Non-banks disrupting APAC payments space: Survey

• Non-banks the choice for most of Gen Y, Singapore leading the Asean charge
• Driven by Shared Economy (eg: taxi services, meal delivery, 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, according to a survey commissioned by ACI Worldwide and conducted by IDC Financial Insights.
 
This is resulting in higher usage of online payment services (72.4%), smartphone wallets (32.8%), and mobile money (13.3%) in Asia Pacific, ACI Worldwide said in a statement.
 
The Asia Pacific study on the current state of digital payment adoption and how new Internet-based services affect payment trends was conducted across Australia, China, India, Indonesia, Japan, Malaysia, New Zealand, Singapore and Thailand.
 
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 Generation Y consumers aged 25-34 years old.
 
Across the eight countries surveyed, 82% of respondents had used new digital payments, ACI Worldwide said.
 
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.
 
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 via smartphone wallets.
 
“The region is rapidly moving toward real-time or immediate payments, driven by customers’ demand for faster and more efficient payments,” said Rachel Hunt, marketing director, Asia Pacific & Japan, ACI Worldwide.
 
“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.
 
“Asia Pacific’s FSIs (financial services industries), 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,” she added.

Singapore leads in Asean
 
The survey also found that in the Asean region, Singaporeans lead in the use of digital wallets:
 

• More than 77% of survey respondents have used online payment services such as PayPal and Google Checkout, with the top reason being that the services are faster and more efficient (48%), followed by them being trusted over competitor payments (27%).

• Of the respondents who have carried out online shopping activities on Facebook, Line and WeChat, almost 50% have also purchased virtual products on these social platforms.

• 22% have used a contactless wallet accessed through a smartphone; the most typical use cases were for offline shopping (61%) and paying for services such as taxis (59%).

Future payment trends

“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,” said Leslie Choo, general manager and vice president, Asean & Greater China, ACI Worldwide.
 
“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.
 
“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 behaviour on the mobile platform.”
 
ACI will be releasing the second part of the research findings in early October, focusing on the future of digital payments in Asia and how financial services will likely further evolve with changing consumer choices and payment preferences in Asia Pacific.
 
The report can be downloaded here.
 
Related Stories:
 
Week in Review: Bank CEO joins What’s Next conference lineup
 
Banks don’t hold the future of banking: Akamai exec
 
Asia at the epicentre of the digital banking shakeup
 
APAC outpacing rest of the world in mobile payments: IDC
 
Disrupt: Gaps in payment ecosystem that entrepreneurs can fill
 
 
For more technology news and the latest updates, follow us on Twitter, LinkedIn or Like us on Facebook.