payments
4 years
Over the next 4 years there is expected
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 to be a fall in the cash proportion of both
total transaction volume and value.
Sources: Global Data; EDC Analysis
Forward View
The payments and fintech landscape Developments in blockchain and CBDC have the potential to enhance cross-border payments and
accelerate the digitalization of financial ecosystems. As artificial intelligence and machine learning
will continue to evolve. Emerging further improve fraud detection and personalization, companies that effectively harness these
technologies like the Internet of Things technologies will gain a distinct competitive edge.
(IoT) are enabling seamless, automated
transactions that have the potential to As open banking expands into Open Finance, it presents new opportunities for innovation and
transform both consumer and business financial inclusion. Digital banks, alternative payment methods, and digital remittances are reshaping
the market by offering more flexible, secure, and efficient solutions tailored to diverse consumer
payment experiences. needs. However, the pace of adoption will hinge on overcoming regulatory hurdles and building
consumer trust. In underserved regions, digital solutions are gaining traction, though the balance
between cash and digital payments will differ across markets, highlighting the need for adaptable
strategies.
Looking ahead, traditional financial models will face increasing disruption, prompting greater
collaboration between established institutions and fintech startups. Success in this dynamic
landscape will depend on a focus on consumer-centric innovation, fostering strategic partnerships,
and navigating complex global challenges. As the lines between traditional finance and technology
continue to blur, we can expect more integrated, efficient, and accessible financial ecosystems that
meet the diverse needs of individuals and businesses in an increasingly digital world.
Glossary and notes
A2A challenger banks, are online-only banks without Open Loop

Account-to-Account any physical branches that offer their services Network / system that enables payments
completely via mobile apps. between different payment methods and parties
A2A payments that do not belong to the same entity or financial
Total value of A2A consumer and commercial Fis / FIs institution.
payments, including credit transfers, direct Financial Institutions
debit and instant payments. Potential total P2M
addressable market for OB payments. GPI Peer-to-Merchant
Global Payments Innovation
ASPSPs P2P
Account Servicing Payment Service Provider Internet of Things (IoT) device Peer-to-Peer
Different sources have slightly different
CFPB definitions of what constitutes an IoT device, Profitability
Consumer Financial Protection Bureau meaning that figures might differ slightly based Profitability in the context of this report refers to
on what is included as an IoT device. All these annual or financial year profitability, not shorter
CICO sources forecast a fast growth of IoT devices in periods such as monthly or quarterly.
Cash-in / Cash-out the next few years.
Remittance prices
Closed Loop JROC Includes both cash and digital remittance prices.
Network / system that only enables payments Joint Regulatory Oversight Committee Fluctuations between corridors could be due
between payment methods and parties that to differing weighting between cash and digital
belong to the same entity or financial institution. MNOs remittances.
Mobile Network Operators
Consortium model Restricted Loop
A model where multiple stakeholders, such as Mobile wallets Network / system that enables payments
banks, technology companies, and other financial Include pass-through wallets that facilitate card between a limited group of payment methods
institutions, collaborate to launch and operate a transactions, stored value wallets, mobile money and parties.
digital bank. wallets and global brands such as Alipay, Apple
Pay, Google Pay, M-Pesa and PayPal as well as TPP
Digital banks local and regional wallets. Third Party Provider
Digital banks, also known as neobanks or
About Edgar, Dunn& Company
We are a global consultancy specializing in payments Our Mergers & Acquisitions Advisory
and financial services. Since 1978, we have partnered
We provide comprehensive support for merger and
with clients across the globe and developed an
acquisition deals in the payments and digital financial
unrivalled depth in specialist expertise.
services space including:
We help organizations navigate the complex payments
Buy-side support (target selection, bid strategy)
and fintech ecosystem, identify opportunities to
accelerate profitable revenue growth, and drive their Sell-side support
competitive advantage.
Due diligence
Offering a truly independent perspective, our vision is
to be the most trusted global payments consultancy. Valuation
Today, we serve clients in over 45 countries through Information memorandums
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Advanced Payments &

