Five Payment Trends In Emerging Markets For 2025
- Igor Kozintsev, Vice President at CMA
- 17.01.2025 03:30 pm #PaymentTrends2025 #EmergingMarkets
While most countries across South-East Asia, the Middle East, Africa and Latin America have Real-Time Gross Settlement (RTGS), Automated Clearing House (ACH) and Instant Payment Systems (IPS) in place, they recognize the importance of keeping up with the rapid pace of change in the international payments landscape. Central banks and financial market infrastructure providers are looking to deliver increased efficiencies and cost savings, as well as improved payments accessibility, security and financial inclusion for all.
As the World Bank continues to advocate investment in secure, affordable and accessible payment systems and services that promote development, support financial stability, and help expand financial inclusion across emerging economies, CMA foresees an ongoing focus in these markets on the modernization of domestic payment systems. In parallel, we’re also seeing growing interest in cross-border payment initiatives between countries in different regions.
Five key areas of focus for the year ahead include:
- Deployment of next-generation RTGS systems
A growing demand for better liquidity and risk management support, including liquidity saving mechanisms that lower liquidity costs for all RTGS participants, requires a more modern, open approach. Central banks are also increasingly looking at extended RTGS operating hours to facilitate the settlement of transactions outside of business hours and during national holidays. The objective is to avoid settlement delays that could result in participants not having the necessary liquidity needed to cover their obligations.
In addition, to foster increased competition and innovation in payment services, there’s a growing desire for central banks to onboard non-bank payment service providers to RTGS systems, and also to consider how to orchestrate linkages from RTGS to cross-border payment systems and to prepare for the potential introduction of CBDCs.
- Expansion of instant payment systems
Central banks are keen to promote increased financial inclusion by providing easier access to instant payment services. Areas of interest include support for unified QR-codes, offline payments, request-to-pay, pre-validation of payee, and other value-added services. Effectively there’s the potential to implement a range of user-friendly instant payment services that improve the customer experience, similar to those that already exist within card payment systems.
- Replacement of ACH systems
The modernization and extension of RTGS systems, coupled with the deployment of instant payments systems is diminishing the ongoing requirement for separate, batch-based ACH payment systems within emerging economies – particularly for those countries that handle relatively small daily volumes of retail payments. Some are questioning whether they need to continue operating a separate ACH system, and whether these payments can easily be re-routed and handled more efficiently as part of a modernized RTGS and IPS infrastructure. We expect an increasing number of conversations on this topic.
- Developments in CBDCs and digital money
While overall discussions around central bank digital currencies reduced somewhat in 2024, interest has not gone away. Emerging economies will continue to watch developments in CBDCs so that they can be ready to respond. Part of the challenge, however, remains a lack of common standards around CBDC implementation with many areas remaining open to interpretation. We expect discussions and pilot projects to continue but think it unlikely we’ll see significant growth in the volume of real CBDC transactions in the year ahead.
- Growth in cross-border payment initiatives
Regional and international initiatives to create real-time remittance and cross-border payments corridors is something we can expect to continue in 2025. We anticipate many discussions around how industry standards and best practices can support in achieving true interoperability across both national and international payments systems.
The implementation of cross-border payments depends on having common rules and legislation for all stakeholders. While the CBPR+ ISO 20022 protocol is becoming a common standard, concerns remain around regulatory differences between participating countries, compliance issues, and access to sensitive payment information by third parties, including network providers and system operators. There’s also a need to agree risk mitigation rules, final settlement procedures and more.
Due to the diversity of cross-border payment options – within ‘closed user groups’, regional and worldwide – CMA sees that an ‘integration’ module, hub or similar application may be necessary at a domestic level, helping to solve ‘orchestration’ tasks, such as messaging formats, business flows, payments corridors, connectivity and more.
As regional cross-border systems mature – providing attractive services in terms of speed, compliance and security – over time we can expect the use of correspondent banking to diminish, with relationships iteratively replaced by such services.
Underpinning many of the above trends, we also see increased deployment of advanced technologies such as artificial intelligence (AI) and distributed ledger technology (DLT).
While DLT can’t yet demonstrate clear benefits in natively centralized systems such as RTGS and IPS systems, it’s arguably much better suited for regional payment systems or cross-border payments frameworks where participating countries need to delegate responsibility to a designated system operator. Just as DLT is considered typical for CBDC implementations, we see its potential to underpin regional cross-border payments and alternate ‘private’ payment systems.
As for AI, there’s no doubt of the huge potential to deliver benefits in areas including business analysis, system development and implementation. Fraud protection and anomaly detection is another strong use case where it’s already delivering results.
With so many developments underway, CMA relishes the challenges ahead in helping financial market infrastructure operators modernize their systems and benefit from the latest innovations.
