Economic Drivers of Electronic Payment Systems in Developing and Emerging Markets

Richard Moore

INTRODUCTION

What would a new non-cash global payment system look like in the next decade and do we need another currency that is not based on intrinsic values such as gold or silver? In most financially mature and urbanised marketplaces, few companies or people obtain their wages or exchange goods and services with commodity money, natural resources or precious metals. It is mostly done through Fiat currency – sovereign-state-backed promissory notes, based on a regulation or law. Most electronic payment systems (EPSs) that are regulated are still based on that same principle of a promised payment. Additionally, many sovereign states could increase their profitable standings through currency exchanges, stock markets, and building easier ways for people to trade goods and services. Financial inclusion is a prerequisite to sustained economic progress. We will discuss the background of some economic drivers of EPSs, the use of and risks to financial technology (ie, fintech) in developing and emerging markets, and the implication these new payments systems will have on global financial stability.

BACKGROUND

The World Economic Forum says that 50% of the world’s adult population r

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