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ECOMMPAY is an international payment service provider and direct card acquirer, engineering bespoke payment solutions

ECOMMPAY is an international payment service provider and direct card acquirer, engineering bespoke payment solutions on behalf of e-Commerce merchants worldwide.

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2018

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Payment & Consumer Trends in Asia and the Pacific

worldwide. ECOMMPAY 2018 ecommpay.com ECOMMPAY ECOMMPAY ECOMMPAY Payment & Consumer Trends in Asia and the Pacific

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ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

/ Payment & Consumer Trends in Asia and the Pacific 01 Introduction e-Commerce is the umbrella

01

Introduction

e-Commerce is the umbrella term for various industries and technologies operating online, ranging from the transfer of electronic funds and transaction processing to supply chain management and related fields. Countries within the Asia-Pacific region have rapidly become one of the biggest drivers of e-Commerce growth. Based on the latest figures, the region accounted for more than half of global e-Commerce sales in 2017, comprising USD 1.365 trillion of the USD 2.352 trillion global turnover. This growth is expected to continue, with the Asia-Pacific market share reaching USD 3.001 trillion by 2021.

Though it holds immense potential, the region is incredibly diverse in terms of legislation, languages,

Alexander Pestana, Head of Business Development (APAC) at ECOMMPAY, acknowledges that, “over the past few years, Asia has become a leader in the digital revolution, from manufacturing the latest

electronic gadgets to the development of cutting-edge software solutions.” Alexander sees this process as

a major challenge for regional players, “due to the

numerous local payment solutions and the differing consumer requirements in each Asia-Pacific country.”

Alexander sees this process as a major challenge for regional players, “due to the numerous local payment solutions and the differing consumer requirements in each Asia-Pacific country.” To shed some light on the market conditions and payment preferences within the Asia-Pacific region, ECOMMPAY conducted a

within the Asia-Pacific region, ECOMMPAY conducted a “From a financial perspective the region leaped from the

“From a financial perspective the region leaped from the old-fashioned banking era to a time in which anyone with a smartphone can buy a coffee, pay for utilities bills, perform bank transfers, manage their savings, and more – in just a few seconds. The demanding attitude of modern consumers forces companies to develop simpler, faster, and cheaper solutions to everyday needs. This same demand applies to payment providers, since the payment process is expected to be flawless, seamless, and completed in seconds.”

- Alexander Pestana

logistics, and the local payments landscape, which can prove challenging for e-Commerce merchants looking to expand into new territories. Having opened an office in Singapore in 2015, payment service provider and acquirer ECOMMPAY has extensive knowledge and market expertise in Asia-Pacific.

thorough investigation into the e-Commerce landscape

of China, Japan, Vietnam, Thailand, Malaysia, Indonesia,

and the Philippines, focusing on consumer behaviour.

4.24%

61.85% 35.91%

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/ Payment & Consumer Trends in Asia and the Pacific 02 Market overview Internet users &

02

Market overview

Consumer Trends in Asia and the Pacific 02 Market overview Internet users & digital penetration Though

Internet users & digital penetration

Though the Asia-Pacific region is home to the biggest percentage of the world’s population and, subsequently, a large amount of Internet users, each country has its own, individual conditions. Countries vary not only in regards to the percentage of habitants with access to the internet, but also on the devices, such as desktop, laptop or tablet computers and mobile phones, preferred.

For example, despite its high level of Internet penetration (94%), Japan is only third largest in terms of users. Indonesia and China, while only at 50% and 54% penetration (barely above the regional average of 48%), respectively, are much more populous, meaning that the total number of Internet users within these countries is high. For context, the total population of the EU, which was 741 million in 2016, is still less than the number of internet users in China.

ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

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Number of internet users (millions)/ Payment & Consumer Trends in Asia and the Pacific 5 755.5 Source: We Are Social

755.5

Source: We Are Social and Hootsuite: 2018 Global Digital

74,5%
74,5%

23

We Are Social and Hootsuite: 2018 Global Digital 74,5% 23 47,5% 32 57% 54 93,5% 64,8%
47,5%
47,5%

32

Social and Hootsuite: 2018 Global Digital 74,5% 23 47,5% 32 57% 54 93,5% 64,8% 65 54%
57%
57%

54

and Hootsuite: 2018 Global Digital 74,5% 23 47,5% 32 57% 54 93,5% 64,8% 65 54% 50%
93,5%
93,5%
64,8%
64,8%

65

2018 Global Digital 74,5% 23 47,5% 32 57% 54 93,5% 64,8% 65 54% 50% 132 117.5
54%
54%
50%
50%

132

Digital 74,5% 23 47,5% 32 57% 54 93,5% 64,8% 65 54% 50% 132 117.5 Malaysia Thailand

117.5

74,5% 23 47,5% 32 57% 54 93,5% 64,8% 65 54% 50% 132 117.5 Malaysia Thailand Vietnam

Malaysia

Thailand

Vietnam

Philippines

Japan

Indonesia

China

Omnichannel distributionMalaysia Thailand Vietnam Philippines Japan Indonesia China Source: We Are Social and Hootsuite: 2018 26.10% 69.65%

Source: We Are Social and Hootsuite: 2018

26.10% 69.65% 4.24% 66% 29% 4% 54% 42% 4% 70% 26% 4% 38% 56% 6%
26.10% 69.65%
4.24%
66%
29%
4%
54%
42%
4%
70%
26%
4%
38%
56%
6%
30%
63%
6%

China

Japan

Thailand

Smartphone26% 4% 38% 56% 6% 30% 63% 6% China Japan Thailand Malaysia Indonesia Desktop Tablet Philippines

Malaysia Indonesia Desktop Tablet
Malaysia
Indonesia
Desktop
Tablet

Philippines

Vietnam

Smartphones are incredibly popular in Asia-Pacific. In China, Thailand, and Indonesia, users tend to use their phones for access to the internet much more frequently than their desktop or laptop computers. In China, for example, 8 in 10 users access the internet via mobile device s, leading to the majority of e-Commerce transactions to be facilitated through smartphones. Japan, the Philippines, and Vietnam stand out among neighbouring countries with comparatively high desktop usage. In Japan’s case, this can be explained by the median age distribution, which was 46.5 in 2016 .

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02/ Payment & Consumer Trends in Asia and the Pacific 7 Market overview Banking account penetration

Market overview

Consumer Trends in Asia and the Pacific 7 02 Market overview Banking account penetration by region

Banking account penetration by region (Source: The World Bank )

Source: The World Bank: Financial Inclusion Data / Global Findex 2017

2011World Bank: Financial Inclusion Data / Global Findex 2017 2017 Banking penetration Many countries within the

2017Bank: Financial Inclusion Data / Global Findex 2017 2011 Banking penetration Many countries within the Asia-Pacific

Banking penetration

Many countries within the Asia-Pacific region have low bank account and card penetration. According to data from the World Bank, the percentage of account holders (whether individual or partner accounts) at banks or financial institutions reached 73% in 2017, having grown by 13% since 2011. In the EU and North America, the level of banking penetration is at 98% and 93%, respectively. The lowest level of banking penetration among the countries chosen for this study was observed in the Philippines, Vietnam, and Indonesia. The same countries also have the lowest card penetration in the region.

also have the lowest card penetration in the region. Banking account penetration by country Source: he

Banking account penetration by country

Source: he World Bank: Ibid.

EU 98% 92% 59% APAC 49% 60% MENA 73%
EU
98%
92%
59%
APAC
49%
60%
MENA
73%
74,5% 92% 93% North America
74,5%
92%
93%
North
America

Debit card ownership by country

Source: The World Bank: Financial Inclusion Data / Global Findex 2017

96% 98%

80% 81% 85% 73% 64% 66% 48% 30% 27% 32% 21% 20%
80%
81%
85%
73%
64%
66%
48%
30%
27% 32%
21%
20%

87%

74% 67% 60% 43% 41% 31% 27% 23% 21% 13% 13% 15% 11%
74%
67%
60%
43%
41%
31%
27%
23%
21%
13%
13%
15%
11%

Vietnam

Philippines

Indonesia

China

Thailand

Malaysia

Japan

Philippines

Vietnam

Indonesia

Thailand

China

Malaysia

Japan

Indonesia China Thailand Malaysia Japan Philippines Vietnam Indonesia Thailand China Malaysia Japan 2011 2017 2011 2017

