Digitizing merchant payments presents a big opportunity for financial institutions in developing countries because virtually all small merchants around the globe accept billions of dollars in electronic cash payments each year. However, the vast payments service providers that do have it in their near-future roadmap are quite few and far between. There is no obvious path forward for developing nations to adopt Digitizing merchant payment technology as their payments solution. The lack of an accepted standard by international organizations and merchants limits the application to the small-scale market.
Most of the developing economies are highly concentrated in commodity markets. As these markets become more integrated, with local currencies becoming the de facto global currency, the opportunities for financial services providers to serve these markets will increase. While governments and banks have shown interest in Digitizing merchant payment solutions, they have not been able to come up with a common ground due to their different needs, legal obligations and political situations.
Most developing economies have not been able to benefit from standardization in currency rates and other economic indicators. In most cases, they have relied on local exchange rate information supplied by the CIA, which has sometimes been wrong. The inability to use standardization for pricing and other purposes has impeded the development of micro-organisms in the developing nations. Digitizing merchant payments has been implemented with a view to improve the micro-economics of these countries. To some extent, the problem lies in the deficiencies in information systems, lack of standardized pricing and other factors.
With the exception of China, the developing economies have not been able to develop any specific digital cash industry. Several attempts to introduce digitized payment systems to the developing economies have been abortive. It is obvious that an attempt should be made to standardize and automate the payment processes and provide a common interchange platform. This would help avoid the delays and cost involved with the adaptation of different systems.
To enable digital cash businesses, merchants have to be willing to go through the rigors of accepting payments in a fast way. They have to be willing to expand their business network even if it means opening up new stores or departments. Most merchants are open to accepting credit cards from their clients, but only when the conditions of the agreement allow for such expansion. They have to be willing to spend time convincing their customers to make the change over to debit cards, as compared to making the change over to cash.
Retailers have to be willing to accept higher transaction fees from their customers to enable them to compete in the market. They have to be willing to increase their transaction fees to stay in the competitive groove. It becomes difficult for a retailer to go through a year without incurring any costs related to purchasing raw materials, employing people to run the operation, and developing efficient retail payment processes. On the other hand, a service provider can capitalize on the same conditions, increase its revenues manifold, and also be able to make deals with its clients to develop efficient retail payment processes. As a result, both retailers and service providers will derive benefits from the joint venture.
Enterprises have to go through the cost involved in digitizing merchant payments data to reduce the risks associated with their business. The business process would need to store customer data in a secure location. It would have to have access to safe storage devices to avoid theft of the information. In addition, the enterprise would have to set up the infrastructure to accept electronic payments from various customers across various industries. The enterprise should also develop a system to process the digital channels for processing of payments, which will allow it to process the payments from the various digital channels and convert them into cash.
Service providers are developing economies to boost their revenues and boost their profitability too. As a result, entrepreneurs in these developing economies can exploit digital channels to take advantage of the market. Enterprises and retailers should take advantage of this business opportunity to increase their revenues. This allows them to reap benefits of both the worlds develop markets and cater to customers, while developing nations can become technologically developed and enhance their revenue streams.