Consumers in South East Asia may now rely on real-time payments (RTPs) to buy goods and services equally as much as they depend on cash. Research conducted by ACI Worldwide and YouGov[i] estimates that 61% of consumers in Indonesia, Malaysia, Thailand and Singapore now prefer to make payments using RTP. That is the same number as do cash (also 61%) and significantly more than those which opt for digital wallets using cash or card top-ups (56%) or credit cards (30%). Over half of those surveyed also reported using RTPs more frequently than they did before the pandemic avoiding payment methods involving any form of physical contact.
The transition coincides with multiple developments in the region, including the greater penetration of lower-cost smartphones, faster, more reliable mobile network coverage, increased eCommerce activity and greater engagement with banking and financial services apps. The average speed of mobile Internet connections in Indonesia jumped almost 25% year on year to 17.3Mbit/s in January 2021 according to Ookla speed tests, mirroring similar expansion in Singapore (up 17% to 67Mbit/s) and Thailand, which almost doubled its average mobile download speeds to 52Mbit/s.
56% of Internet users between the age of 16 and 64 in Singapore and Malaysia used a banking or financial services app during the third quarter of 2020, according to GlobalWebIndex. That number is even higher in Thailand (68%) but drops to 39% in Indonesia. Statista’s Market Outlook for eCommerce estimates that Indonesia saw a 49% surge in the value of consumer goods purchased over the Internet in 2020 (US$30.3bn), with similar expansion in Thailand (up 43% to US$7.3bn), Malaysia (up 37% to US$4.5bn) and Singapore (up 32% to US$2.4bn).
The total number of people making digital payment transactions – which includes goods and services purchased online and in physical stores using digital point of sale (PoS) terminals – also saw significant expansion in all four countries. In Indonesia, for example, the combined value of those purchases rose almost 28% year on year to US$35.7bn in 2020, according to Statista’s Digital Market Outlook for Fintech. The equivalent rate of growth in Singapore was 24% (US$15.4bn), with Malaysia registering a 22% rise (US$12.3bn) and Thailand seeing 19% growth (US$9.1bn).
India leads global RTP charge
Corresponding use of RTPs such as instant payments, QR codes and social media payments has also surged across the globe since the onset of coronavirus, with smartphone apps such as Zelle, Venmo and Paypay replacing cash cheques and IOUs in multiple countries. India leads the world in terms of adoption, transaction volumes and value, however. It accounted for 25.5bn RTP transactions in 2020, according to ACI Worldwide, followed by China (15.7bn), South Korea (6bn) and Thailand (5.2bn).
The 7th annual FIS global RTP report also estimates that India remains the world’s single largest market for RTPs, generating 41m payments per day. That is primarily due to the simplicity and success of the united payments interface (UPI) introduced in 2016. UPI was developed by the national payments corporation of India (NCPI) to make inter-bank transfers quicker and easier and is regulated by the Reserve Bank of India (RBI).
Consumers sending and receiving instant payments via UPI need only a smartphone and an account with a UPI-member bank, which currently stands at 229 in the country. Leading examples by transaction volume and value include PhonePe, Paytm and Google Pay, with others being Amazon Pay, Yes Banks and BHIM.[ii]
While India leads the world, FIS estimates that real-time payment systems had been activated in 54 countries by 2019, up fourfold since 2014. Australia’s NPP supports QR payments, such as Singapore’s FAST and Sweden’s BIR. China has its own RTP system – the Internet Banking Payment System (IBPS) but it is commonly used to fund eWallet accounts, making the actual payments.
South-East Asia is also set to rapid RTP expansion over the next four years as consumers in the region maintain the payment habits which were newly adopted during the pandemic. While transaction numbers are still low in Malaysia (69m), it is the second-fastest-growing market in the world according to ACI Worldwide, forecast to see a compound annual growth rate of 84% over the next four years. Singapore generated 138m RTP transactions in 2020, and its CAGR is estimated to hit 23% between now and 2025.
Under assault from multiple sources, including RTPs, eWallets, direct carrier billing and other forms of digital payments, the declining use of cash to fund the purchase in an increasingly electronic banking world could now start an even steeper downward trajectory.
[i] Real-time payments now as popular as cash in Southeast Asia, Payments Industry Intelligence, 7th July 2021
[ii] Google Pay Improves UPI Market Share; But PhonePe Still #1 UPI App In India, Trak.in, 9th June 2021