The world’s emerging markets account for around 85% of the global population, offer its most attractive rates of economic growth, and feature a rapidly expanding middle class with real spending power. Why aren’t more developed market businesses targeting customers in these nations?
The answer, say the founders of British fintech PayFuture, is not that Western businesses don’t want to sell into emerging markets, but that they often find it impossible to do so. The demand for their products and services is there – and growing quickly – but the practicalities of satisfying that demand, and particularly getting paid, get in the way of the opportunity.
The emergence of online sales has solved the problem of how to reach new markets in recent years, points out PayFuture’s co-founder and CEO Manpreet Haer. But actually completing the sale and getting paid is another matter. “If you want to go into these markets, you need to offer local payment types and that is something many businesses are just not set up to do,” he warns.
PayFuture’s ability to resolve that issue has seen it grow remarkably quickly since its launch in 2019 – despite raising no finance from external investors, with the founders of the fintech bootstrapping its development themselves.
The company now offers payment services in more than 40 countries and is on target to support $2 billion worth of transactions this year. It has been in the black since its earliest days, delivering a gross profit of $4.3 million in 2020, its first full year in business, rising to $11.1 million last year.
Growth appears to be continuing along that trajectory. For 2022, PayFuture is now predicting that profits will at least double, and it has been recruiting at pace to support its expansion. The company’s workforce has increased from 14 members of staff in 2021 to more than 70 today.
The company’s unique selling point is its ability to connect merchants in developed markets to multiple local payment solutions in the emerging markets they are now serving – it offers access to more than 30 such markets worldwide.
“It’s all about solving a problem that has not been solved previously,” Haer adds. “We want to be the bridge between merchants and these emerging markets to help them gain valuable access to growth territories but in a way that is safe and secure.”
PayFuture now has clients in the UK, in continental Europe and in North America, Haer explains, though it also works with businesses selling from one emerging market into another. Digital services sectors such as education technology, travel and online gaming are a particular target; the company has also held discussions with online retailers, though these businesses are proving slower to embrace emerging markets given the complexities of logistics and fulfillment.
As well as ensuring that payments flow freely, PayFuture also offers services to help clients set up in emerging markets for the first time – helping them through bureaucracy and red tape such as the need to set up local entities, for example. It can also support payments into emerging markets, where these are needed.
The company started out with a focus on India, long tipped as a powerhouse of global economic growth – and now expected by economists to become the world’s third largest economy by 2030. But the key has been to be led by where customers want to do business, Haer adds. “It’s ultimately what merchants tell us that determined where we expand,” he says. “They tell us where they want to do business and we aim to help them make that happen.”
In doing so, the fintech is something of a bellwether, providing early evidence of the emerging markets where international businesses see the most opportunity. Haer points to South-east Asia as one region particularly in demand – particularly Pakistan and Bangladesh. East Africa is also exciting many merchants, he says, with Kenya and Tanzania especially in focus.
The company believes there is plenty more growth to go at, and will continue to market the simplicity of the connections it provides to popular payment methods in each region. Its business model depends on it taking a small commission on transactions passing through these connections.
“As internet usage grows in these regions so does the opportunity for e-commerce merchants to enter these new markets and find previously untapped markets for growth,” says Haer.