Strategy Note /

The ultimate guide to digital payments: The largest EM fintech sub-sector

  • Digital payments is the biggest EM fintech segment and dominates the ecosystem in Egypt, Indonesia, Pakistan and Vietnam

  • There is strong growth in users and operating profit. But fewer firms are profitable than in other fintech sectors

  • Main values: speed, responsiveness. Success factors: user-friendly, smooth execution. Innovation: onboarding, chatbots

The ultimate guide to digital payments: The largest EM fintech sub-sector
Rahul Shah
Rahul Shah

Head of Corporate & Thematic Research

Rabail Adwani
Rohit Kumar
Tellimer Research
13 July 2022
Published byTellimer Research

Digital payments is the largest segment in the emerging markets fintech universe, accounting for a quarter of all such firms. In recent years, this sub-sector has registered strong growth in key operating metrics such as user numbers, revenue, and operating profit. Firms expect to grow market share over the next three years, notably in card payments. Moreover, over half of the payments fintechs claim to be profitable, with another quarter indicating that they are close to breaking even.

Our database of almost 3,400 fintechs across 14 emerging markets (including over 800 payments fintechs) helps us position the digital payments segment in a broader EM context. The key performance indicators payments firms are targeting include transaction value, user numbers, and product/service innovation, while their customer value proposition focuses on transaction speed and customer responsiveness. Planned innovations aim to ease customer onboarding, improve chatbots, and use big data analytics/risk management.

Payments fintechs credit their user-friendly platforms, seamless execution, and innovation for their success to date. They plan to enter new customer segments, increase use-cases for products/services, invest in technology, and enhance operational efficiency. Meanwhile, the greatest growth limiters they face are regulation, funding/ capital, competition from fintechs, and the size of the market. The main regulatory hurdles include capital requirements, data/consumer protection, and KYC/AML laws.

In this report, we take a detailed look at the emerging markets digital payments space, including:

  • The size of the EM payments fintechs universe

  • Key growth trends in the EM digital payments industry

  • Payments fintechs’ profitability versus other sub-sectors

  • Payments service provider current and expected market shares

  • The key performance indicators that payments fintechs are targeting

  • Payments fintechs’ values and success factors

  • Payments fintechs’ strategic plans and targeted innovations

  • Payments fintechs’ growth constraints and regulatory hurdles

We also compare our current findings with those from our 2020 industry survey.

Egypt, Indonesia and Vietnam have the highest weights of payments fintechs

Egypt, Indonesia and Vietnam have the highest proportion of payments firms in their fintech ecosystems, while China and India lie at the lower end of the range. Within emerging markets, c25% of the firms provide payment services, which is greater than any other sector.

Emerging markets fintechs: product mix

We think that payments acts as a gateway product for fintechs; many firms in this sub-sector, once they have achieved scale, seek to broaden their offerings with the goal of becoming a next-generation super app. Along with payments, super app products can encompass credit, insurance, and investment in addition to non-financial services such as travel/restaurant bookings, mobility or communications. Some examples of such apps in emerging markets are Alipay (China), WeChat (China), Kakao (South Korea), GoTo (Indonesia), Paytm (India), and Grab (Indonesia).

In comparison with our previous survey, the weight of payments fintechs in China has reduced by 11 percentage points (ppts) as other product segments have grown. The dominance of Alipay and WeChat Pay has also likely played a role. In fact, Indonesia is the only country out of our seven previously surveyed emerging markets that has witnessed a slight (4ppts) increase in the proportion of payments fintechs within in its fintech ecosystem.

Weight of payment fintechs in emerging markets

Payments firms continue to grow strongly

Our survey of 215 emerging market fintechs across 14 emerging markets, allows us to examine performance metrics by different product segments and geography. At the aggregate level, payments firms have enjoyed similar growth in user numbers to their peers. But revenue growth has lagged, driving down average revenue per user (ARPU). Despite this, operating profit growth has been in line with the broader fintech space; payments fintechs have been able to boost their operating margins, perhaps reflecting the emergence of scale/ network benefits that characterise this product.

Emerging market fintech growth rates

There are also some interesting divergences in sub-populations. For example, the data show unlisted payments firms focusing on enhanced scale via user number growth, while listed companies have shifted attention to monetising their user base.