2011

Indonesia China Thailand Malaysia Japan Philippines Vietnam Indonesia Thailand China Malaysia Japan 2011 2017 2011 2017

2017

Indonesia China Thailand Malaysia Japan Philippines Vietnam Indonesia Thailand China Malaysia Japan 2011 2017 2011 2017

2011

Indonesia China Thailand Malaysia Japan Philippines Vietnam Indonesia Thailand China Malaysia Japan 2011 2017 2011 2017

2017

8 ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

/ Payment & Consumer Trends in Asia and the Pacific 02 Market overview Market volume The

02

Market overview

Market volume

The majority of countries selected for this study are projected to exhibit double-digit e-Commerce growth year-on-year. This estimate comes as a result of rapidly expanding levels of internet penetration, which, consequently, increases the numbers of e-Commerce consumers. Japan, again, remains an exception. Its high banking and internet penetration temper its growth rates, exhibiting only moderate increases year-on- year. To grow at an even greater pace, countries within the Asia-Pacific region should implement improved digital and logistical infrastructure, which currently pose obstacles to e-Commerce development.

which currently pose obstacles to e-Commerce development. China The world’s largest e-Commerce market, China

China

The world’s largest e-Commerce market, China accounted for USD 1.133 trillion of global e-Commerce transactions in 2017. Despite amounting to nearly half (49.5%) of e-Commerce turnover worldwide, there is still room for growth. Projections estimate that the Chinese market will continue double-digit growth annually until 2021. Despite the relatively low numbers of payment card penetration, high volumes of smartphone usage among Chinese consumers, paired with the popularity of mobile-based payment platforms, such as WeChat, ensure high volumes of m-Commerce sales. Comprising USD 882 billion or 73% of total e-Commerce sales in 2017, Chinese m-Commerce could reach USD 2.236 trillion by 2021.

2017 1132.79 2019 1832.43 2021 2660.49
2017
1132.79
2019
1832.43
2021
2660.49

Total eCommerce transactions (billions)

2021 2660.49 Total eCommerce transactions (billions) Japan As mentioned previously, Japan has both high internet,

Japan

As mentioned previously, Japan has both high internet, banking, and card penetration, leading to the popularity of e-Commerce among local consumers. In 2017, 83.3% of the populace were active in e-Commerce, especially on international and local marketplaces, such as Amazon and Rakuten. Additionally, Japan is ranked quite high in the World Bank’s Logistics performance index (#12 in 2016), reflecting a high level of trade and transport infrastructure, as well as a high overall quality of logistics services. As a result, the Japanese e-Commerce market is the second largest globally, accounting for USD 95.33 billion in 2017 and predicted to reach USD 111 billion in 2021.

2017

2019

2021

95.33 104.1 111.19

95.33

95.33 104.1 111.19

104.1

95.33 104.1 111.19

111.19

Total eCommerce transactions (billions)

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/ Payment & Consumer Trends in Asia and the Pacific 9 The Philippines According to data
/ Payment & Consumer Trends in Asia and the Pacific 9 The Philippines According to data

The Philippines

According to data from the World Bank, 21.6% of the local population in the Philippines is living in poverty. Though the poverty level is gradually decreasing, the internet and banking penetration remains low, resulting in the smallest e-Commerce market within the region. e-Commerce in the Philippines faces additional challenges in terms of geography. Comprised of more than 7,000 islands, shipping products is notoriously complicated, earning the Philippines 71st place in the World Bank’s Logistics performance index. This has resulted in a sales volume of USD 70 million in 2017, but infrastructural improvements promise to boost the number to USD 130 million by 2021.

2017

2019

2021

0.07 0.1 0.13 Total eCommerce transactions (billions)
0.07
0.1
0.13
Total eCommerce transactions (billions)
0.07 0.1 0.13 Total eCommerce transactions (billions) Indonesia The Indonesian e-Commerce market was estimated at

Indonesia

The Indonesian e-Commerce market was estimated at USD 8.21 billion in 2017, lagging a little behind New Zealand at USD 9.29 billion. Despite having immense potential due to a large population with access to the Internet, surpassing even Japan in terms of overall Internet users, the country is hampered by the same geographical landscape as the Philippines, earning it 63rd place in the World Bank’s Logistics performance index. Spread across thousands of volcanic islands, Indonesia faces the same challenges in the quest to establish the digital, shipping, and delivery infrastructure necessary for the effective development of the local e-Commerce market.

