The deep dive: Digital payments in the APAC region

By Puja Sharma

The deep dive’ is our bi-weekly exploration of a relevant topic, hot trend or new product. For Prime subscribers only.

The Southeast Asian (APAC) economy has emerged as the roaring lion of the world economy. Asian nations each have their payment methods and preferences. Identifying and implementing these preferences will position companies for strong growth in Southeast Asian markets. In the APAC, non-cash payment transactions are growing rapidly. So rapidly that they are outpacing the rest of the world when it comes to the growth of a cashless payments ecosystem.

How does it work?

Among the APAC countries exhibiting significant eCommerce growth are India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand.

Even though 735 million Indians lack access to the internet, India has the highest growth rate for eCommerce in the world, illustrating its huge potential for continuing growth. To capitalize on the tremendous growth in the APAC region, it is important to know the preferred payment methods that vary significantly from country to country. Examining these trends will shed light on strategies for a payment integration that will work across the APAC region. It will also highlight the intricacies of a given nation that need to be noted to generate market traction.

The impact of Covid-19 has further accelerated several ongoing trends in APAC’s payments landscape, among which the growing number of connected and digitally active consumers, booming e-commerce markets, and regulators standardizing infrastructure and encouraging competition. All of these trends reinforced the need for innovative payments technology.

Beyond impressive revenue, payments in APAC are also providing banks with opportunities for delivering stand-out customer experiences, expanding consumers engagement, and boosting innovations in payments technology.

Who is under the radar?

Indians do significant cross-border shopping and rely heavily on app-driven purchasing. Among Indian eCommerce, eWallets and bank transfers dominate. eWallets have overtaken credit cards as the preferred method of payment in India. UPI-powered bank transfers and e-wallets were preferred by 53% of respondents, showing the evolving nature of these payment methods. One of the most technologically advanced nations in the world is Singapore. The online shopping market in Singapore is valued at just under $5 billion, with 60% of shoppers shopping internationally. Online payment methods in Indonesia are extremely diverse, with many people using eWallets, debit cards, bank transfers, and cash.

In addition to credit cards, over-the-counter cash payments remain very popular in Japan. In Japan, e-wallets are increasingly used for online payments.PayPay is gaining popularity rapidly and is expected to become Japan’s main e-wallet. South Koreans love shopping on international sites, with 75% of cross-border purchases made on U.S. sites. Online shopping is dominated by smartphones in the region.

Payment modes used at least once a week by consumers in the Asia Pacific: over half of the respondents have used at least one form of digital payment once a week. nine in ten customers have used mobile payments apps at least once during last year. consumers attributed convenience, accessibility, ease to use, and privacy to the high adoption rate of digital payment.

Why does it matter now?

With a region this big, there is no unified payment service provider. instead, the regional scene is fractured with a plethora of FinTech startups, open banking initiatives, and actual-time payments processors all vying for market proportion. And even as the latest international events may have accelerated digital adoption for an expansion of SMEs, there is nonetheless a loss of readability for plenty of merchants on the total volume of the bills landscape that they could capitalize on.

Hence businesses in APAC need to keep up with this shifting demand from their customers, and this is one of the reasons why the digital payments market here is growing at a rate of more than 30% a year. And with over 60% of the global population residing here, APAC is the driving force behind the 11% increase in global payments revenues, contributing nearly half of that value.