By country, digital payments in India outperforms other emerging markets for growth in users, Nigeria for revenue growth, and Russia for operating profit. 12 out of 14 emerging markets witnessed a decline in payments fintech ARPUs, with South Africa and Kenya remaining unchanged. Egypt has experienced the biggest expansion in operating margins.

On the other hand, digital payments in the Philippines underperformed other emerging markets in user growth, Indonesia and China in revenue, and India in operating profit. The decline in payments fintech ARPUs is most pronounced in India.

EM payments fintech growth rates

Fewer digital payments firms are profitable relative to other fintech sectors

According to our survey, over half of the payments fintechs already have a positive bottom line. This is a lower proportion than other fintech sectors (except for blockchain). However, it is above the level indicated in our 2020 survey, when slightly more than one-third of the surveyed payments fintechs were profitable.

EM fintech profitability survey

Payments fintechs are likely to gain market share, notably in card payments

We asked 900 consumers in 14 emerging markets about the types of providers meeting their current financial services needs, and the provider types they expect to use in three years. This data allows us to estimate the current market share of the different industry players and likely future shifts. Note that the survey responses are unweighted; we think traditional financial institutions would have a much higher share if our survey were value-weighted.

Based on responses across three products (mobile payments, domestic money transfers, and card payments), payments fintechs account 40% of the retail payments market (up by 4% points from our 2020 survey). This is more than the 31% market share fintechs average across our 11 surveyed retail financial services products.

In the next three years, payments fintechs will likely gain market share from traditional financial institutions and bring more users under the financial services net. However, the expected gain of 3ppts is lower than the average market share gain of 7ppts that consumers expect for other fintechs, suggesting that the digital payments segment is much closer to maturity. Notably, fintechs’ share of mobile payments is anticipated to remain unchanged. The top product beneficiary within payments fintechs is card payments, with market share expected to increase by 7ppts over the coming three years.

EM payments provider market shares

Targeted KPIs: Transaction value, user numbers, product/service innovation

According to payments fintechs, their key performance indicators are transaction value, number of users, and product/service innovation. These top KPIs are aligned with the aggregate results of our fintech survey. However, payments firms are less focused on financial performance than their peers in other sectors, notably in relation to credit defaults and profitability. Somewhat surprisingly, they also place less emphasis on brand strength.

In our previous survey, customer satisfaction, product/service innovation, and market share topped payments fintechs’ targeted KPIs. While digital payments firms are still keen on lifting market share via transaction value, their emphasis on building customer satisfaction to gain loyalty has lessened.

Transaction value

This is the most frequently targeted KPI and one of the metrics commonly used by investors to assess payments fintechs. Firms actively targeting transaction value growth include PalmPay (Nigeria) and MobiKwik (India).

User numbers

Growing the user base is key to generating scale and opening the door to cross-selling/up-selling opportunities. Payments fintechs focusing on growing their customer base include Airtel Africa (South Africa) and JazzCash (Pakistan).

Product and service innovation

Product and service innovation enables payments fintechs to reach their customers more cheaply and effectively. It also helps these companies to be more relevant to their customers, for example by offering them greater convenience and/or a better user experience. Firms that cite these innovations as key to success include PesaPal (Kenya) and Starpay (Philippines).

EM payments fintechs: targeted KPIs

The customer-value proposition: Seamless execution, fast approvals, customer responsiveness

The top values provided by payments fintechs are seamless execution, fast approvals and responsiveness to customer needs. These top values are aligned with the aggregate results of our fintech survey, albeit that payments fintechs place less emphasis on pricing transparency and on delivering unique offerings.

In our previous survey, product quality, security and faster approvals topped the list of key values for payments fintechs. However, these firms now cite security and branding less often, while the importance of speed has increased.

Seamless execution

Users increasingly demand that payments fintech-operated platforms and mobile applications should operate without any delays or interruptions. Firms that cite seamless execution as their key value include MoMo (Vietnam) and iBoxPay (China).

Fast approvals

Payments fintechs can bypass the legacy systems used by incumbent firms that require human interaction. They may also be less constrained by compliance checks. Firms highlighting fast approvals as their key value include Gojek (Indonesia) and Clip (Mexico).

