DIGITAL PAYMENTS ENABLE NEW BUSINESS MODELS AND REVENUE STREAMS The benefits of digital payments go far beyond driving down costs and increasing the convenience of existing transactions. Like electricity or roads, a digital-payment network can become part of the basic infrastructure of an economy and can underpin a broader and more innovative array of economic activity. We consider three important emerging business models. The first is financial services based on the increased transparency and information about users generated by digital payments. The second type builds on the idea that digital payments allow people to transact in small amounts, creating new opportunities based on micropayments. The third type of new business model is e-commerce and on-demand services made possible by digital payments (Exhibit 12). Exhibit 12 Digital financial services enable the creation of new business models New business model Example services enabled Example companies Digital payments platforms and  Alipay, Baidu Wallet, WePay(China) wallets  EasyPaisa, OneLoad (Pakistan)  HelloCash, M-Birr (Ethiopia)  Pagatech, Quickteller(Nigeria)  Paytm(India)  Zuum(Brazil) 1 Individuals Online peer-to-peer lending  Kubo Financiero (Mexico) New  Lufax, Yirendai (China) financial- New insurance models  KifiyaCrop Insurance (Ethiopia) services  MicroEnsure(16 countries in Asia and Africa) products Personal financial planning  GuiaBolso (Brazil) Supply chain financing  Ant Financial, Gome, WeBank(China) Cash management  Clip, Red Qiubo(Mexico) MSMEs  Ezetap (India)  iZettle (13 countries including Brazil and Mexico) Digital salary payments  Most example businesses above providing digital payments services Digital installment payments for  Bridge International Academies (India, Kenya, health and education Liberia, Nigeria, Uganda) Mobilemicro-payments Pay-as-you-go investment model  M-KopaSolar (Kenya) Layaway plans  KickStartInternational (Kenya) E-commerce  Alibaba (China)  Flipkart, FreeCharge (India) Digitizedbusinesses On-demand services  Didi Chuxing car ride service (China)  Hello Doctor mobile health care (Ethiopia) Online labor platforms  Freelancer, Upwork (global) 1 These services are relevant to micro-enterprises as well. SOURCE: McKinsey Global Institute analysis 38 McKinsey Global Institute 2. The power of digital to transform finance