In recent years, the digitisation of payment methods worldwide has been rapidly growing, with an increasing number of people using virtual payment methods.
According to data provided by Statista, the total transaction value in the digital payments market is projected to reach US$287.20bn during this year. The total transaction value is expected to show an annual growth rate (CAGR 2024-2028) of 9.77 per cent, resulting in a projected total amount of US$417.00bn by 2028.
This article analyses how the digital payments ecosystem is growing in the SEA region, driven by various factors, and what are some of the most commonly used payment methods in the region.
The most common virtual payment methods in Southeast Asia
Each country within the Southeast Asia region has cultures and populations with different demographic characteristics. Even so, it is possible to analyse and understand what some of the most used virtual payment methods in the region are.
Mobile wallets
In recent years, the mobile wallet market segment has grown rapidly in the Southeast Asia region.
According to Investopedia, a mobile wallet can be defined as “a mobile wallet that stores credit or debit card information on a mobile device, such as a smartphone, tablet, or smartwatch. Mobile wallets are a convenient way for you to buy things online or in stores that are set up to take payments through the wallet. They may also be more secure than physical payment cards because of the technology they use to protect your account information.”
This is how various companies such as Lineman, GrabPay, and DOKU have begun to offer millions of users across the region the possibility of having virtual wallets.
Claudio Cossio, Co- Founder of Meta Pool, said “Southeast Asia had a first mover advantage in regards to Digital payments; the big opportunity is how blockchain protocols add value to the super apps and/or compete with mobile offerings such as Saga and Jambo phones.”
Virtual credit cards
It is increasingly common to find companies and financial institutions that offer virtual credit or debit cards. These allow users to make payments for goods and services online and also in various applications such as Grab and Food Panda, among others.
Also Read: The future of payments in Singapore: From outages to innovation with BaaS
Cryptocurrencies
When choosing methods to make virtual payments, cryptocurrencies have positioned themselves as a growing option.
In this sense, more and more companies have begun to allow the payment of goods and services with cryptocurrencies, with the recent example of Grab incorporating cryptocurrencies as a means of payment.
Within the crypto market, stable cryptocurrencies are usually the most used when making payments.
Pavel Zavadskii, founder of Biqutex, added, “Cryptocurrencies are definitely one of the fastest growing methods of paying for goods and services in Asia, mainly due to low transaction fees. Also, one of the success factors is the absence of unnecessary regulatory barriers and, accordingly, the opportunity for any business to quickly start accepting payments in crypto”.
What are the main factors behind the growth of the crypto ecosystem?
We can find various economic, technological, and cultural factors behind the growth of digital payment methods in SEA; some of the main factors behind the growth are:
New technologies and infrastructure
In recent years, new technologies have impacted populations in various countries of the SEA region. Thanks to the advancement of 5G mobile infrastructure and faster internet connections, there has been an impact on the advancement of the use of digital payments.
E-commerce growth
With a booming e-commerce sector, there is a greater need for digital payment solutions that facilitate online transactions.
Financial inclusion
There are large numbers of people in the SEA region who still do not have access to the traditional financial system. Digital payments offered by startups and crypto companies have contributed to increasing levels of financial inclusion in the region, increasing the use of virtual payments.
Also Read: Cross-border payments: Can incumbent banks compete with fintechs in Asia?
Government support
Governments and regulators are actively promoting digital payments to build the necessary infrastructure for a sustainable digital economy.
A growing demand for digital payments
There is an increasingly larger demand for people who prefer not to use cash and have more secure and efficient payment methods. In this sense, this growing demand has rapidly impacted the growth of virtual payments.
The surge of cryptocurrencies
In recent years, the cryptocurrency market has grown drastically, moving from a market of a few to a massive market.
In this sense, the surge of the crypto market has had a significant impact on the change in consumer preferences, opting more and more to operate with cryptocurrencies instead of cash.
We can conclude by understanding that there are various types of virtual payment methods in the SEA region, which are being driven by economic, cultural, and technological factors.
—
Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.
Join our e27 Telegram group, FB community, or like the e27 Facebook page.
Image credit: Canva
The post Tapping into a cashless future: The rise of digital payments in Southeast Asia appeared first on e27.