Responsiveness to customer needs

Many incumbent firms are failing to address customers’ specific needs (due to difficulties in tailoring products/services), which is creating opportunities for payments fintechs such as NextPay (Vietnam) and NayaPay (Pakistan).

EM payments fintechs: key values

Factors for success: User-friendly platform, seamless execution, innovative service

The top factors credited by payments fintechs for their success are a user-friendly platform, seamless execution and innovative service offerings. Relative to other fintechs, fast transaction speed is preferred over seamless execution. Meanwhile, payments fintechs place less emphasis on funding access and operational efficiency as success enablers.

In our previous survey, the top payments fintechs’ success factors were innovative service offerings, product quality, and targeting the financially-excluded.

User-friendly platform

Payments fintechs need to create an easy-to-use and seamless interface where operations are self-evident or easy to perform. Firms citing this as a success factor include Yeahka (China) and Vinatti (Vietnam).

Seamless execution

This is the most-cited value proposition by payments fintechs and also one of the key success factors. Firms citing seamless execution as their success factor include EasyPaisa (Pakistan) and Masary (Egypt).

Innovative service offerings

Innovation is a key pillar for payments fintechs’ success. It can, for example, allow firms to improve their service offerings and, hence, enhance the consumer experience. Firms that are striving to innovate include Payfazz (Indonesia) and PaySky (Egypt).

EM payments fintechs: success factors

Strategic plans: New customer segments, more use-cases, tech investment, cost-efficiency

Based on our survey, the biggest strategic priorities for payments fintechs are entering new customer segments, increasing use-cases of existing products/services, increasing technology investment, and increasing operational efficiency. Compared to other fintechs, payments fintechs are less focused on introducing new products and services.

In our 2020 survey, technology investment, expanding into other countries, and introducing new products/services were the top three future plans disclosed by payments fintechs. Our latest survey demonstrates an increased focus by payments fintechs on enhancing product use-cases and entering new customer segments compared to our 2020 survey.

Payments fintechs are less keen on strategic partnerships, introducing new products/services, and expanding to new markets than in our previous survey. It seems that firms are trying harder to exploit the full potential of existing markets before committing to new ones.

Entering new customer segments

Financial exclusion is a major phenomenon in some emerging markets. Many EMs have a diverse customer base, by geography, age and income. Therefore, it makes sense for payments fintechs to modify their existing offerings to appeal to a broader range of customer segments. Firms planning to enter new customer segments include Alipay (China) and Remita (Nigeria).

Increasing use-cases of existing products/services

Payments fintechs can partner with merchants and institutions to expand the use-cases for existing products. This can help to drive growth in the user base and in transaction volume. Firms planning to enhance product/service use-cases include Vindi (Brazil) and Paystack (Nigeria)

Boosting technology investment

Investment in technology is one of the top strategic priorities for payments fintechs. Continuous investment in technology ensures that consumers get the best available features most securely and conveniently. Some payments firms planning to invest in technology include Keenu (Pakistan) and NowNow (Nigeria).

Increasing operational efficiency

Operational efficiency allows payments companies to boost their bottom-line and also enables competitive pricing, thereby growing the addressable market. Payments fintechs targeting operational efficiency include NayaPay (Pakistan) and OnOnPay (Vietnam).

EM payments fintechs: strategic priorities

Targeted innovations: Easier customer onboarding, chatbots, big data

Planned innovations of payments fintechs over the next three years include technology to ease customer onboarding, chatbots/virtual assistants for customer education, and big data analytics and risk management. Relative to other fintechs, payments fintechs have less focus on artificial intelligence and blockchain but they do place more emphasis on virtual assistants and big data analytics.

In comparison with our previous survey, innovations based on cloud technology have become less important, while quantum computing is getting more attention. The targeted innovations for payments fintechs that topped in our previous survey included digital banking, chatbots/virtual assistants, and cloud technology.

Technology to ease customer onboarding

Any complexities or difficulties in customer onboarding can lead to a bad first impression, resulting in lower business volume and less customer loyalty. Due partly to regulatory requirements, customer onboarding has traditionally been a lengthy procedure, but payments fintechs such as PaySky (Egypt) and ShopeePay (Indonesia) are targeting to improve the process.

