Settling bills and paying retailers via your mobile is being taken to a whole new level in Southeast Asia and India, with a significant increase in mobile payment adoption. It’s a growing business and about to get much bigger.
Recent research from Forrester shows that online and mobile-based purchases in Southeast Asia are expected to exceed US$22 billion in 2015, while India is expected to grow 55 per cent from its present size of US$2 billion to US$19 billion by 2019. IDC meanwhile also predicts that the Asia-Pacific is expected to lead the world in mobile payment developments.
Growth in the region is being driven by two factors — the low banking population and the increasing growth of smartphone penetration, according to Naveen Mishra, industry principal, telecom at Frost & Sullivan Asia-Pacific.
“We are witnessing tremendous potential for a ‘cashless society,’” he says. “At present, mobile payments are mostly being used for low-ticket items but this will move to larger purchases.”
With growth potential for mobile payments looking healthier than ever, multiple players including banks, credit card companies, mobile operators and financial technology (fintech) startups are all getting in on the act, while Apple Pay is also expected to launch in Singapore next year. Uses for mobile payments range from settling bills to mobile recharge, sending money from one to another and merchant payments.
Sam Ahmed, SVP head of marketing Asia-Pacific at MasterCard, believes that the rapid increase of urbanisation and smartphone ownership across the region is leading to an increase in demand for products and services that meet the needs for convenience and comfort.
“Empowered with smartphones, the large demographic of digitally savvy youth in Southeast Asia and India are more connected and have access to a variety of merchants and enhanced payment experiences,” he says.
Players are using a variety of methods to build brand awareness. Malaysia-based Soft Space, which provides a mobile point-of-sales payment platform, reaches out to consumers via traditional financial institutions. Soft Space also offers discount coupons and partners with merchants with strong branding to lure users.
“We believe that this is the fastest way to scale,” says Chang Chew Soon, founder and chief executive of Soft Space. “Asia’s financial ecosystem is highly regulated and partnering with banks is the fastest way to grow.”
Understandably, where money is concerned, the main challenges for mobile payment operators revolves around security and trust.
Convenience is also a consideration, according to Soft Space, which believes that it is vital to have enough acceptance points for users to regularly use their mobile phone to pay, so much so that it becomes habit.
The other big hurdle is the varying levels of infrastructure and regulatory landscape across Asia-Pacific, where no two markets are alike.
“Sophisticated markets have an extremely high smartphone penetration and a government that supports technology and innovation,” says MasterCard’s Ahmed. “Then you have developing markets which are slowly but surely gaining more traction but lack the infrastructure to make mobile payments a viable option just yet.”
‘Must-have’ transactions will drive adoption in this region
Zhi Ying Ng, researcher for eBusiness and channel strategy, Forrester
The growth of mcommerce, or mobile commerce, is strong. This upward trend of purchasing goods and services on smartphones will continue into 2016. Peer-to-peer (P2P) payments relating to mobile money services have contributed to the growth in mobile payments, and we expect remittances to drive this growth further as more providers move into the mobile payment space in oder to facilitate cross-border remittances.
Bill payments are also among the first few types of mobile payments that consumers across Southeast Asia region are using. Mobile remote commerce is gaining traction, but the uptake of proximity payments has been low to date.
Forrester identified a range of players involved in this sector including contactless payments, digital wallets and mobile payment systems. In terms of raising brand awareness, mobile payment providers are adopting a number of strategies. In the Philippines, telcos are leveraging existing relationships with retail outlets, creating roadshows to build awareness. In Singapore, some banks use push notifications to inform consumers of new mobile payment services.
Consumers need to be motivated to adopt such systems with ‘must-have’ transactions that persuade them to sign up in the first place and encourage repeat usage. Additionally, providers also need to ensure that any new payment system is demonstrably better than existing alternatives like cash and plastic cards.