Unveiling Fintech's Best-Kept Secret: The True Location of Advanced Payment Systems

International merchants looking to expand into rapidly growing markets such as Brazil, India, Kenya, or Southeast Asia frequently make a critical misstep by treating payments as a final checklist item before launch. This often stems from an erroneous assumption that a card acquirer will function universally as it does in Western home markets. However, in regions where instant payment schemes and mobile money dominate, this assumption can severely delay market entry and significantly depress conversion rates even before a single sale is made.

Carlos Menendez, COO at dLocal, a cross-border payments platform, highlights that the payment infrastructure in many emerging markets has, in fact, surpassed that of the West. He argues that merchants must make three crucial decisions early in their planning to ensure successful market entry. The problem is exemplified by scenarios where a global merchant discovers, just weeks before launch in Brazil, that their cross-border entity structure prevents them from accepting Pix – Brazil's dominant instant payment system. Rectifying this by establishing a local entity can take months, pushing back launch dates. Even when they do go live, their checkout systems are often built around payment methods rarely used by local customers, directly impacting conversion.

Research underscores this recurring issue, with 64 percent of merchants reporting operational and technical failures with their payment systems in emerging markets, and 57 percent experiencing direct conversion problems as a result. These failures are seldom due to a poor product or timing, but rather a payment model designed exclusively for familiar developed markets. Western merchants often approach these markets with an overconfidence, failing to recognize that local ingenuity has forged payment systems more technologically advanced than their own. They bring their card-centric payment stack, unaware that the local infrastructure operates on entirely different and often superior rails.

In the US, UK, and Western Europe, cards are ubiquitous, interchange infrastructure is mature, and choosing a payment processor is indeed a late-stage decision. However, emerging markets did not develop their payment systems on card rails. Instead, they built something different and, in several respects, more advanced. For instance, Brazil’s Pix processed 64 billion transactions in 2024, nearly double the combined volume of all card transactions in the country. It settles in seconds, costs merchants a fraction of card interchange fees, and reached 93 percent of Brazilian adults within five years. India’s UPI handled almost half of all real-time digital payment transactions globally last year, with a transaction value 12 times greater than all card payments in India combined. In Kenya, M-Pesa processes approximately $800 million daily and serves 34 million subscribers, many of whom have never had a traditional bank account. Ghana sees nearly 60 percent of its adults relying on mobile money as their primary financial tool, with the market growing at nearly 57 percent year-on-year in 2024. These systems offer faster settlements, lower operating costs, and accessibility to populations that cards never reached, demonstrating that their infrastructure is not behind the West, but has rather left it behind.

For a merchant entering these markets with a card-first payment stack, they are not fully entering the market, but rather attempting a partial version. Three key decisions determine the success or failure of market entry. First is **entity structure**. Accepting dominant local payment methods like Pix often necessitates a local legal entity. Many merchants initially opt for cross-border structures for speed, inadvertently preventing them from offering payment methods used by the majority of local consumers. Closing this gap requires revisiting and restructuring entity decisions, leading to significant time and launch costs.

Second is **currency**. Local payment infrastructure is built around local currency. Presenting prices in US dollars to a consumer paying via Pix or M-Pesa introduces unnecessary friction, directly impacting conversion rates. Repricing in local currency is not merely a checkout adjustment; it involves foreign exchange (FX) and margin implications, and in some markets, requires regulatory approval. The commercial team must address these complex questions proactively, before payments integration is forced upon them.

Third is **reconciliation**. Southeast Asia perfectly illustrates this challenge: Indonesia, Thailand, Vietnam, and Malaysia each operate their own distinct payment rails, regulatory frameworks, and settlement systems, such as QRIS, PromptPay, VietQR, and DuitNow. These are not regional variations but entirely unique systems influenced by different central banks and consumer behaviors. A merchant treating Southeast Asia as a monolithic market will build for one system and find they have built for none. Finance teams failing to account for this fragmentation from the outset often find themselves creating complex reconciliation workarounds once transaction volume increases, workarounds that rarely scale effectively with growth.

The fundamental issue is that these critical aspects remain invisible if merchants assume the payments problem is a familiar one. Traditionally, payments are left to the end in developed markets. However, successful merchants in emerging markets are those who ask the payments question early enough to shape all other strategic decisions, including entity structure, pricing, and finance operations. The infrastructure in these markets is unforgiving of late decisions; it simply exposes their consequences much later, after the critical foundational choices have already been made.