The Rise of Deglobalisation in Payments


In the evolving landscape of global payments, a notable trend towards deglobalisation has taken center stage. This phenomenon, gaining momentum alongside the BRICS countries’ departure from SWIFT, is the transformative rise of Universal Payment Systems (UPS). This paradigm shift is fundamentally reshaping the fintech landscape. While geopolitical discussions have dominated the narrative, the subtle yet impactful growth of these decentralised payment ecosystems has quietly become one of the most significant trends in the world of fintech.

Global UPS landscape

UPS are a groundbreaking development in the realm of fintech, defined by decentralised and interconnected payment ecosystems. These systems effortlessly combine diverse payment methods, delivering users a seamless and efficient experience while diminishing dependence on conventional banking channels. 

Several countries have spearheaded the development of their version of UPS, leading to the siloing of payment ecosystems within individual nations. Noteworthy examples include the United States’ Automated Clearing House (ACH), which facilitates electronic funds transfers, including direct deposits, bill payments, and business-to-business transactions. Additionally, the European Union’s Single Euro Payments Area (SEPA), enables cross-border euro transactions. China has its own unified payment systems, including Alipay and WeChat Pay. The United Kingdom has Faster Payments, which allows for near-instant electronic fund transfers between banks, and the Bacs Payment Schemes for Direct Debit and Direct Credit transactions. 

India has taken a notable step forward in the mobile payment space with Unified Payments Interface (UPI), which allows for instant fund transfers between banks using mobile devices. Amid the Indian Government’s assertive promotion of UPI and Rupay, global titans Visa and Mastercard are witnessing a decline in their dominance within India’s Digital Payments Ecosystem. The card market in India experienced a substantial 10% decrease in 2019 compared to 2018, while UPI transactions exhibited an impressive nine-fold growth during the same period. Notably, by September 2019, UPI had surpassed cards to become the preferred mode of payment, a trend that has continued. As of January 2020, the UPI transactions had surpassed 1.3 billion, solidifying its position as a leading force in India’s rapidly evolving digital payment landscape.

Impact on global payment players

These UPS platforms are designed to enhance trade efficiency and speed, disrupting the traditional fintech industry. Notably, major players like Visa and Mastercard are anticipated to feel the impact most profoundly. Each UPS has the capability to bypass the traditional Visa and Mastercard payment rails, representing a noteworthy change in the global payments landscape.

Envision a world where transactions seamlessly happen between banks – tap your card, and money is directly paid from the payer’s bank to the merchant’s bank, bypassing intermediaries. This evolution challenges the traditional revenue model, as interchange fees previously earned by Mastercard and Visa with each transaction within their networks are now at risk. On the other hand, how will this function if you wish to buy a coffee in New York with your FNB card without relying on payment processing networks such as Mastercard and Visa?

Looking to South Africa

South Africa is working towards the development and implementation of a formalised unified payment system. One notable initiative in this direction is PayShap, introduced in March 2023. PayShap is a real-time Rapid Payment Platform (RPP) created in collaboration with BankservAfrica (the automated clearing house owned by South African commercial banks and the South African Reserve Bank), the Payments Association of South Africa and the South African banking community.

Beyond individual benefits, PayShap plays a crucial role in reducing cash usage within South Africa’s economy, aligning with global best practices. The platform introduces a ‘push payment system,’ ensuring secure transactions and lower costs compared to conventional banking methods. This represents South Africa’s proactive approach to financial modernisation, ensuring alignment with global fintech trends while addressing local needs. As the UPS landscape evolves, South Africa’s strategic investments in innovative payment systems position the country for sustained economic growth and technological leadership.

Most importantly, PayShap isn’t just a win for individuals; it’s a game-changer for businesses too. By enabling both merchants and consumers to make payments without depending on regular card issuers, PayShap encourages a variety of payment choices and could lessen the reliance on traditional banking methods. This flexibility and inclusivity highlight how PayShap caters to the diverse needs of individual consumers and businesses alike in South Africa’s financial ecosystem. 

Fintech champions 

While PayShap actively engages in the deglobalisation of payments, other fintech pioneers like Payfast, JUMO, Adumo, and Kazang are driving local economic growth through modernized payment methods. These innovators, in collaboration with traditional financial institutions such as Standard Bank and ABSA, as well as regulatory bodies and fintech accelerators, create localised payment solutions using cutting-edge technologies. JUMO prioritises inclusive financial services, Adumo excels in payment technology solutions, and Kazang specialises in providing electronic vending and payment services. Together, these fintechs represent a dynamic shift towards a more autonomous and interconnected South African financial ecosystem, challenging global payment giants and fostering regional resilience. Their collective efforts not only contribute to localised payment solutions but also reduce reliance on traditional global payment networks, aligning with the global trend of deglobalization in payments.

As UPS proliferates in each economic area, the questions linger: What impact will this have on the dominance of Visa and Mastercard outside these systems, and could traditional methods like traveller’s cheques stage a comeback in this evolving financial landscape?


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