Mobile payments allow users to transfer money at point of sale in a physical shop, pay for items whilst shopping online, or even transfer money to friends remotely. And thanks to rising mobile penetration in the region, Asia Pacific, with over a billion smartphone users, is currently leading the world in mobile payment.
Connected Life reveals over half (53%) of connected consumers in Asia Pacific are using their mobile phones to pay for goods or services at point of sale via apps, compared to 33% in North America and 35% in Europe.
While North Asian countries such as China, Hong Kong and South Korea top the chart for mobile payments globally*, Southeast Asian mobile-first markets such as Malaysia and Indonesia are fast catching up.
This is in part due to the lack of legacy banking structures, as 73% of consumers in the region do not have a bank account. This means that mobile payment is an attractive solution for connected consumers. A case in point is in mobile-first Indonesia, where mobile payment use has increased from 9% in 2015 to 14% in 2016.
The evolution of Asian chat apps is also a contributing factor in the adoption of mobile payment. In recent years, popular chat apps such as WeChat and LINE have developed numerous payment services facilitating everything from taxi bookings and convenient store purchases to e-commerce sales. Mobile payment options within these apps allow consumers to complete their purchasing journey seamlessly, and have helped to establish these behaviours.
Aurelia Leopold, Director – Finance & Banking at Kantar TNS says: “The rapid uptake of mobile payments has been facilitated by a new breed of disruptors – digital businesses such as WeChat who are now competing with traditional banks in the fintech arena. They are able to do so because they have an existing user base, giving them the audience and the insight to effectively provide people with the financial services they want and need. They are also not tied down by cumbersome legacy structures or regulatory issues, allowing them to be more nimble. As mobile payments become the norm across Asia Pacific, traditional financial services companies need to find ways to embed their services within the ecosystem of the Asian consumer, or run the risk of becoming obsolete.”
The good news for brands is that the uptake of mobile payment across the region is likely to help facilitate the growth of e-commerce. However, the numbers suggest that e-commerce makes up a very small proportion of total sales across Asia Pacific, and still has a way to go before it reaches its potential.
Trust is a key barrier – for example, 31% of consumers in the Philippines would want a more secure payment system before they shop online. Besides security, customers also worry that the payment cannot be made when the Internet connection is lost.
Leopold continues: “There are clear patterns of adoption before a market begins to fully embrace e-commerce. Access is the first, with the lack of infrastructure and payment mechanisms preventing e-commerce from taking off. After this comes trust – consumers need to be confident in the payments they are making and the companies facilitating the transactions. That’s why it’s positive to see Asia Pacific leading the world in terms of mobile payments, but companies need to be doing more to improve ease of access and trust in the payment systems. As access and trust increase we will no doubt see e-commerce increase.”