The power within the payment value chain in Asia is shifting to Gen Y consumers aged 25-34, a new study finds.
Consumers are increasingly drawn to new payment methods, such as smartphone wallets and online payment tools. 72%t of respondents across 9 countries in the Asia Pacific region claimed to use emerging digital payment methods, with 82% stating that they intended to use them in the future.
Gen Y Consumer interest in new payment methods
According to the IDC Financial Insights/ACI Worldwide survey, a combination of 2 trends in Asia is driving new payment method adoption. The first is the continued growth of smartphone ownership across the region, spurred by affordable Android phones from Chinese manufacturers.
The second is the rise of what the authors dub ‘the next billion’ users — those who already own a mobile phone but are accessing the internet for the first time. As this group upgrades to more functionality-rich smartphones, they will become a key addressable market for the telecoms and banking sectors.
The interdependent relationship between mobile and new payment methods cannot be overstated. For many in the region, mobile phones represent the only or primary method of accessing the internet and e-commerce.
Credit and debit card usage across the region varies dramatically between mature and emerging economies. Cash is still king for offline payments within the region, including cash on delivery for e-commerce sales among the unbanked or under-banked population. The opportunity to replace this with newer payment methods and reduce the reliance on cash is huge. Smartphone wallets may be a natural cash replacement, but not necessarily card replacement.
Consumers are increasingly opting for new digital payment methods, but this depends heavily on the type of transaction, value and context of the purchase. Context is everything.
Higher ticket items usually require large amounts to be stored in the digital wallet, which consumers may be reticent to do, due to security concerns. However, for low-value payments, consumers may be willing to sacrifice some level of security for ease and convenience.
The survey was conducted with 2,000 respondents across 9 countries: Australia, China, India, Indonesia, Japan, Malaysia, New Zealand, Singapore and Thailand.
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