Time For Emerging Markets to Embrace Prepayment


The world of financial transaction is rapidly changing. Visits to the banks are significantly reducing and mobile and internet penetration have encouraged reliance or dependency on mobile phones.

Today, you can send thousands of dollars via your mobile phone or internet banking. Another interesting thing is that you can use something as little as an Amazon gift card discount to make international purchases on Amazon and the order will be delivered to you in a matter of days. Hence, do not be surprised that in the near future, banks may not exist or very minute transactions will be performed there.

Regardless of this advancement-largely thanks to technology-citizens of emerging nations still prefer to pay for their services cash-in-hand. For example, a recent report on the Nigerian hospitality industry authored by Jumia Travel shows that 67% of Nigerians prefer to pay at the hotel, 19%- mobile money, 4%-credit/debit card, and 10%-offline. This is an obvious reflection of the deplorable performance and acceptance of prepayment in emerging nations.

Emerging markets

Emerging national economies, also known as emerging markets are less developed nations with fast-growing economies. In other words, they are countries undergoing rapid growth and industrialization that are poised to emerge onto the global market. There are many emerging nations in the world, but the acronym BRICS is usually used to discuss the five major emerging markets: Brazil, Russia, India, China and South Africa. These countries have large and fast-growing economies, and if their growth trend continues, they could become strong global economic players in the years to come.

Why prepayment is yet be embraced

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The potentials of emerging nations are very shiny and bright. The gap between the very rich and extremely poor is bridging to the extent that there is now an emerging middle class. This middle class is quite enlightened because of exposure to social media and the internet.

However, this laudable development is yet to have any effect on the payment for good and services as buyers still prefer to pay cash. This is arguably because there is a huge lack of trust in the online banking system. The level of electronic and bank card fraud is humongous as millions of dollars are lost to these desperate and ‘smart’ fraudsters.

Similarly, the security of these banks in emerging markets is suspect. Even though they have extremely improved their security, you cannot guarantee that they are not penetrable.

This is why many people in these economies prefer to carry cash around which is unsafe and not advantageous to the economy. Clearly, inflation will set in and the valued of the money  will be lost.

So emerging nations are choiceless and must accept prepayment. There will come a time when cash will no longer be accepted. It is either you pay via POS, Bitcoin or make an online payment.

What can be done?

Since internet penetration is reasonably high-although more needs to be done to bring the rural areas online-banks, government and stakeholders must make efforts to enlighten people on the advantages of prepayment. It is convenient and cheap to process.

Importantly, banks and fintech startups must intensify their strive to guarantee cybersecurity.

Online payments should not be painstaking. It should be painless and must not take forever. If reports of online scams don’t decline, very few people will discountenance the positives of prepayment and rely on cash to make transactions despite its inherent risks.


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There is no doubt that banking transactions are moving online. Whether emerging nations like it or not, they must move with the times or be left behind. As such, all hands must be on deck to assure people of their online transactions and in case anything goes wrong, the refund should be immediately done. This will convince both the banked and the unbanked to do online transactions and make payments online.