// INDUSTRY INSIGHT //
Mustafa Syed, Senior Manager, PwC
Brazil’ s central bank has entered the second phase of its Drex CBDC pilot, working with major payment processors including Mastercard and Visa. This collaboration targets improved transaction efficiency and broader financial inclusion, with implications for how small businesses interact with digital payment infrastructure. The initiative expects full launch in early 2025, potentially serving as a model for other large emerging economies.
Cross-border payments represent another frontier where CBDCs could deliver significant benefits. Project mBridge, involving central banks from China, Thailand, the UAE and Hong Kong, has reached its minimum viable product stage. The platform supports real-time, peer-to-peer international payments, offering small businesses the kind of efficient cross-border settlement that was previously available only to large corporations with sophisticated banking relationships.
The reality check
Digital payment platforms have made progress in addressing some of these challenges, particularly across Africa and Asia. Mobile money services have brought millions into the digital economy. Yet the landscape remains fragmented, with different platforms unable to communicate effectively, fees accumulating across multiple intermediaries and trust in private providers varying significantly by market and region.
A new financial infrastructure
CBDCs represent a different approach entirely. As digital versions of sovereign currency backed by central banks, they carry the credibility of government backing while potentially operating at much lower cost than traditional banking infrastructure. Unlike cryptocurrencies, they maintain stable value and legal tender status. Unlike private payment platforms, they can serve as neutral, interoperable rails that don’ t favour particular service providers.
Technology enables possibilities that current systems cannot match. Payments could settle instantly rather than requiring days for clearing. Programmable features could automate routine business processes, with invoices triggering payments when delivery conditions are met or tax obligations calculating and remitting themselves. For resource-constrained small businesses, such automation could free up time and capital for actual business development.
Recent developments demonstrate how this potential is beginning to translate into practice. India’ s e-rupee pilot has expanded beyond traditional banking institutions to include FinTech companies, directly improving SME access to digital payment options. The acquisition of Digiledge by PayPal-backed Mintoak for US $ 3.5 million illustrates how private investment is flowing toward CBDC integration, enabling established banks like HDFC and SBI to offer specialised digital currency services to small business customers.
Despite these promising developments, the gap between CBDC potential and current reality remains substantial. Recent survey data reveals that 56 % of emerging market central banks express concerns about adoption challenges, with low user uptake and infrastructure gaps leading their list of obstacles. Additionally, 31 % of central banks have delayed their implementation plans due to regulatory uncertainties and technical complexities.
Nigeria’ s experience provides a sobering case study. Despite launching eNaira in 2021, the initiative has achieved limited penetration, with only 13 million wallets created nearly three years post-launch in a country of over 200 million people. This suggests that technology deployment alone isn’ t sufficient to drive adoption. User experience, education campaigns and compelling use cases prove equally important.
Infrastructure gaps persist across many emerging markets. Reliable Internet connectivity remains inconsistent in rural areas where many small businesses operate. Smartphone penetration, while growing rapidly, hasn’ t reached universal levels. Digital identification systems, essential for CBDC
36 Intelligent SME. tech