With the rise of convenient financial technologies (fintech), consumers are increasingly paying for everyday goods and services via mobile. New data indicates that this trend is particularly prominent in the Asia-Pacific (APAC) region, which is currently leading the world in terms of mobile payments.
This study was conducted by global insights consultancy Kantar TNS, who polled over 70,000 consumers. Kantar TNS found that 53% of APAC’s connected consumers use mobiles to buy goods and services via apps, in contrast with 35% for Europe and 33% for North America. This was driven by APAC’s one billion strong smartphone user base and the evolution of Asian chat apps to include payment facilities.
According to Payment Week, Kantar TNS broke their APAC’s study’s findings down to shed more light on mobile payment practises. China was found to be the largest mobile payment market on earth, with 77% of consumers having used these facilities in the past and 40% doing so weekly. Hong Kong and South Korea followed, with 32% and 31% of those polled using mobile payments weekly.
The mobile payments trend is particularly strong in Singapore, which ranks first globally for mobile penetration and is increasingly becoming a cashless society. Over half (57%) of connected Singaporean consumers have used mobile payments, with 27% doing so weekly. Broken down along age lines, weekly mobile payment rates in Singapore were high among the 31 – 45 (33%) and the 16 – 30 (31%) age groups, while 37% of 46 – 65s have used mobile payments in the past, but only 11% do so weekly.
Also, Kantar TNS discovered that the trend is becoming popular in mobile-first nations like India, Malaysia and Indonesia, due to insufficient traditional banking infrastructure. 73% of South-East Asians do not have a bank account, so mobile initiatives can provide these consumers with access to previously-inaccessible services. In Indonesia, for instance, mobile payments rose from 9% in 2015 to 14% in 2016, illustrating this heightening demand in nations with significant unbanked populations.
Meanwhile, Kantar TNS argued that the rise of mobile payments in APAC is being assisted by the evolution of Asian chat apps. Programmes like WeChat and LINE have developed various payment options in recent years, such as the former’s WeChat Pay, making it possible for consumers to do everything from booking taxis to buying products, via mobile. The solutions which come with these apps provide consumers with a seamless experience, incentivising them to keep paying by mobile.
Commenting, Kantar TNS’ Director of Finance and Banking, Aurelia Leopold, said: “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. With smartphone penetration so high in Singapore, mobile payments will eventually become the norm.”
Explaining the challenges that the APAC mobile payments sector faces, Leopold noted: “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.”
APAC leads the mobile payments sector globally, because there is more appetite for these services in this region, than anywhere else. It is key to note that many APAC nations are using a top down regulatory approach to develop cashless societies. Its mobile payments market is expected to grow to just over US$270bn by 2021, with the active customer base projected to almost double concurrently, reaching around 130.8m, so there is plenty of room for mobile payments to expand further in APAC.
However, APAC governments must address the issues outlined by Kantar TNS, to ensure mobile payment firms can tap into this potential. A key issue is trust – as online payment systems are a favourite target of cyber-criminals. In a recent poll, NTT DATA found that over half of global consumers believe that cash is safer than mobile payments, but the latter are safer than people think. Therefore, APAC governments must provide mobile payment firms with the regulatory environment needed to allow them to win over reluctant consumers, to boost growth in this key segment going forward.