Expersight Research
Introduction
Over the last decade, the Asian banking market has been on the cusp of a financial revolution. Being one of the most economically dynamic regions in the world, there is enormous potential for digital platforms to thrive here, including internet banking and digital wallet solutions.
Market research has shown that in the wake of this ongoing Covid-19 crisis, there has been an ever-increasing rise in the number of transactions taking place online, across the various e-wallet digital solutions. For instance, the award-winning fintech payment service and e-wallet solution, STICPAY, has garnered a vast customer base in Southeast Asian countries since its inception in 2018. Given its popularity in the e-wallet solution market, STICPAY has attracted concentrated users from the Asian markets, particularly Singapore, China, Malaysia, Indonesia, and the Philippines, despite being a UK-based e-wallet solution company.
Surveys conducted over the last year showed that as many as 74 percent of merchants and businesses cited that they are willing to accept e-wallet payment options. Not only this, but over one-third of Asian consumers also said that they were willing to shift their traditional banking activities, such as using credit cards and money transfer, to various e-wallet solutions available in the market today. In fact, in countries like Thailand, China, Malaysia, India, Vietnam, Singapore, and Indonesia, more than 12 percent of consumers have already moved on to non-banking e-wallet solutions. What is more appealing is the fact that much of this transition towards the e-wallet solution market had already begun long before the Covid-19 wave hit these Southeast Asian countries.
Data collected from Asian countries, such as India, China, Singapore, Thailand, Indonesia, Malaysia, and the Philippines shows that there have been over 10 million e-wallet transactions listed across these countries in the last two years! Singapore alone has contributed to 34 percent of these e-wallet transactions, that too with a population of over 6 million people. Looking at the e-wallet solution market trends in these countries, it is quite clear that people have become almost twice as comfortable with using e-wallet solutions and e-wallet money as compared to credit and debits cards.
Keeping in mind the diverse population residing across the many Asian countries, STICPAY not only supports the majority of the languages spoken in these regions, rather it also serves as a connector for cross-border payments between Asian consumers/businesses and their parallel European businesses.
Also referred as a mobile wallet, the e-wallet solution market is picking pace in developed Asian countries like Singapore and China as a result of an ongoing spike in the smartphone market. This, in turn, has resulted in promising economic growth, hence solidifying the reliability of these new-age e-wallet solutions in the Asian markets.
E-Wallet Market Size, Growth and Future in Asia
Asia is a mobile-first region. The continent has witnessed an explosive rise in the adoption of mobile users making it a leading choice for global businesses. A number of factors such as affordable devices, enhanced network reachability and a progressive middle class have all steered 90% of South East Asia’s internet users to the mobile. These assertions from Google’s e-Conomy SEA Spotlight 2017 Report have caught the interest of digital wallet products in the west. It is safe to believe that by end of 2023 the global digital wallet market will value 2.1 trillion and Asia will be at the helm of it.
In fact, embracing digital wallets as an alternative to traditional channels may have already doubled due to COVID-19 restrictions. However, for the most densely populated corner of the planet in SouthEast Asia, the trend has just started with impressive numbers.
By July 2020, 49% of commercial bank customers in the urban parts are already using digital wallet services. As per the same report from BCG, the consumption could shoot to 84% in the next 5 years. In fact, one-third of these urban consumers could migrate their financial services such as credit/debit cards, loans and savings accounts to non-bank entities in the digital ecosystem.
Furthermore, the BCG report anticipates close to 12% of credit card businesses in Malaysia, Thailand, Indonesia and Vietnam could be solely handled by digital wallets from non-bank finance institutions.
Countries like China and India that are home to more than 50% of global mobile users have been instrumental in putting the APAC region on the top of the pyramid.
The Global Market Insights report that surveyed the market in-depth foresees the product market value touching USD 140 billion in next 5 years.
The 2020 pandemic emerged as a significant hint at the highly adaptive mobile user in India, Singapore and South Korea. In April 2020, the Reserve Bank of India (RBI) confirmed the doubling of transactions to 87 million through mobile wallets.
The restrictions for contactless payments saw millions of users subscribing to popular brands like Google Pay and quickly followed by new players such as STICPAY that cemented a strong foundation in a record timeline. In fact, STICPAY recorded a 300% growth in a short span of 2.5 years, making it one of the fastest growing E-wallet solutions in the Asian region in the last few years.