2017

2019

2021

8.21 13.16 18.07 Total eCommerce transactions (billions)
8.21
13.16
18.07
Total eCommerce transactions (billions)

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Vietnam/ Payment & Consumer Trends in Asia and the Pacific The Vietnamese economy is highly dependent

The Vietnamese economy is highly dependent on cash, with almost 90% of all transactions in the country paid for in cash. However, the Vietnamese government has launched several initiatives to combat the low banking penetration, aiming to have at least 70% of citizens over the age of 15 possess bank accounts by the end of 2020. This promises to have an effect on e-Commerce, which reached USD 2.08 billion in 2017 and is projected to reach USD 3.46 billion by 2021. The country still has room for improving both the local regulatory environment and transport infrastructure, which would help it move up from its current 63rd rank in the Logistics performance index and 68th place in the Doing Business ranking.

2017 2.08 2019 2.88 2021 3.64 Total eCommerce transactions (billions) Malaysia
2017
2.08
2019
2.88
2021
3.64
Total eCommerce transactions (billions)
Malaysia

Thailand

Expected to reach sales volumes of USD 4.95 billion by 2021, Malaysia, despite having a lower population, enjoys both high internet and banking penetration. This is partially reflected in the country’s comparatively high quality of business regulation. Malaysia is ranked 24th in the World Bank’s Doing Business ranking, between Iceland and Mauritius. In 2017, e-Commerce sales amounted to USD 2.63 billion, and domestic growth is projected to steadily increase over the coming years.

Thailand has relatively high banking penetration, but lags behind in terms of internet usage. While its 45th ranking in the World Bank’s Logistics performance index could use improvement, the country’s Business Regulation level is comparably high in 26th place. The local e-Commerce market still amounted to USD 3.56 billion in 2017, projected to almost double by 2021, reaching USD 6.84 billion.

2017

2019

2021

2.62 3.69 4.95 Total eCommerce transactions (billions)
2.62
3.69
4.95
Total eCommerce transactions (billions)

2017

2019

2021

3.56 5 6.84
3.56
5
6.84

Total eCommerce transactions (billions)

ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

/ Payment & Consumer Trends in Asia and the Pacific 1 3 KEY FINDINGS Banking and

1

3

KEY FINDINGS

Banking and Internet pen- etration varies across the Asia-Pacific region, but tends to be lower when compared to the EU or North America

Underdeveloped financial, technological, and logistics infrastructure presents an opportunity for e-Commerce growth in the region

2

4

The majority of Asian countries skipped desktop and went straight to mobile devices

The majority of countries reviewed in this study are expected to experience double-digit e-Commerce growth year-on-year

11

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/ Payment & Consumer Trends in Asia and the Pacific 03 Insights into consumer behaviour One

03

Insights into consumer behaviour

One global trend resonates particularly strongly within the Asia-Pacific region. The omnichannel approach is essential for e-Commerce merchants looking to appeal to Asian consumers, who tend to interact with digital brands across multiple devices. For example, a 2017 Retail Re port released by PwC revealed that Chinese shoppers visit retailer webpages via mobile much more frequently than shopping in-store (45% weekly compared to 36% weekly, respectively).

e-Commerce merchants looking to improve customer experience in hopes of increasing profitability and overall efficiency must ensure that they establish a comprehensive omnichannel strategy. Many brands operating in Asia-Pacific have implemented the

A feature of the omnichannel approach within the

Asia-Pacific region that cannot be overestimated

is the influence of social media and reviews on the

buying habits of the local populace. For instance, Thai consumers rely heavily on mobile applications, conducting 50-60% of online product queries through services such as Messenger, Line, Instagram, and Kaidee.

