Evolution Vs Strategies: A new way of looking at Global Payment (and other) solutions

What works well in one country might not necessarily have the same effect in another country. This is why.

A few weeks ago, I had the privilege to speak at Vendorcom’s Future of Payments Conference.

During my conversations with various payment providers and financial services experts, one of the topics particularly raised my attention. The question is along the lines of:

“How can we keep up with the payment methods used in other countries and apply them here?”

What is my thought on this?

The concept of evolution

In one of my talks, I discuss the notion of linear human evolution - where we, human, start from apes with big jaws and end with the two-legged walking modern men.

 Linear human evolution

Linear human evolution

It seems very straightforward: Start simple and end advanced. But the truth is, the depiction of human evolution as a simple linear affair (transformational evolution) is slightly misleading. The reason the image of linear evolution has come to dominate people’s understanding of biological evolution because a linear series is easily grasped.

 Evolution tree: Species live alongside with each other (Image credit: Evolution/Ecology Project)

Evolution tree: Species live alongside with each other (Image credit: Evolution/Ecology Project)

The actual evolution is not linear. In fact, Darwin’s theory advocates the concept of variational evolution. Variational evolution is a process of continual branching and extinction, apparently without end.

No one is advanced. Chimpanzee is living alongside with human and spider monkey. Different species exist together.

It all starts with one starting point but they evolve differently throughout the centuries. Some species survive and grow well, some die out along the way. It is the environment that influenced how each creature evolve. Each finds their niche and evolve accordingly.

The same concept also applies to, for example, payment methods, the use of mobile phones, buying behaviours and travel patterns in different countries and community groups. 

 Payment solution evolution

Payment solution evolution

It’s not what and how each evolves to be a modern man. The process is not simple and linear which leads to a predicted end. 

You can say people around the world are adopting each other’s technologies or learning from one another, but they are not try to evolve to become one another.

Find the niches

What works well in one country does not necessarily work in other countries. 

For example:

M-Pesa (mobile payment) is a big success in Kenya because it works within its environment and context: Low percentage of Kenyans have a bank account due to poverty and limited access to banks while the country has a high penetration of mobile devices. On top of that, the presence of one single dominant mobile carrier, Safaricom, made it easy for the offering to be adopted in a faster pace as ultimately, people mainly want to use what everyone else is using: The snowball effect. Kenya as a collectivist society, hence social support is important. Without a bank account, the urban Kenyans faced the difficulties in transferring money to support relatives in rural areas. M-Pesa solves this problem by enabling them to deposit, withdraw and transfer money via their basic mobile devices. It also helps to decrease corruption and the chances of being robbed.

 

 The use of M-Pesa in Kenya (Image credit: BBC UK)

The use of M-Pesa in Kenya (Image credit: BBC UK)

The success of M-Pesa in Kenya is not by luck or coincidence. It is exactly what Kenyans need. It solves their problems. It works for their specific environment and infrastructure setup. It fits into their ecosystem.

To duplicate the same solution in other countries with a different setup and problems to solve, it won’t work.

Another example is QR code payment, which has been successfully adopted in China with Singapore making moves towards the adoption and Indonesia following the lead. QR is not a new technology. In fact, it was first designed in 1994 and had been used mostly for advertising, promotions, merchandise tracking and so on. Mobile QR code payments took off in China thanks to a decision by Alibaba (the China retail giant who also owns both Tmall and Taobao) when they use it to handle transactions via AliPay. 

 Alipay QR Code Payment in China (Image Credit: China Daily)

Alipay QR Code Payment in China (Image Credit: China Daily)

By having Alibaba, who has already conquered the gigantic Chinese market, to introduce the QR code payment solution, it certainly contributed to its success in China. There are many other reasons too. As University of Wharton research unfolds:

“The lack of payments infrastructure in China has made the rollout of relatively inexpensive QR code payments more compelling. QR codes are inexpensive and merchants increasingly been adopting them for payments. The growing prevalence of smartphones in China has given consumers even more reasons to use QR codes for payments and also created an ecosystem effect, resulting in social behaviour changing and QR codes becoming a way of life. Unlike Apple Pay, Android Pay or Samsung Pay, QR code payment does not require an internet connection to work. The convenience and privacy of QR codes makes QR code mobile system easily adoptable. ”

Unless you can duplicate every single of these elements in another country, replicating the exact technology and solution in other markets without in-depth understanding or research is certainly not a wise strategy. 

Stop the catching and following games. Find the right fits.

Instead of trying to imitate a specific technology or solution which works in a country, what is most important and useful is to: First, understand the niches such as their context and background, beliefs and customs, history and infrastructure; then use these aspects to define a society’s attitudes, needs, and challenges.

The best approach is to explore how their needs can be met, what aspects of their problems can be solved in their environment.

Never design, build and create something purely based on:

  • What works well for other countries; or 
  • Available new technologies (e.g. AI)

You might found that the best design and solution does not always require advanced technology.

This does not apply only for payment solutions but other sectors. Think about Variational Evolution, not Transformational Evolution.

Want to chat more about this?

If you’d like to hear more about how we help other businesses identify their market fit and explore business innovation design and solutions in different countries, get in touch with us: hello@beyo.global or +44779 3413481.

 

Chui Chui Tan