The payments revolution is a truly global affair yet, at the regional level, Asia undoubtedly stands at the forefront of payments innovation. Driven by e-commerce, it is a position that requires close management if it is to deliver on expectations.
Extraordinary rates of growth are predicted for e-commerce across the region by Worldpay, with five-year compound annual projections of 21.3% in Malaysia, 20.2% in Vietnam, and 18.6% in the Philippines and Indonesia telling a compelling story.
China remains on a path towards widespread adoption of digital wallets, led decisively by Alipay and WeChat Pay. These app-based payment tools are seemingly redefining the scope of the possible. Certainly, Chinese consumers favour the seamless integration and trusted environment offered by these all-inclusive apps.
Indeed, wallet use is ubiquitous in online China, accounting for nearly two-thirds of e-commerce transactions. But Worldpay also notes that eWallets are so popular among Chinese consumers that they also lead payments at the point of sale, representing more than a third of card-present market share.
Worldpay is forecasting growth and dramatic shifts in payments in India too. The world’s second largest population is far from saturated in either internet access or mobile phone penetration. This translates into projected e-commerce growth at 21.2% CAGR for the next five years.
The rapid upgrade of payment rails across Asia Pacific is accelerating the trend towards mobile payments. The use of overlay solutions such as QR codes are key features of real-time payment schemes in the region, far more so than in other schemes around the world.
The push for financial inclusion is also fuelling the growth in real-time payments across the region as governments see an opportunity to use new technology to provide financial services to citizens who previously did not have bank accounts.
However, as payment rails proliferate and diversify across the region, so do the challenges and opportunities.
On the downside, with payment methods varying widely across the region, both between and within countries, and across the spectrums of development from urban to rural, a complicated and demanding payment landscape is emerging. The major positive is that Asia seems to be offering almost infinite promise for commerce and payments, and this is something that businesses across the world can leverage.
The bottom line for Asian payments is this: for critical mass to be reached, regulators, banks, payment solution providers, and large corporates must work together. The prize for getting it right is surely too big to ignore.