Shoppers in China also use mobile applications and social media when it comes to e-Commerce. The aforementioned PwC report showed that 34% of Chinese consumers cite “Superior online customer reviews” as the main reason in choosing their favourite retailer, while the global average for the same factor

retailer, while the global average for the same factor Another trend to highlight is the preference

Another trend to highlight is the preference of many Asian consumers to search for products or services via mobile, but to carry out purchases via desktop computers. Despite mobile traffic accounting for 70% overall traffic in Indonesia, ValueWalk highlights that the conversion rates of Indonesian e-Commerce are 200% higher on desktop. The clear consumer predilection for browsing via mobile but purchasing via desktop or laptop devices is telling. Viewing merchandise on desktop computers is considered more reliable, presenting the opportunity to carefully analyse the item selection on a wider screen.

click-and-collect model, wherein shoppers carry out purchases online, but pick up their items in-store. This approach is widespread within Thailand, enabling consumers in urban (27.2%), suburban (21.6%), and rural (20.8%) areas to access an expanded inventory of products both online and offline.

was 10% lower. Customer feedback is highly valued in China, with shoppers frequently leaving reviews on the purchases they make. According to Pete Stein, Global CEO of Razorfish, “roughly 75% of all online users provide purchase feedback at least once a month [in China], while that figure is less than 20% in the States .” Interestingly, although the most popular answer was

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related to price, with 56% of Chinese respondents and 57% global respondents choosing “The prices are good” as the main factor influencing their decision, the second most frequent response was “I trust the brand”, with 40% Chinese and 34% global consumers opting for this answer. Fast delivery and good return policies were also among the top choices. This demonstrates a clear shift from the price-oriented approach Chinese consumers had as recently as several years back. Today, their reasons for choosing one service provider over another is much more nuanced.

Another trend to highlight is the preference of many Asian consumers to search for products or services via mobile, but to carry out purchases via desktop computers. Despite mobile traffic accounting for 70%

desktop computers. Despite mobile traffic accounting for 70% 1 3 KEY FINDINGS The omnichannel approach is

1

3

KEY FINDINGS

The omnichannel approach is essential, mobile phone traffic is high

Online consumers are not located only in major cities:

suburban and rural population also benefits from e-Commerce

2

4

overall traffic in Indonesia, ValueWalk highlights that the conversion rates of Indonesian e-Commerce are 200% higher on desktop. The clear consumer predilection for browsing via mobile but purchasing via desktop or laptop devices is telling. Viewing merchandise on desktop computers is considered more reliable, presenting the opportunity to carefully analyse the item selection on a wider screen. To assuage consumer concerns, retailers must offer guarantees. Marketplaces such as Alibaba, Taobao, and Tmall offer escrow payments. In this scenario, the marketplace acts as an intermediary between shopper and merchant, holding the payment until the former party confirms successful receipt of the purchased product.

Personal computers are also important: in some cases, conversion is higher on desktopp

Product reviews and rates are important for local consumers, they are keen to provide feedback

is higher on desktopp Product reviews and rates are important for local consumers, they are keen

14 ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

/ Payment & Consumer Trends in Asia and the Pacific 04 Payments landscape Due to the

04

Payments landscape

Due to the varying levels of bank account, card, and internet penetration rates, each country within the Asia-Pacific region requires an individual approach. Merchants wishing to operate in the region face the challenge of selecting the most appropriate payment methods. In contrast to Western markets, wherein

credit or debit cards are used as a silver bullet solution, guaranteed to cover most, if not all, consumer bases, and alternative payment methods are viewed as a tool for access to additional, niche audiences, the Asia-Pacific market demands that specific payment requirements be met.

China

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Mobile payments are massively popular in China. Dominated by two major players, the market is divided between Alipay, who holds a 54% share, and WeChat Pay, holding just under 40% . The popularity of mobile applications within the Chinese context is due, in no small part, to their ability to combine social interaction, financial tracking, relevant advertising, and payments seamlessly within a singular ecosystem.

and payments seamlessly within a singular ecosystem. Alipay Alipay is also expanding its offering. Extending the

Alipay

Alipay is also expanding its offering. Extending the seamless customer experience, which won it more than half the local market, the mobile application is now partnering with local banks in the countries Chinese tourists love to visit. In so doing, Alipay not only enhances its own capabilities and attracts new users, but also promotes its partners within the tourism sector.

54% 40%
54%
40%
promotes its partners within the tourism sector. 54% 40% WeChat Through WeChat, for example, users can

WeChat

Through WeChat, for example, users can chat to friends and family, pay for goods and services, as well as receive offers based on geolocation, resulting in more than 1 billion active monthly users and 800 million monthly payments carried out through the application.

