Wednesday 17 October 2018 10:34 amCFA Institute Talk

How would you like to pay for that, madam?

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These are articles written by professionals for investment professionals. They are contributions from external subject matter experts who do not work for CFA Institute, but may be a CFA charterholder as well as a member of a CFA Society. All are experts in their field and strive to deliver useful insights that help investment professionals make better decisions.


The global payments industry is dramatically improving due to technology. Mobile has changed everything. Payments are getting faster and smarter. Competition is intense. And payments are revolutionsing markets in the developing world even faster than in the developed world.

In just the next seven years, the McKinsey Global Institute estimates that widespread adoption and use of mobile money could increase the GDPs of all emerging economies by 6 percent, or a total of US$3.7 trillion.

But how does this progress in the payments industry affect the payment decisions we make at an individual level?

Our payment decisions are a reflection of our culture, our available options, and ourselves.


Payment behaviour varies by region. The payments experience we have depends on where we are. Crossing a border changes a lot, and changing continents changes nearly everything. A few examples:

Sweden: In the last month, six out of 10 Swedes have used a smartphone app called “Swish” that has largely replaced cash transactions. Swish is a C2C peer-to-peer money transfer app. It is not available outside of Sweden.

Hong Kong: Despite the global growth of mobile payments, current spending habits can sometimes be hard to change. Hong Kong is a perfect example — although residents have rapidly embraced smartphones, many people there are creatures of habit when it comes to payments. Octopus has long been the dominant player since it launched physical payment cards in 1997. This “stored-value” card can be used in more than 20,000 businesses, including convenience stores and restaurants, and on public transport. Roughly 97% of Hong Kong residents have Octopus cards.

China: By contrast, people have been remarkably quick to change their behaviour on the mainland. The Financial Times reported on the explosive growth in mobile payments in China:

Almost half the world’s digital payments in 2017 were made in China, through apps such as Alipay (owned by Ant Financial, an affiliate of e-commerce juggernaut Alibaba) and WeChat (owned by Tencent), according to PwC research.

These progressive apps provide social, e-commerce, and payment functions together in one place so people can manage their financial and social lives at the same time.

Africa: Mobile reigns in the world of African payments. Martha Mghendi-Fisher is the founder of both African Women in FinTech & Payments (AWFP) and European Women in Payments Network (EWPN). “From an African perspective, mobile continues to be the main method for payments. I come from Kenya and I was there when everything started. M-Pesa was born in 2007 and this really changed the way that people think about mobile money. It became so huge in East Africa. Just about everyone can now have access to financial services.”


Technology and demographics are also shifting the world of payments. New fintech start-ups are putting pressure on incumbent platforms, and fees are dropping across the globe.

There are some interesting demographic trends as well. Duncan Stewart, CFA, the director of research for technology at Deloitte Canada, notes that choice of payment method varies by transaction size and value among millennials aged 18 to 36.

“These young people are daily users of mobile payments for small transactions like coffee or restaurant bills: For them, the phone is the new wallet. But when they research, plan, and book bigger ticket items, such as an international vacation, they usually shift their payment technology from their phones to their laptops. When moving thousands of dollars, they prefer the larger screen and more precise keyboard of the PC for goods such as aeroplane tickets, hotels, or jewellery. And when it comes to even more expensive items like cars or apartments, they still go to bank branches to make the payment. Interestingly, although use of mobile payments varied considerably by country in both North America and Europe, this shift from mobile to PC was seen in all countries.”


Payment behaviour varies by personality. Different user personalities demand diversity in the payments industry. Millennials today don’t have the same archaic notions that seem to persist with older generations — they expect diversity and merit-based hiring selection. The landscape is changing quickly in the payments and FinTech space.

What do users want?

Our payment decisions today depend on the choices available to us in payment options, devices, and associated fees. These factors vary radically by geographic region and by culture. All else being equal, how we decide to pay is a reflection of self — many of us are free to express our personal payment preferences.

Payment behaviour could be based on any number of things including mood at the time of the transaction, desire to appear to be fashionable or in sync with my peers, or values around paying fees. The world is made up of diverse user personalities with diverse preferences.

If you liked this post, don’t forget to subscribe to the Enterprising Investor. This blog was written by Barbara Stewart, CFA.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.