- Key insight: dLocal exec Yang Yang Zhang says concern over foreign influence on local payment systems is accelerating amid global political tensions.
- What's at stake: The trend contrasts with pressure to boost cross-border payments.
- Expert quote: "The U.S. payment giants have not changed in many decades."---dLocal's Yang Yang Zhang
Countries have always been concerned about losing
Cross-border payments veteran Yang Yang Zhang is stepping into this fray as dLocal's new Asia/Pacific lead. "Nations are seeking more control over the digital economy," Zhang, CEO of APAC for dLocal, told American Banker.
At dLocal, Zhang is responsible for growing the company's international profile at a time in which
Going local
Founded in 2016, the
It enables clients to manage payments without needing to establish local entities or forge individual relationships with merchant acquirers in every country.
dLocal experiences both sides of the payments sovereignty issue. While it's an alternative to major U.S.-based payment companies, it is also entering dozens of markets from the outside.
"The U.S. payment giants have not changed in many decades," Zhang said. "We don't see ourselves as being competitive but complementary."dLocal is active in 10 APAC countries, mostly relying on clients who request dLocal services in particular markets. Zhang said dLocal plans to more proactively pursue markets in the region.
The company's strategy is to connect directly to national payment rails, an arduous task given the differences between laws and technology in different countries.
"As nations pay more attention to financial inclusion and access to the global economy, sovereignty will become more important," she said.
Overall, dLocal has more than 600 merchant clients in 40 countries, including Amazon, Spotify, Uber, Booking.com and Shopify. While its home base is in Latin America, it has secured a U.K. Financial Conduct Authority (FCA) license, which allows dLocal to sell to U.K. merchants that have operations in emerging economies.
dLocal has additionally integrated with national payment systems including Pix in Brazil and UPI in India, the world's two largest real-time settlement networks.
"A lot of these national rails are still evolving, so it's a vastly different experience," Zhang said, noting that dLocal also connects with local regulators to manage compliance. dLocal additionally recently joined the
The company hopes this range of currency options and its ability to act as a middle layer between merchants and local payment systems will enable dLocal to compete in multiple markets. "We have to make that work through a single integration," she said.
A difficult balance
The trend toward payment protectionism comes at the same time that cross-border payments are becoming a large driver of economic and financial services growth.
"Politicizing U.S. payment systems abroad or creating a fear that they may be politicized, spurs countries to develop alternatives, which is hardly in America's national interest,"
That dichotomy is placing pressure on payment companies to tap international markets while enabling local needs such as financial access.
"Payments sovereignty has existed for decades. Domestic payments are inherently local because governments want control over financial stability, regulation, data and access," Meng Liu, principal analyst at Forrester, told American Banker, adding there is already tension between global standardization and the emergence of regional or geopolitically aligned payment systems.
"That is why every region has developed its own mix of card schemes, wallets, account-to-account payments and mobile money."Geopolitical tensions have heightened awareness because governments increasingly see payments as critical infrastructure, not simply a commercial service, according to Liu, who added this will lead to more domestic and regional alternatives and, inevitably, more fragmentation.
"But cross-border payments follow a different economic logic. Global trade requires interoperability, broad reach and common standards," Liu said.
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Since most payment systems are focused on domestic transactions, there will likely need to be some collaboration between systems.
"A sovereign payment system can work within one country, but it cannot support international commerce in isolation. That is why Swift has remained central to global financial messaging since going live in 1977," Liu said. "The future is not sovereignty or globalization. It is more sovereign rails connected by global interoperability. Politics will fragment the endpoints, while trade will keep pushing the networks to connect."