Despite numerous barriers, including the inability to speak foreign languages, the desire to travel in groups, and the preference for familiar environments (in which payments are key), Chinese tourists spend, on average, USD 762, far surpassing the spend of non- Chinese tourists, who average USD 486. However, due to these same barriers, the travel destinations of choice tend to be primarily neighbouring Asian countries, which offer a similar context. Alipay’s new service will empower Chinese tourists to travel further abroad. Though payments through mobile applications are incredibly popular, local

card scheme China UnionPay remains the dominant force in mainland China. The largest payment card organisation in the world, China UnionPay is the only interbank network within China.

The most popular payment methods in China, listed in order of popularity:

China UnionPay

Payments through mobile applications (Alipay, WeChat Pay)

Bank transfers

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Japan

Japanese consumers prefer a combination of Western payment methods, such as credit/debit cards.

The statistics show that 98% of the population have a bank account, 87% own a debit card, and 68% own a credit card. Besides the traditional Visa and Mastercard, companies looking to operate in Japan should consider offering domestic card brand JCB as a card payment option. This is particularly convenient for Western businesses since they are able to tap into the country’s consumer base by offering a method already popular in their region.

Other than cards, Japanese consumers pay for goods and services via online banking and via cards or cash in convenience stores. For example, by checking out with Konbini, consumers are able to pay at convenience stores, such as 7-Eleven, throughout Japan.

The most popular payment methods in Japan, listed in order of popularity:

Credit cards (JCB, Visa, Mastercard)

Bank transfers (online banking)

Convenience stores (Konbini) ATM payments (Pay-Easy)

Malaysia

In Malaysia, credit/debit cards enjoy considerable popularity. For example, if in 2011 only 23% of the population had a debit card, then this number has grown to 74% by 2017. Payments via cards are becoming increasingly widespread as consumers are becoming increasingly familiar with this payment method, viewing it as a safe way to pay for purchases. Malaysian consumers usually own several credit and debit cards.

Online banking has also had a significant impact on the local payments landscape, with banks such as Hong Leong, Maybank, CIMB, RHB Bank, and Public Bank Berhad offering this option.

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The most popular payment methods in Malaysia, listed in order of popularity:

Credit cards (Visa, Mastercard, PayNet)

Online banking

Over-the-counter payments

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The Philippines

As mentioned previously, the payments landscape within the Philippines is diverse. Cash payments are widespread, mostly due to low finance inclusion:

only 32% of the population has a personal or a jointly owned bank account. Projecting significant changes to this tendency in the near future is difficult, mostly due to the fact that uptake is not growing as rapidly as in other countries within the region.

e-Wallets, such as the local GCash or Smart Money, are present on the market, but do not account for a significant portion of the local population. SMART Money is a partnership between local telecommunications company SMART, Mastercard (which enables users to receive a card), and Banco De Oro and is available only to SMART mobile subscribers. Currently, the number of partner banks has grown and a remittance service has been added.

Although there is a possibility that the popularity of smartphones will embrace technological innovation and boost the usage of e-Wallets in the future, as happened in China, the most popular option for online payments is online banking. Banks such as Banco de Oro, Metrobank, Bank of the Philippine Islands (BPI), Unionbank, and Asia United Bank (AUB) are not only popular for online payments, but also for their recently improved online banking apps.

The most popular payment methods in The Philippines, listed in order of popularity:

Online banking

Cash-on-delivery (over-the-counter payments)

ATM payments

e-Wallets (GCash, Smart Money)

Indonesia

More traditional payment methods, such as online banking, bank transfers, and over-the-counter payments, are also preferred by Indonesian consumers. Krung Thai Bank, Bank of Ayudhya, United Overseas Bank, Bank Central Asia, Rakyat, Bank Mandiri, and Bank Negara are the most popular in the country.

As roughly 150 million Indonesians still lack a bank account, cash payments are crucial. Another rising trend in the country is payments in installments. Cards are slowly gaining popularity in the country. If in 2011 only 11% of population had a debit card, then in 2017 the card share has reached 32%.

