Markets of the Future: Navigating Payment Regulations Across Africa, Asia & Latin America

Emerging markets—the markets of the future—offer some of the strongest long-term growth potential for digital businesses, but they also come with complex, fast-evolving payment regulations. From licensing and KYC expectations to FX controls and data rules, regulatory requirements shape how you can accept and move money, and how quickly you can launch or scale across regions.

This guide provides a practical overview of how to approach payment regulations in emerging markets, with a focus on Africa & the Middle East, Asia, and Latin America.

1. Why regulation matters so much in emerging markets

In many emerging economies, regulators are using payments as a lever to:

• Strengthen financial stability and AML controls
• Accelerate financial inclusion and digitalization
• Build or modernize real-time payment rails, e-money schemes, and interoperability frameworks
• Manage FX exposure and capital flows, especially on cross-border activity

For global merchants and platforms, this means:

• The same business model may be classified differently from one country to another (e.g., PSP vs. remittance vs. collection and payment service provider).
• Licensing requirements and product availability can change as new rules are issued or clarified.
• You often need a specialized partner with local entities, licenses, and on-the-ground regulatory relationships to operate efficiently across 40+ markets.

2. Core regulatory building blocks to understand

When assessing regulatory risk and requirements, most emerging markets converge around a few core elements.

2.1 Licensing and permitted activities

Countries typically define which payment activities require a license, such as:

• Issuing or acquiring card and APM transactions
• Operating as a payment institution, e-money issuer, or mobile money provider
• Providing remittance or money transfer services
• Acting as a collection and payment service provider, handling funds on behalf of merchants

Some markets allow limited collection and settlement activity without a formal license, as long as a licensed third party processes the underlying payment. Others require a full payment institution license and direct connection to local schemes like Pix in Brazil or mobile money rails in Africa.

2.2 AML, KYC, and transaction monitoring

Even when a specific "payment license" is not mandatory, regulators almost always expect:

• AML/KYC programs aligned to local standards
• Transaction monitoring for suspicious or unusual activity
• Sanctions screening and reporting where required
• Proper record-keeping and auditability

In many markets, payment rules are derived from broader AML frameworks, which can differ in strictness and clarity by region.

2.3 FX controls and cross-border rules

Many emerging markets maintain:

• Capital controls on how and when funds can move offshore
• Specific requirements for documentation, purpose codes, or supporting tax certificates
• Restrictions or approvals for large-value cross-border payments or certain industries

These rules directly affect settlement currencies, repatriation timelines, and how you structure your cross-border flows.

2.4 Data and consumer protection

Growing digital adoption has driven:

• Data localization and privacy requirements
• Rules on dispute resolution, chargebacks, and fair treatment
• Expectations for clear pricing, fees, and FX disclosure

Payment providers must balance strong risk controls with a friction-light user experience, especially for recurring or subscription use cases.

3. Regional regulatory patterns

Regulatory maturity and style vary by region. Understanding this helps you calibrate go-to-market, timelines, and the partner model you need.

3.1 Latin America

Characteristics

• Payment regulations often derive from AML frameworks, with a heterogeneous landscape—from strict regimes to relatively light oversight.
• Regulators tend to be receptive and collaborative, but documentation and tax requirements can be extensive.
• Major schemes like Pix in Brazil combine central-bank-driven innovation with evolving licensing expectations for direct participants.

Implications

• Expect detailed scrutiny around FX, tax treatment, and documentation, especially for cross-border collections and payouts.
• Direct participation in instant schemes (Pix) or e-money frameworks typically requires local entities and licenses, so most global merchants rely on a licensed local partner.

3.2 Africa

Characteristics

• Regulatory frameworks can be extensive but operationally ambiguous, leading to frequent ad hoc exceptions and case-by-case approvals.
• Mobile money and wallet-based ecosystems are central to financial-inclusion agendas and tightly supervised by central banks.
• Regulators tend to value in-person engagement and operational visibility from providers.

Implications

• Be prepared for sandbox pilots or phased launch models, especially for cross-border use cases and FX.
• You need strong local compliance and operations support to interpret evolving rules and align to supervisory expectations across multiple countries.

3.3 Asia

Characteristics

• Many markets are building lean frameworks with consolidated payment laws, while also driving ambitious real-time payment and e-wallet ecosystems.
• Governments use regulation to enable QR-based schemes, e-money, and, increasingly, virtual asset frameworks (for example, moves to formalize VASP regimes).
• Cross-border use of domestic schemes (e.g., local-currency QR corridors) is expanding, sometimes under pilot or bilateral agreements.

Implications

• Product design must align closely with domestic rails and local consumer behavior, not just card-first models.
• Capital controls and licensing for cross-border flows can be stringent, particularly around USD outflows, requiring careful structuring with a licensed local intermediary.

4. Choosing the right operating and licensing model

Your regulatory exposure depends heavily on how you structure your payment flows and what role you (and your partners) play.

4.1 Direct licensing vs. partnering with a specialist

1. Full local build-out

• You set up local entities, secure payment-institution or equivalent licenses, integrate directly with schemes, and manage regulatory relationships.
• This gives maximum control but is capital-intensive and slow across 40+ markets.