Fintech, Payment Strategy, M&A, and Litigation Support

• 6 Office locations worldwide

For inquiries regarding this report, please contact: Sydney

Samee Zafar Amine Saidi Beatrice Save Charlotte Piron

Davide Villa Elisabetta Nadal Euan Jones Julia Callejo

Louis Wapler Rawad Nasser Rohan Shaju

Introduction 6 08 Consumer Digital Banks 59

Advanced Payments Survey Results 7 09 Digital Disruption in P2P Remittances 66

Emerging Technologies 12 10 Expanding Financial Inclusion through Payment Solutions 71

05 Central Bank Digital Currencies (CBDCs) 37 14 Future of Cash 95

Financial Services Inclusion and Innovations 42 Forward View 100

In an era of rapid technological 1. Emerging technologies

Q: What are the growing use cases of AI and machine learning in Q: W

Business to business (B2B) Consumer to consumer (C2C)

All of these Business to consumer (B2C)

Consumer to business (C2B)

Instant payments 75%

47% 57% Mobile payments 56%

QR code payments 41%

IoT-enabled payments 18%

Blockchain & cryptocurrency 11%

Q: How important is open banking in driving innovation, competition,

and customer-centricity in the financial industry?

35% 27% 25% 12%

Very important Important Somewhat important

Not very important Not important at all

AI has the potential The application of AI It requires

 s technology advances, AI, including

 his dual approach allows financial institutions

Process-side applications Client-side applications

Blockchain can Banks and DeFi Regulations

 lockchain technology enhances fraud

 lockchain also broadens financial inclusion in

 eFi platforms like Uniswap and Aave are

2008 – 2013 2014 – 2017 2018 – 2020 2021 – Present

Global blockchain funding (B USD)

Sources: Statista; CB insights; EDC Analysis

Cross-border payments and remittances Merchant payments Other verticals

Apps like Circle and Cash App use

IoT payments are IoT device adoption IoT payments will

Internet of Things payment pyramid

that does not require human confirmation or authentication. Examples

Sources: Agilie; Worldline

 oday, any device that connects to the internet is

 rimary examples include voice-activated home

Availability of IoT devices (number and costs) Healthcare (billing data)

Internet broadband and 5G availability Retail (self-service stores / machines)

 ommunication & Interoperability

Number of IoT Connected Devices (in Billions)

Sources: Statista; Introspective Market Research; EDC Analysis

Businesses / retailers These gateways integrate AI and machine

User experience Privacy and security Costs Data

Alternative Alternative Payment Alternative Payment

 PMs refer to any means of making a

of sale, representing 51% of global 32% 22% 35%

transaction values 66%

Benefits for consumers and businesses Cultural and demographic factors

Sources: GlobalData; PYMNTS; WorldPay; EDC Analysis and Predictions

Q: What are the growing use cases of AI and machine learning in Q: W

Q: How important is open banking in driving innovation, competition,

s technology advances, AI, including

his dual approach allows financial institutions

lockchain technology enhances fraud

lockchain also broadens financial inclusion in

eFi platforms like Uniswap and Aave are

oday, any device that connects to the internet is

rimary examples include voice-activated home

Availability of IoT devices (number and costs) Healthcare (billing data)

Internet broadband and 5G availability Retail (self-service stores / machines)

ommunication & Interoperability

PMs refer to any means of making a

– PayPal stands out as a leading mobile wallet for

s of early 2024, 135 countries are actively

BDCs are designed for a broad range of

pen Banking was developed with the

pen Banking Payments, also known as

igital banks, also known as neobanks or

he digital banks sector has seen significant

emittance volumes have seen strong growth

here is a gradual shift from cash-based to

he percentage of individuals with accounts

merging markets in regions like LAC, MENA