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The most popular payment methods in Indonesia, listed in order of popularity:

Online banking / Bank transfers

Over-the-counter payments in supermarkets

ATM payments

Cards

Installments via cards or bank transfers

20 ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

Vietnam

Online banking is crucial in Vietnam, with Vietcombank, Vietinbank, Bank for Investment and Development of Vietnam, Asia Commercial Bank, Techcombank, and VPBank as the most popular service providers. Cards also occupy a portion of the market share, but only 15% of cardholders have used their payment cards in 2016 . The explanation for this is the low density of ATMs in rural areas, where 70% of the population live.

Cash-on-delivery is quite popular in terms of online payments in the country. According to the World Bank, 90% of people who bought something through the Internet paid using this method and the remaining 10% paid online. This could be explained by the fact that only 10% of employees receive their wage onto an account in a financial institution, while 60% receive their wage in cash only.

e-Wallets are also gaining popularity in the country, with different sources reporting that anywhere from 3 to 10 million people possess one, if not several. Among the various options, Ngân Lượng, Payoo, and MoMo are the most popular. However, none of these hold a major share in the market at present. Some experts believe this is due to the fact that existing e-Wallets are inconvenient for mass users.

The most popular payment methods in Vietnam, listed in order of popularity:

Online banking

Cash-on-delivery

e-Wallets (Ngân Lượng, Payoo, MoMo)

Cards

Thailand

Thai consumers, 81% of whom have a bank account, rely on conventional payment methods, such as online banking. Bangkok Bank, Kasikorn Bank, Siam Commercial Bank, Krungthai Bank, TMB Bank, Bank of Ayudhya, and CIMB Bank are the most popular service providers of this payment option. Cards and e-Wallets, despite the popularity of cash payments, are also present.

Despite having a high banking penetration, only 60% of the Thai population had a debit card in 2017. In this regard, mobile phone operators are stepping in and providing their own e-Wallets (akin to SMART Money in the Philippines). This is true of the most popular e-Wallet in Thailand, True Money, which is a product to mobile telecommunications operator TrueMove.

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The most popular payment methods in Thailand, listed in order of popularity:

Online banking

Over-the-counter payments

Cash-on-delivery

e-Wallets (True Money)

Cards

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/ Payment & Consumer Trends in Asia and the Pacific 05 Closing thoughts and recommendations ECOMMPAY’s

05

Closing thoughts and recommendations

Asia and the Pacific 05 Closing thoughts and recommendations ECOMMPAY’s Head of Business Development (APAC), Alexander

ECOMMPAY’s Head of Business Development (APAC), Alexander Pestana, believes that anyone looking to do business in Asia-Pacific needs to understand the specifics, nuances, and particularities of each individual country, as there is no one-size-fits-all solution that would address the needs of the entire region.

Key differences between Asian and European payment service providers

“The Asia-Pacific region is very fragmented in terms of doing business online and accepting payments. Each country has difference consumer preferences, each country has different payment methods, each country presents a challenge in its own way. Despite many payment service providers recognising the need for a single, unified solution, none in the region are capable of offering this to prospective clients. The problem tends to be that local fintechs are growing too fast, as are their regional markets. As a result, they do not try to compete at a Pan-Asian level.

In most cases, at least from a technological point of view, local payment gateways in Asia-Pacific are not as competitive as their counterparts in the EU or North America. Even something as readily available to European merchant clients as 3D Secure is viewed

as a new, innovative feature in Asian markets. Also, because the local e-Commerce markets in Asia and Southeast Asia are still growing rapidly, local payment service providers have a different approach than European tech companies. Rather than solving client pain points and explaining a payment service provider’s capabilities and added value services, Asian payment companies offer a basic connection to the major local banks and alternative payment methods.

In contrast, European companies are used to working across the EU/EEA and are looking to implement the same approach in the Asia-Pacific region. This is immensely challenging, considering that there are far less potential partners offering widespread coverage in all the major markets.”