Chatbots and virtual assistants

If executed well, chatbots and virtual assistants can improve the customer experience by automating customer service/education and simultaneously allowing payments fintechs to reduce their operating costs by limiting the staff required to handle customer queries. Firms with plans in this area include Paytabs (Egypt) and EiduPay (Indonesia).

Big data analytics and risk management

Payments fintechs are using big data analytics to generate value from collected data. Meaningful insights can help to improve products and services, uncover new opportunities, boost operational efficiency, and effectively manage risk. Firms that plan to innovate in this area include CashFree (India) and (Russia).

EM payments fintechs: targeted innovations

Major growth constraints: Regulation, funding/capital, competition, market size

The key growth constraints faced by payments fintechs are regulations, funding/capital, competition from fintechs, and the size of the market. These top growth hurdles are in line with other fintechs.

Market size, regulations, and competition from fintechs as top growth constraints for payments fintechs are in line with what we saw in the previous survey. Informal competition, distribution capacity, and limited smartphone/internet penetration are now less important growth constraints relative to the 2020 survey.


Payments fintechs’ operations differ considerably from those of incumbents, and rulebooks are being continuously updated as regulators catch up with the pace of innovation. Regulatory oversight also tends to rise as these firms grow larger. As a result, payments fintechs are often subject to substantial regulatory uncertainty, which can act as a barrier to investment and growth.

Payments fintechs that regard regulation as a growth constraint include Skyband (Saudi Arabia) and Paysend (Russia).


Funding/capital is the lifeblood of payments fintechs because infrastructure requires significant investment. Along with high marketing, spending to attract unbanked/underbanked customers, achieve notable scale, and meet any imposed regulatory requirements. Firms regarding funding/capital a growth constraint include PayMate (India) and Conekta (Mexico).

Competition from fintechs

Payments start-ups face many challenges. Incumbents are actively developing digital products, either in-house or in partnership with fintechs. Meanwhile payments fintechs themselves are ratcheting up the competition. Firms citing competition from fintechs as a growth constraint include Zoop (Brazil) and TrueMoney (Philippines).

Market size

It can be difficult for industry leaders to outgrow the overall market, particularly as the number of competing payments fintechs rises. Firms that cite market dynamics as a growth constraint include Huifu (China) and Paynear (India).

EM payments fintechs: key growth constraints

Regulatory hurdles: Capital requirements, data protection, KYC/AML, consumer protection

The top regulatory hurdles cited by payments fintechs include capital requirements, data protection, KYC/AML, and consumer protection. These top regulatory issues are in line with other fintechs, while pricing restrictions are bigger concerns for payments firms than those in other fintech sectors.

In our previous survey, the top regulatory hurdles for payments firms were data protection, deposit insurance, and consumer protection. Relative to the 2020 survey, capital requirements, KYC/AML laws, and disclosure requirements have become stricter, while deposit insurance is no longer a concern for payments fintechs.

Capital requirements

Capital requirements create significant entry barriers for new players; in general, payments fintechs tend to favour capital-lite business models. They are also a key consideration for incumbents expanding their businesses. Firms citing this regulatory hurdle include ChinaPNR (China) and Zoona (South Africa).

Data protection

One way payments fintechs can generate competitive advantages is through the collection and utilisation of customer data. Data protection regulations play a key role in determining the extent to which these companies can obtain and use such information, and the processes they must follow to protect it. Payments fintechs citing data protection regulations as a hurdle to their growth include Eko (India) and Alymente (Brazil).

KYC/AML regulations

KYC/AML can be tougher in countries with a significant undocumented economy (at least relative to informal providers). Payments fintechs that have cited this as a major challenge to their operations include FacilitaPay (Brazil) and MobiKwik (India).

Consumer protection

Payments fintechs have access to consumers' funds and their personal details. Regulators are heavily focused on protecting consumers in both these areas, which can limit firms’ scope. Payments fintechs citing consumer protection regulations as a hurdle to their growth include ElectronicPay (India) and PayMaya (Philippines).

EM payments fintechs: regulatory hurdles