An interesting report collaboratively done by Hootsuite & We Are Social revealed the limitless reach of mobile users in Southeast Asia.
- The world’s highest Mcommerce penetration was recorded by Indonesia (76%) followed by China (74%).
- Thailand (74%) outranked European majors such as Sweden (71%) and Turkey (68%) in mobile banking penetration
- Percentage of mobile wallet users paying for goods & services in Thailand, Malaysia, The Philippines and Vietnam outranked the global average.
Scope of Opportunities
The fate of digital wallets depends upon the growth in mobile users. Alone APAC region will see an explosive rise in adoption with 663 M users by 2025. Progressive economies like India have experienced a mobility revolution with the number of users increasing from 242 M in 2015 to an expected 500 M in 2023. This has compelled more banks to render all net banking services on mobile such as send/receive/hold money, check balance and even make investments.
Going forward, digital wallets will continue to benefit from the surging adoption in the next 5 years. Not to miss, the rise of Mcommerce (ecommerce on mobile) has greatly influenced the way consumers make transactions. In 2018, 7 Asian countries made it to the list of top 10 global countries with the highest Mcommerce penetration rates. This means an average Asian user is more adaptive to purchasing on apps than anybody else in the world.
And ultimately, it is the broadest coverage of the rural population in the world that resides in Asia and produces a lucrative opportunity for e-wallet businesses to tap upon the unbanked users. As telecom has outreached banking services, digitization of transactions in these areas can create a parallel industry of its own.
Challenges in venturing into South East Asia
However, exclusive legal compliance in every country is a bottleneck for most mobile wallet products. Ironically, two of the most mobile-friendly countries, India and China have the toughest legal compliance to sail through. New mobile wallet products are found entangled with financial and consumer regulations that increase their time-to-market.
The challenges of the fastest growing product market don’t end here. The rise in mobile fraud has cautioned potential user from using digital wallets. Although the Reserve Bank of India (RBI) has made KYC validation mandatory for all digital wallet services, fraud transactions have been reported multiple times. During the 2020 lockdown, 31% of digital wallet users in the country were victimized by fraudulent attempts to clone payments.
This has led to a restrained outlook towards e-wallet solutions among the users. Most of them believe these solutions are a greater risk and hardly solve anything. For those businesses eyeing the Asian market, resurrecting the trust in the product will be a great challenge.
Fastest Growing Asian Players
An associate of popular Alibaba Group Holding, the Ant Financial Services Group made a breakthrough and pioneering entry into the e-wallet solutions markets across Southeast Asia with AliPay. Given the multi-trillion tourism industry, the AliPay e-wallet solution application enables both inland consumers as well as foreign travelers to make a variety of online transactions without the requirement of a local mobile number or bank account of any particular country. To make the experience more seamless for people visiting these countries, AliPay enables transactions using a prepaid card provided by the Bank of Shanghai, which comes with 90-day validity. Data shows that AliPay enjoys a user base spanning over 700 million consumers, out of which 200 million users are reportedly based out of China across other Southeast Asian countries.
STICPAY is a prominent e-wallet solution provider founded in London, the United Kingdom in 2018. Over a short span of two years, this e-wallet solution provider has won many awards in Asia for its seamless user experience and popularity in both European and Asian countries. With a diverse user base that expands over several developed and developing Southeast Asian regions, STICPAY has shown rapid growth, that too without an active marketing strategy in place. The wide range of merchant networks also works in favor of STICPAY. E-commerce, online gaming, trading, entertainment are just a couple of merchant network options that this e-wallet solution provides to its consumer base in the Asian countries.
Yet another advantage of using STICPAY is the fact that all the e-wallet services are provided using their own internal resources. However, one of the prominent attractions of the STICPAY e-wallet solution is that it acts as a reliable connector for cross-border transactions between Asian and European businesses and consumers alike.
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WeChat Pay
WeChat Pay is yet another e-wallet solution that has taken the Asian business market by storm. This e-wallet solution connects each user and provides a larger reach towards prospective customers or businesses. One of the peculiar features of WeChat Pay is in-app web-based payments. Using this feature, businesses can push messages and notification to their customers, provided that they have WeChat Pay enabled on their smartphones. As of now, WeChat Pay is steadily making its way into other Southeast Asian countries and regions. With a customer base already ranging over a billion, the WeChat Pay e-wallet solution definitely holds the potential to break the European markets in the times to come.
