But what is driving APAC users to make more mobile payments than their peers in other countries? Scale and smartphone penetration are undoubtedly significant factors. With their large populations, two APAC countries alone – China and India – are estimated to provide more than half of all the smartphone users in the world.
A Tech Research Asia report published in 2018 highlights other trends, notably a desire for a secure, smooth payment experience across whatever channel or device the buyer wants to use and a willingness to adopt new ways of paying for goods and services, particularly amongst younger generations.
PwC’s Global Consumer Insights Survey 2019, which draws its conclusions from 21,000 respondents in 27 different countries, believes APAC consumers are “more socially engaged” than their counterparts in Europe and the Americas. A more significant percentage of respondents in Thailand, Indonesia, and Vietnam (roughly half in each case) make purchases directly through social media platforms like Instagram and Facebook, for example.
The enthusiasm of Gen-Z and Millennials for new technology doesn’t tell the whole story, though. Older consumers without bank accounts or landline-based telephones too are going digital and mobile to access essential financial services. In its recent report The Mobile Economy: Asia Pacific 2019, the GSM Alliance (GSMA) highlighted mobile payments as a pivotal contributor to socio-economic growth in the APAC region as innovative suppliers find new ways to conduct business. Examples cited included CashUp – an Indian USSD-based money transform platform that enables bank to bank transfers and Impact Terra – a mobile platform in Myanmar that provides smallholder farmers with information and best practice to improve their productivity.
The scale of mobile payment app usage in China dwarfs any other country on the planet, however. The two most popular platforms – WeChat and Alipay – had over 1.5bn users between them in 2018 and facilitated US$2.9 trillion of payments in 2016 according to payments consultancy Aite Group. At the end of 2017, 47% of China’s rural community was using one or the other for mobile payment services estimated the government-run China Internet Network Information Center.
India is another hotbed of mobile payment activity with the number of merchants accepting digital payment modes – including mobile wallets, unstructured supplementary service data (USSD), the National Payments Corporation of India’s unified payments interface (UPI) and QR codes – having increased to over 10m in the space of three years according to research from KPMG. In its report “Fintech in India – Powering mobile payments” the global accounting and professional services firm also notes the role played by the Reserve Bank of India (RBI) and central and state governments in ensuring the country has state of the art payment systems which are secure, efficient, fast and affordable.
Political stimulus certainly appears to play a big part in growing mobile payment ecosystems on a nationwide basis as governments aspire to realise the socioeconomic benefits that a digital economy can bring. The 2018 Government E-Payments Adoption Ranking (GEAR) study conducted by the Economic Intelligence Unit – which assesses the extent to which respective national governments are actively nurturing the adoption of digital payments adoption – marks China (48) and India (28) with the two highest scores amongst all 73 countries it rated.
That extent of that socioeconomic impact is reflected in the diverse range of transactions being conducted through various forms of mobile payments. The GSMA found that 27% of smartphone users in developed Asian countries such as Japan, China, Malaysia and South Korea had used their handsets to book transport in 2018. Over half (56%) made online purchases, 42% transferred money, 24% used contactless payment technology and 23% paid their utility bills.
While the GSMA’s transaction numbers are significantly lower for less developed countries within the region (including Vietnam, India, Indonesia, Myanmar and Bangladesh) that is because the scope for smartphone and service penetration within these geographies is much higher, Mobile data consumption within the Asia Pacific region is expected to grow by almost four times between 2018 and 2024, driven primarily by 5G penetration and increased smartphone adoption. A report from Global Market Insights suggests that the APAC mobile wallets market alone will grow to be worth over US$140bn by 2024, up from US$35bn in 2017.
According to Tech Asia, APAC countries will also incubate more payments technology innovations than anywhere else in 2020 – with mobile wallets, contactless, blockchain and cryptocurrencies all playing a leading role. With so many different technologies being used by so many different segments of its population, any bricks and mortar or digital provider looking to successfully scale their business across the APAC region will need to carefully develop and implement an integrated payments strategy that covers all the available bases.