Consumers in Asia-Pacific are amongst some of the most connected in the world

Rachel Hunt, Marketing Director of Asia-Pacific & Japan for ACI Worldwide, is a keynote speaker at the upcoming Global Payments Summit 2015, which will take place between 26 and 27 August 2015 in Singapore. During her presentation, Rachel will discuss findings from ACI’s brand new survey on the impact of the shared economy and digital payments in Asia and how deploying digital-based services will offer competitive edge and promote financial inclusion.

We are seeing a dramatic shift in payments globally, but the pace of change across Asia is driving intense competition and innovation due to geographic, demographic and behavioral characteristics which are unique to the region. If I were to pinpoint 3 major developments, I feel that currently the most important would be:

1. The digital payment boom

In Asia-Pacific, only 55% of online purchases were made using cards (credit and debit cards), whilst online payments services and cash-on-delivery (CoD) were used in 72.8% of transactions (1). Increasingly, these transactions are being made using a digital wallet on a mobile. The consultancy also projects m-commerce to grow in the region from USD16.6 billion in 2013 to nearly USD67 billion in 2018 (2).

Clearly there is a polarization of the data. The highly banked economies, such as Singapore or Australia show comparable card usage to Western adoption, whilst CoD is more popular in the underbanked economies of Indonesia or India. The common factor remains that consumers in Asia-Pacific are amongst some of the most connected in the world: For example, 98% of Indonesian internet users have a social media account (3).

This diversity, the young and digital native population, all contribute to the increasing number of digital payments in the region, which go beyond mobile money transfer services. We have seen a number of digital wallets introduced riding the rails of social networks, from bank led offerings (e.g. Axis Bank with Ping Pay) to mobile messaging providers (e.g. WeChat).

This digital payment boom is likely to continue as consumers demand ever more alternatives. The complex geographic environment is also driving the rise of alternative economic models such as the shared economy (a sub-set of the Internet of Services), which in turn drives demand for new payment methods. Latest research from Ovum and commissioned by ACI corroborates this trend, with 60% of retailers interviewed feeling that their payment service provider did not offer the services needed to meet the demands of their customers.

2. Real-time, any-to-any payments

As new payments are introduced, so is the expectation that these are fulfilled in real-time. The Asia-Pacific region is rapidly moving towards real-time or immediate payments. The high adoption rate of mobile phones and the evolution in the development in technology has driven this shift. If people have access to real-time information, they expect transactions to be fulfilled in the same way. Payments cannot be seen as the weak link in the chain.

Immediate payment initiatives include FAST (formerly G3) in Singapore, which was launched last year, Malaysia and Thailand are exploring similar initiatives, whilst Australia will be moving to its New Payment Platform, NPP, in 2017. These schemes enable consumers (and businesses) to make payments faster and more cheaply. Payments can be timed to suit the consumer, speeding up transactions and enabling faster delivery of goods and services and generally allowing more efficient payment flows between consumers, merchants and banks.

Real-time also drives innovation and Asia is already outperforming in this regard. Singapore with its FAST payment scheme has a number of overlay services such as DBS’s Paylah, Dash (a collaboration with Singtel and Standard Chartered and others for bill payments, mobile wallet and instant loans), CIMB Clicks (Immediate Transfers between MEPS and Nets Malaysia to Singapore),and Pay Anyone (OCBC bank which includes Facebook payments).

Most of this innovation has so far been in the retail side of the business, but as usage matures, we will see more in the corporate space. Schemes in the region are also moving towards real-time settlement and a convergence of payments across retail and transaction banking. This is the case of NPP in

Australia, which is likely to be a model for others. In conjunction with immediate payments, the region has been making good progress in promoting broader adoption of the ISO 20022 standard. As a result, we will witness greater convergence on a common data standard to underpin the integration of cross-border payments flows in real-time.

3. Supporting growth by laying the foundations for greater cross-border payment integration

The ASEAN Economic Committee, AEC, represents a huge economic opportunity as gross GDP is forecast to grow from USD 2.4 trillion in 2013 to more than USD 6.2Trillion by 20234. Yet, in order to support intra-ASEAN trade and the large number of small and medium sized businesses, more harmonized and efficient cross-border payment and settlement conduits are needed. Although there is no payment integration component per se as part of the AEC’s pillars, technology is bringing the region closer to enabling real freedom of flow of goods, capital and investments. ISO 20022 will play a key role in assisting with interoperability issues across borders.

This move to greater integration does not relate to the ASEAN region alone. Across Asia we are seeing a need for greater efficiency in cross-border transactions, as new payment corridors are formed, intra-region and externally such as from China towards Africa.

1) IDC Retail Insights survey 2015 – multiple answers allowed

2) excludes Japan

3) GlobalWebIndex 2014

About Rachel Hunt

Rachel Hunt is Marketing Director of Asia-Pacific & Japan for ACI Worldwide. Based in Singapore, Rachel is responsible for the management and direction of all aspects of marketing in Asia-Pacific. Rachel has 20 years’ experience in financial services technology having held roles with banks, industry vendors including Temenos and Perot System, as well as having provided consultancy services for over a decade at independent research firms, such as IDC and Tripliii.

About ACI Worldwide

ACI Worldwide, the Universal Payments company, powers electronic payments and banking for more than 5,600 financial institutions, retailers, billers and processors worldwide. ACI software processes USD 13 trillion each day in payments and securities transactions for more than 300 of the leading global retailers, and 18 of the top 20 banks worldwide.