Along with the impact of COVID-19 causing social distancing globally, the booming of the e-commerce market seemingly dives the rapid adoption of online payment.
The industry faced rapid-fire consolidation, rising omni-channel commerce, and a wave of new competitors, particularly IT companies. In which, cash might be no longer the standard method for purchasing activities in favour of e-payment. We will show you the e-payment trends, which will build its empire in Asia in the next five years.
2019 had witnessed the mighty domination of Tech titans in several market industries. Additionally, the penetration of tech companies in the payment and e-commerce market causing aggressive competition among players.
Consequently, both startups and giants across the ecosystem have to attempt solutions and strategies to fight.
On the other hand, the healthcare crisis (i.e coronavirus) spread a gloomy colour in the picture of the vulnerable economy in Asia.
In an optimistic perspective, it might make an enormous transformation in purchasing behaviour in favour of online channels. Asians currently prefer automatic payment more than ever, which reduce the rapid spread of this disease through direct communication.
We draw four expected transitions that dominate the Asia payment market in the next five years, including POS financing, contactless payment, real-time payment, and autonomous checkout.
E-commerce giants leverage POS financing
Western countries have been entering the mature phase of POS financing sectors, which their citizens become familiar with noncredit finance in purchasing. Especially for POS lending, Western customers currently have the chance to request the instalment loans for their order.
This type of consumer finance is constantly growing along with technological advance as well as the booming of the fintech industry.
While Visa and Mastercard keep its presence, the integration of several digital upstarts and retailers lights up the market. In which, Paypal Credit and Affirm tend to be two particular examples.
On the other hand, major areas in Asia remains underdeveloped in POS financing. The season for this situation related to roundly 43 per cent of ASEAN fintech focuses on digital payment and e-wallet, while only 8 per cent go with POS lending.
However, the Asia market will see the dramatic transformation in 2020 when e-commerce giants expectedly take on space.
In Q1, 2020, Shoppe and Lazada (owned by Alibaba) have acquired digital banking licenses to start offering digital lending across SE Asia. Alternatively, some other startups choose to form a partnership with banks and fintech firms to share the POS financing risk to its provider.
Also read: 4 ways digital payments are helping businesses thrive amid a global recession
With the growth of alternative credit purchasing, the e-commerce market in SE Asia is anticipated to be marvellous growth in the next five year. S&P Global research predicts that ASEAN 6 will significantly increase by nearly 90 per cent of online sale from 2019 to 2022, which expectedly reach America data.
This trend is seemingly similar to the strategy of Amazon, which is e-commerce giants in the US but less presence in POS financing. Amazon decided to collaborate with Zip (Australia) and Paidy (Japan) to offering experimental POS financing in this market before spreading it to the whole system.
Contactless payment will be the mainstreams but not in 2020
Obviously, Asia Pacific has more potential to pursue carless payment than any other areas due to the highest ratio of smartphone owners. The rapid growth of mobile payment foresees the future of ubiquitous contactless payment in the next five years.
Not only for users, but government systems also get benefit in adopting cashless since it promises the more effective of managing monetary policies.
As powerful support from regulatory sectors, mobile payment will draw the perspective of pure cashless across Asia. According to Global payment submit, regulatory push promises to grow the mobile payment market by about US$72 billion until 2021. Besides, the threat of spreading COVID-19 through contacting with surface encourages the use of contactless payment.
However, contactless payment cannot be ubiquitous in the early of this decade despite lots of effort from several sectors. Why? The main reason is the lacks of vehicles to show customers where they can find the merchants accepting contactless payment. This uncertainty let consumers carry another payment method in checkout.
On the other hand, consumers still do not have a sensible motivation in using contactless payment. They concern more on securities and data privacy rather than the speedy payment. In fact, the technological flaws currently keep the users far from completely adopting contactless payment.
Real-time payment in B2B market
Real-time payment (RTP) scheme might not be a novel concept these days. The presence of RTP or fast-payment was initially in South Korea 2001, along with the e-banking system’s foundation here. Currently, the majority of RTP in the market only supports to low-value transactions, made from individuals.
In fact, according to PromptPay, an RTP platform in Thailand claimed that roundly 85 per cent of its transactions was less than US$200. Meanwhile, 80 per cent of RTP transactions in India reported to below US$20.
In B2B business, the massive payment amount induces substantial risk for both payers and receivers, which require a series of valid documents. This situation has a sign to switch in 2020 when the electronic signature is gradually becoming more popular.
In 2019, Giants card networks like Mastercard and VISA officially launching their RTP services across space in both B2B segments for the UK market. Particularly, Mastercard has committed to offers a set of RTP technologies globally, including the Asia Pacific.
It will provide payment application APIs, allow local bank apps becoming RTP apps without relying on the third-party apps. Especially, it can process a large amount of payment on a real-time basis.
From 2020 to 2025, several Asia countries, including Thailand, Vietnam, Indonesia, are expected to finalise their regulation regarding fast payment in favour of supporting B2B transactions. In which, credit intuitions can start developing RTP platform for B2B sector.
Growing autonomous checkout in stores or groceries
Recently several companies employ computer vision, sensors, and other tracking technologies for supporting autonomous checkout for groceries, which allow customers to pick items and pay without stopping in front of cashiers. Additionally, retailers also deter the threat of product stolen by leveraging these technological advances.
Likely to card payment methods, autonomous checkout will reduce both time and effort by accepting payment automatically after consumer identify themselves via a profile. In a business perspective, companies might take tremendous advantage from detail payment information, that consumers need to complete and save their profile before entering a store.
In Asia, a survey done by 5,000 consumers found that roundly 45 per cent of respondents are willing to switch from traditional in-store purchase to automation payment. That number for urban. That numbers for urban citizens and millennials are 55% and 58%, respectively. Additionally, that number in India (79 per cent) and China (85 per cent) are proved the dramatic adoption of autonomous checkout in these regions.
In 2020, Asia Pacific is projected to increase by 15 per cent at the CAGR of self-checkout systems among convenience stores. In which, Artificial Intelligence (AI) in autonomous checkout is claimed to drive the market.
In April 2019, Seikatsu Saika had trialled a novel AI-based self-checkout system in one store in Tokyo. Currently, this technology has started to massive apply in more store chains.
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