Asia has long been a front-runner in mobile payments; according to some reports, Southeast Asia has become a „wallet-first region”. „Mobile-payment wallets have become a vital part of the Southeast Asian consumer landscape, allowing financial access for millions of previously excluded people. As online spending soared during the Covid-19 pandemic, wallets saw a surge in newly registered users. Uptake of this convenient technology now far outpaces that of credit cards in the region’s emerging markets, thereby revitalizing the payments ecosystem”, wrote global management consulting firm Mckinsey. According to a market report by Mordor Intelligence, the Asia Pacific mobile payments market is expected to grow at a CAGR (Compound Annual Growth Rate) of 23.91 per cent between 2023-2028.
Within the region, China is playing a leading role in the surge of mobile payments. Considering the fact that China is home to the world’s largest internet user population and smartphone market, it’s not a surprise at all. More than 85% of China’s internet users were using mobile payment services in 2022. The Chinese government has long sought to make a cashless society, supported by a favourable regulatory framework, which has contributed to the success of mobile payments. Mobile payment giants like Alipay and WeChat Pay, which boast over a billion users each, are leading the way.
But why is mobile payment so appealing? Besides the fact that you don’t need to carry cash with you to pay, it has a lot of positive effects on the economy as well. Mobile payments can boost rural household consumption by making shopping easier for communities that may not have access to traditional financial services such as banks, notes The Conversation. Moreover, mobile payments can create business opportunities by helping small entrepreneurs become more nimble, increasing their appetite for risk and easing credit constraints by allowing them to take advantage of micro-lending services.
Similar trends can be recognized in other countries in the region. For example, the market for mobile payments is anticipated to expand at a CAGR of 29.5 per cent between 2022-2027 in Indonesia. Moreover, the Indian instant payment system UPI hit a record 9 billion transactions in May 2023. According to a report published by The National Payments Corporation of India, UPI accounted for about 75 per cent of the total transaction volume in the retail segment during 2022-23.
However, there’s still room for growth, there are a lot of places where cash payments are dominant. Nevertheless, it is clear that Asia is a front-runner in this important area of technology.
The author is an editor at Eurasia