Across many of the European countries, an e-wallet often translates to PayPal by default. Studies prove that almost 70 percent of the online transactions taking place across Germany, the United Kingdom and France are done through PayPal. Needless to say, PayPal has emerged as a go-to e-wallet solution in the Asian market as well. With PayPal investing in China’s GoPay e-wallet solution, it has yet again proved to be a key player in the Asian e-wallet solution market scenario in the next 5 years.
PayU is an end-to-end e-wallet as well as a payment gateway solution. It is one of the prominent payment gateways that customers and online businesses use to make transactions. With almost 100 percent success rate, PayU provides payment solutions ranging from internet banking, credit cards, debit cards, and UPI among others. With a commendable presence across multiple platforms and custom checkout experience, PayU has emerged as one of the most widely used e-wallet solutions in the Asian market today.
Key Thought Leaders
- Joel Yarbrough – The Vice President of Asia Pacific at Fintech Solutions Provider, Rapyd and the former head of Product at Grab, Joel Yarbrough said, “The numbers aren’t surprising at all. An enormous wave of Southeast Asians are moving from working to the middle class. They used to lack access to traditional banking and credit, but are now turning to new digital channels that are democratizing financial access across the region. The more complex payments will help plug wallets into larger ecosystems, reduce consumer friction, and directly address stressful or emotionally painful issues – whether that’s moving funds overseas or caring for your family”.
- Anirban Mukherjee – the CEO of PayU India, Anirban Mukherjee said, “In its next phase of growth, the company wanted to create a “full regional fintech ecosystem through innovations focused on payments, credit, and fintech investments in the region.” He further added, “India is the largest market for PayU, and it was witnessing unprecedented growth here, and was looking to fortify its team with leaders”.
- James Bay, STICPAY’s Customer Service Director, stated: “Featuring innovative technology and partnering with local financial institutions in Asia, both STICPAY’s global customer base of end-users and merchants can conduct transactions in a fast, secure, and cost-efficient way. STICPAY’s goal is to fulfill Asia’s rising demands for efficient digital payment solutions in the COVID-19 era and beyond. As STICPAY has a global presence in over 190 countries while featuring substantial growth in the recent months, the fintech company can potentially become a leading solution among Asia’s e-wallets and digital payment services as a key player facilitating the continent’s economic revival.”
How Can Businesses Ace to Become Leader in Asia?
Given the growing awareness and competition in the global e-wallet solution market, it has become inevitable for businesses as well as consumers to become a part of this digitalization wave. For beginners, businesses should be open to the idea of adopting multiple e-wallet solutions, which would give consumers the option to make payments conveniently, hence expanding their customer base. For instance, new users can find the wallet QR code scanning system a little intimidating as compared to seasoned consumers. Hence, adopting multiple e-wallet solutions for their business will make it easier for businesses to cater to a wider audience.
Also with the rising stream of new and improved e-wallet solutions in the Asian market, merchants and businesses must integrate multiple payment options of checkout. With the inclusion of an easy-to-use e-wallet solution, businesses can help remove digital friction from their consumer’s shopping experience.
What is in it for the merchants and businesses?
By accepting digital e-wallets, businesses can operate at lower prices. Not only this, but research has also shown that merchants with e-wallets solutions have more success in increasing their conversion rates at the time of checkout. This is because e-wallets add immense convenience to the checkout process, making it as quick and seamless as sending a text message.
Future Scenario for e-Wallet Solutions in Asian Markets
Looking at the current market trend, it is estimated that the global e-wallet industry will witness a spike of approximately 15 percent by the year 2023. On the financial front, the market is estimated to be valued at USD 2,100 billion dollars in the next 4-5 years. Needless to say, the Asian e-wallet solution market will be a primary contributor to this. Similarly, we can expect to see a steady spike in the adoption rates of different digital wallets, with contactless cards already being heartily adopted in many parts of the world. This turns out to be an exceptionally lucrative scenario in most developing Asian countries. This is because millions of low or middle-income populations in Asian countries are now finally getting access to e-wallet solutions and contactless cards, irrespective of their income groups.
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