2. Relying on a local PSP / aggregator

• A specialist like dLocal acts as Merchant of Record or local payment institution where applicable, holding licenses and connecting to local rails.
• You operate cross-border while delegating much of the local regulatory, tax, and FX complexity.

3. Hybrid models

• You may hold licenses in priority markets while partnering in others, especially where regulatory and FX regimes are more complex.

4.2 Understanding your provider's regulatory posture

When evaluating a partner, you should understand:

• Which entities and licenses they use per country
• Whether they act as a payment institution, e-money issuer, collection & payment provider, or Merchant of Record, and how that differs by market
• How they handle AML/KYC, sanctions screening, and transaction monitoring
• How FX, settlement currencies, and repatriation are structured, and what local rules underpin those models

Even when acting "only" as a collection & payment service provider (in markets where no formal license is required for that role), there are still AML and monitoring obligations aligned to the contractual role.

5. Practical steps to navigate regulatory complexity

5.1 Map your regulatory footprint before launch

For each target market, document:

• Who the contracting parties are (your HQ entity vs. local partner entity) and where services are legally provided
• Which payment methods and rails you'll use and their licensing implications (cards, bank transfers, instant payments, wallets, mobile money, cash)
• Any sector-specific sensitivities, such as remittances, gaming, crypto, or education finance

Use this to categorize each flow under a clear business model—PSP, collection and settlement, remittance, platform / multi-party, or Merchant of Record—and connect each model to a licensing and compliance position validated with your provider's regulatory team.

5.2 Align compliance and product design

Ensure your product roadmap accounts for:

• KYC and onboarding requirements for end users, sub-merchants, or corporate clients (for example, platforms using an embedded-payments solution).
• Documentation flows like withholding-tax certificates, proof-of-payment uploads, and invoice matching (especially in invoice-driven B2B cases).
• Local expectations around dispute handling, chargebacks, and fraud prevention, especially where dedicated fraud-management tools are in place.

5.3 Incorporate FX and tax into your operating model

Because FX controls and tax treatments are tightly linked to regulation:

• Agree early on settlement currencies, fees, and FX mark-ups that align with local rules and your internal risk appetite.
• Clarify tax responsibilities—who calculates, withholds, reports, and remits—and how documentation is generated and shared.
• Ensure your finance and AR teams can reconcile multi-market, multi-currency flows through a single dashboard or reporting layer.

5.4 Build direct lines to regulatory expertise

Given the pace of change—new instant payment schemes, e-money decrees, virtual-asset rules—you need:

• A dedicated internal owner for payments regulation (often in payments, risk, or legal).
• Strong communication with your partner's Regulatory Affairs team for new markets, product launches, or unusual flows.
• Processes for regulatory watch, so changes in one market (e.g., new e-wallet or QR regulations, updates to payment-service laws) trigger timely reassessment of your flows.

6. Common pitfalls and how to avoid them

1. Treating all emerging markets as a single regulatory block

   • In reality, there are major differences even within the same region (e.g., Brazil vs. Mexico vs. Colombia; Kenya vs. Nigeria vs. South Africa).
   • Use per-country profiles to understand local rails, regulations, and behaviors before designing a unified strategy.

2. Underestimating documentation and proof-of-payment flows

   • In B2B and high-value scenarios, missing tax certificates, incomplete purpose codes, or incorrect invoice references can delay or block settlements.
   • Invest in tools and processes that capture and reconcile these artifacts end-to-end.

3. Over-relying on card-only, cross-border processing

   • In many markets, alternative payment methods (APMs)—wallets, mobile money, real-time rails—dominate, and regulation encourages their use.
   • Local acquiring and direct connections to domestic schemes can improve authorization rates, compliance alignment, and user trust.

4. Launching platforms without a clear multi-party regulatory model

   • Marketplaces and platforms must manage responsibilities across buyers, sellers, and the platform itself, often under distinct regimes.
   • Using a defined licensing and Merchant-of-Record model helps coordinate payins, payouts, and split payments in line with local regulation.

7. Turning regulation into a strategic advantage

Handled well, regulatory alignment becomes a competitive moat:

• You can enter markets faster, with lower legal and operational risk.
• You build trust with regulators, who are often supportive of providers that drive inclusion and operate transparently.
• You deliver more reliable, localized payment experiences, improving conversion, retention, and LTV across emerging markets—the markets of the future.

By combining:

• A clear view of business models and licensing per country
• Strong AML/KYC and risk controls tuned to local realities
• Thoughtful FX, tax, and documentation workflows
• And a specialized partner with deep emerging-markets coverage

you can navigate payment regulations confidently—and focus on growth rather than regulatory firefighting.

Where to go next

• Use a dedicated emerging-markets payments handbook or internal playbook as a country-by-country reference for payment behavior and regulatory context. Take a look at dLocal's Emerging Markets Payments Handbook.
• Engage your payment partner's Regulatory Affairs team early when planning new markets, new methods, or new business models.
• Treat regulation as an integral part of your go-to-market and product design, not as an afterthought. Connect with dLocal's experts.