New findings released from an Asia Pacific study shows the current state of digital payment adoption and how new Internet-based services affect payment trends across Australia, China, India, Indonesia, Japan, Malaysia, New Zealand, Singapore and Thailand.
Principle findings of this study by ACI Worldwide include:
- Nearly 40% of respondents used a smartphone wallet in India, second only after China (70%), as a result of increased uptake of NPCI’s Immediate Payment Services (IMPS) and innovation from e-commerce technology companies.
- More than 60% of respondents in India used both desktop and mobile devices to make e-commerce purchases, with millennials driving digital use.
- The importance of faster speeds and higher efficiency (48% in India versus 47% in Asia Pacific), and better rates (28% in India versus 15% in Asia Pacific) when choosing new methods of payments was stronger in India compared with other countries in Asia Pacific.
- Mobile recharges (60%), shopping online (58%), utility payments (58%), and paying for taxi services (52%) were the dominant smartphone wallet purchases in India.
Faster and more efficient payments – The Shared Economy
Findings across Asia Pacific highlighted that newer methods of payments with mobile platforms, such as smartphone wallets and online payment tools, are being driven by increasingly sophisticated Gen Y consumers aged 25-34 years old.
- Across the eight countries surveyed, 82% of respondents had used new digital payments.
- The top reason consumers use online payment services is to enjoy faster and more efficient payments (47%), followed by trust in online payments (21%) and better rates compared with other methods of payment (15%).
- The Shared Economy, which is built around the sharing of resources, is a major market driver in Asia Pacific. The top three ‘shared economy’ services across the region are taxi services, aggregated meal delivery and accommodations.
- Non-bank-led financial services, such as Alipay and WeChat Wallet, are disrupting emerging markets and challenging banks by becoming viable alternative payment methods, resulting in higher usage of online payment services (72.4%), smartphone wallets (32.8%) and mobile money (13.3%).
- Digital methods of payments are set to grow in tandem with shared economy services in Asia Pacific, especially for transactions where convenience, speed and seamlessness are valued. Examples of these transactions include taxi hire and car sharing services where 10% of respondents in the region are already paying for them with smartphone wallets.
“The region is rapidly moving toward real-time or immediate payments, driven by customers’ demand for faster and more efficient payments. Non-financial services have added to the dynamic competition, extending payments from online and mobile ecosystems into peer-to-peer payments within social apps such as WeChat and Line,” said Rachel Hunt, marketing director, Asia Pacific & Japan, ACI Worldwide.
“Asia Pacific’s FSIs, processors and retailers will need to transform their payment infrastructures to support any-to-any payment flows and offer innovative value-added services in a secure environment to compete.”
“The rising behavioural complexity in the younger consumer demographic is driving a shift in digital payment methods, and the choice is no longer simply between cash and cards. We are seeing a rise in unique Shared Economy business models, and non-bank financial services are quickly experimenting with new mobile solutions to cater especially to unbanked populations in emerging markets,” said Shekhar Ganapathy, general manager, South Asia, ACI Worldwide.
“Banks need to embrace these disruptions in order to innovate long-term winning strategies. We are entering a new era in payments, with developments focused on financial technology and customer experience that will shape our purchasing behavior on the mobile platform.”
Future payment trends
- The survey results across Asia Pacific and India point to the expectation for Gen Y consumers to drive further change in payments, with online payments and smartphone wallets showing a distinct skew toward Gen Y users (highest with 36.8% usage).
- Emerging markets have the potential to be a key force in driving new non-bank financial services, with these markets scoring higher in their intention to use new services on average (nearly twice as likely for smartphone wallets).
- The need for seamless and integrated payments within applications is crucial, given the increasing usage of Shared Economy services across Asia Pacific and a continued dependence on cash. Smartphone payments are very likely to replace cash as 62% of respondents were already showing a high intent to use in the future.
- The increased need for financial institutions to focus on security and real-time fraud management to safeguard the rising volumes of immediate and card-not-present payments for both the banked and under-banked in Asia.
- The need for greater collaboration in the payment ecosystem (banks, retailers, telco and fintech companies), as consumers diversify their payment behaviours (debit card (50.5%), bank transfers (50%) and online payment services (52.2%) used equally for online purchases on the desktop for Gen Y), to ensure that new methods of payments remain fast, seamless and secure.