China has become a mobile-first country. STATISTA showed that in 2019, over RMB 347 trillion (USD 51 trillion) was transacted via mobile payment channels, leaping from around RMB 9.6 trillion (USD 1.4 trillion) in 2013. As of July 2020, there were around 854 million online payment users in China. Alipay and WeChat Pay, two major mobile payment players in China, have expanded rapidly in Southeast Asia. Alipay is now available in more than 8 Southeast Asian countries and 40 countries globally.
Digital payment has gained a lot of traction since the outbreak of Covid-19. UnionPay International (UPI) announced recently its cooperation with the Military Commercial Joint Stock Bank (Military Bank) in Vietnam to issue 600,000 virtual cards supporting online and QR Code payment, marking the first massive rollout of UnionPay virtual cards in the country. 6 mobile wallets including Boost in Malaysia and Nestia in Singapore also enable users to apply for UnionPay virtual cards, offering a more convenient payment experience. According to SINA TECH, 74% of Vietnamese consumers expect cashless payments to grow further. Also, more than one-third of Southeast Asian consumers surveyed are willing to shift some of their banking activity, including credit cards and loans, to nonbank digital players.
At present, online payment service has been implemented in all of the 10 ASEAN countries at over 500,000 merchants in various sectors. A large number of Southeast Asian countries, such as Singapore and Thailand, have followed China’s path and are well advanced toward standardized digital payment systems. Grab, a Singapore-based decacorn, offers a variety of financial services across Southeast Asia through its digital wallet, including payments, with plans to expand into micro-loans, insurance, and monthly post-payment options. The Covid-19 outbreak and its aftermath will prompt more Southeast Asian households to embrace digital payments. Thailand has recently introduced a real-time retail payment system PromptPay, allowing free and instantaneous money transfers with high levels of security.
Meanwhile, there are signs that Japan is on the verge of an e-payments tipping point. Due to Covid-19, contactless adoption has increased around the world including Japan. Fime Japan revealed that with an increase in the uptake of NFC based contactless payments in Japan, cashless initiatives are now making significant headway. Cash-obsessed Japan has started accepting cashless payments.
Digital payments are now king in Asia’s payment ecosystem. The Covid-19 has accelerated Asia’s transition to digital financial services. Notwithstanding border restrictions, the region’s digital payments ecosystem is growing as countries collaborate to connect their domestic payment systems. Besides, rising investment in the e-payment field is enhancing the digital infrastructure needed, making e-wallets acceptance much easier.
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