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Strategy for penetrating the Asia-Pacific region

“The strategy for penetrating the Asia-Pacific market for a European company will be heavily dependent on the countries targeted and the products and/or services offered. It’s not like operating within the EU, as each country will have its own, unique regulation, rules, laws, and requirements. Bureaucracy is likely to be a massive headache, as each country will require market participants to own a local bank account and a local office. Everything, especially payments, should be easy and seamless. As Asians value speed, solutions such as OneClick Payment are particularly relevant. Customer service should be equally localised: merchants should offer immediate support in local languages. The marketplace model is popular for this specific reason. Consumers can access a range of products in one place, quickly and efficiently. The omnichannel experience is of utmost importance when seeking to do business in Asian markets. In this

region, most consumers have bypassed desktops and laptops in favour of mobile. Even those parts of the population that are considered to be low-income possess smartphones, so mobile applications and webpages adapted to mobile browsing are essential for commercial success. Another major factor is price sensitivity. Though this trend has begun abating in recent years, with consumers in large markets, such as China and Japan, beginning to consider value and quality when choosing products, the belief that new products should not only be better, but also cheaper, remains prevalent among large percentages of local populations. This, incidentally, is one of the reasons why WeChat Pay and Alipay have enjoyed the success they have. Not as bureaucratic as banks, the mobile payment applications enable anyone with a smartphone to download and begin using their e-Wallet and associated services free of charge.”

their e-Wallet and associated services free of charge.” “The key factor to overcome the fragmented payment
“The key factor to overcome the fragmented payment landscape in South East Asia,” explains Alexander,
“The key factor to overcome the fragmented payment landscape in South East Asia,” explains Alexander,

“The key factor to overcome the fragmented payment landscape in South East Asia,” explains Alexander, “is to offer the right payment methods to the right people, combined with a seamless mobile user experience (the payment flow must be as simple as possible, completed within a few steps). The challenge is to merge all the relevant local payment methods in a simple check-out procedure.”

within a few steps). The challenge is to merge all the relevant local payment methods in

24 ECOMMPAY / Payment & Consumer Trends in Asia and the Pacific

About ECOMMPAY & the Author

ECOMMPAY is an international payment service provider and direct card acquirer, engineering bespoke payment solutions on behalf of e-Commerce merchants worldwide. Our PCI DSS 3.2 certified gateway facilitates an omnichannel payment process, combining acquiring capabilities, 100+ payment methods, mass payouts, and technological innovation within a single, seamless integration. Headquartered in London, ECOMMPAY is an authorised payment institution (API) regulated by the Financial Conduct Authority. To facilitate client access to new markets, ECOMMPAY maintains a global presence with seven international offices, employing 450+ specialists, which includes 200+ dedicated IT professionals.

specialists, which includes 200+ dedicated IT professionals. Our Singapore office opened in 2015, focusing on providing
specialists, which includes 200+ dedicated IT professionals. Our Singapore office opened in 2015, focusing on providing
specialists, which includes 200+ dedicated IT professionals. Our Singapore office opened in 2015, focusing on providing
specialists, which includes 200+ dedicated IT professionals. Our Singapore office opened in 2015, focusing on providing

Our Singapore office opened in 2015, focusing on providing flexible, tailored payment services to merchants based in or looking to enter the Asia- Pacific region. Three years on, the ECOMMPAY team in Singapore has grown significantly. Alexander Pestana, Regional Head of Business Development, joined in May 2017 to advance the payment service provider’s interests throughout the region. With over 10 years of experience in the banking and online payments industries across the EU and APAC, Alexander has a deep understanding of the technological requirements needed for successful expansion in the challenging Asia-Pacific region.

References

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1. eMarketer: Asia-Pacific Retail and eCommerce sales: eMarketer’s estimates for 2016–2021

2. Ecommerce Foundation, Japan B2C E-commerce Report 2016

3. We Are Social and Hootsuite: 2018 Global Digital

4. EY: Banking in Asia-Pacific

5. The World Bank: Financial Inclusion Data / Global Findex 2017

6. Marketing-Interactive.com: 8 key e-commerce trends coming out of China

7. Access Intelligence: 7 Key Differences Between Chinese and Western Consumers

8. ValueWalk: 5 Online Consumers Behavior Trends in Indonesia for 2018

9. PwC: Total Retail 2017

10. Forbes, What US Marketers Can Learn from Social Commerce in China

11. Vietnam Briefing: Vietnam’s Payment Preferences: Four Trends to Watch

12. Business Insider: What's next for Chinese mobile payments

Payment & Consumer Trends in Asia and the Pacific 2018
Payment & Consumer Trends in Asia and the Pacific 2018

Payment & Consumer Trends in Asia and the Pacific

2018

Payment & Consumer Trends in Asia and the Pacific 2018