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E-commerce boom reveals shortcomings of local payment methods in emerging economies

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One year into the COVID-19 pandemic saw a tremendous expansion of cross-border e-commerce as consumers continue to seek products and brands unavailable in their home country. The virus outbreak played a key role in increasing the number of the e-commerce users with 57% of online shoppers having made a purchase from an overseas retailer. This trend is expected to continue further into 2021, anticipating to reach 2.14 billion digital buyers worldwide.The Baltics is no exception—there are 48.9% of e-commerce users in Lithuania alone, and it is anticipated to reach 54.7% by 2026.

The booming international e-commerce industry, in turn, pushes the need for local payment methods (LPMs) in emerging and fast-growing markets to move swiftly with the change. This change is seen following two main trends: customers want to shop online more so than before, even those without credit cards, and also want to shop globally, not just on local websites.

Underlying difficulty—as LPMs are growing fast, overtaking cards in market share by 65% worldwide, the LPMs that are suited for local merchants might not be the best fit for global ones. So, while some countries still face the difficulties around regulatory frameworks or money conversion, others battle with finding LPMs that would suit both local and global merchants.

Nikulipea new European Fintech company, is starting to address the prominent issue by tackling the lack of LPMs that would be suitable for international merchants first in the Baltics and soon in other emerging markets, which makes it problematic for global PSPs—Payment Service Providers—and their merchants to connect to. On the local level it appears that there are a lot of  LPM choices, but often the global merchant perspective is not addressed, which limits consumer choice.

“What we’re seeing is that the existing local LPMs are suitable for local merchants but they aren’t for global PSPs and global merchants,” said Frank Breuss, Nikulipe CEO. “The needs of the local consumers and the international merchants are being forgotten. This creates a barrier between the local consumers and the global goods and services, and this is why innovative payment solutions are needed.”

Breuss explained that Nikulipe is set on meeting the needs of both by creating new local payment methods suitable for global merchants as well, so that the consumers in the Baltic region will have access to international e-commerce merchants. Open banking offers an opportunity that serves as an enabler for new kinds of LPMs, and in Nikulipe’s case—an opportunity to create LPMs in the Baltics, while meeting the needs of global PSPs and merchants.

Holding EMI, PISP and AISP licensing, Nikulipe is led by an expert team with very solid experience in the payments industry. At the forefront are the Co-founders Frank Breuss, Nikulipe CEO, expert in local payments and banking, and his main investor Philipp Nieland, serial entrepreneur and the founder and former long-time CEO of PPRO, which was valuated over $1BN in the last investment round. Frank Breuss and the Management team have worked with most of the top PSPs globally, bringing their key expertise to Nikulipe.

“The pandemic is only accelerating the trend that has been around for a while—people want to be able to purchase goods and services online,” explains Philipp Nieland. “It doesn’t really matter if they’re digital goods like streaming services, if they’re booking services, or the classical online retail—there still are serious limitations in some parts of the world, including the Baltics in Europe, where local consumers have issues paying with their preferred or available payment methods at the global merchant level. But Nikulipe is willing to take this hassle head-on; this is why I have believed in Nikulipe’s business model and I am more than happy to be invested into it.”

Nikulipe is set on resolving any complexities for global companies looking to enter fast-growing and emerging markets, which comes from years of experience working with payment service providers and understanding what their needs are, when looking to expand into a new market. The new solution will offer more consumer choice, while more e-commerce options will become possible. This is the first solution in the market to address the needs of global PSPs.

In 2021 e-commerce will only continue to grow, and in order to keep up with the increasing local customer demand for global purchases, the right solution for LPMs in emerging European markets must be found. Connecting or creating local payment methods into a single easy to navigate infrastructure, where there are no existing global solutions could be exactly what is needed at the moment.

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