Going cashless – Mobile Payments in Asia
Throughout Asia Pacific where smartphone penetration is the highest in the world, consistent progress by local governments toward cashless societies is benefiting the mobile payments market. Going cashless is seen as a catalyst for the mobile payments market both in markets where use of cards is transitioning gradually into use mobile payments and in markets where consumers are leapfrogging to mobile payments from cash. Getting to 100% cashless will see mobile payments realize its potential as a key enabler of Cashless Societies.
Regulatory push, standardization, the availability of a ubiquitous payments infrastructure and comprehensive solutions as well as local consumer behaviour play a role in determining how fast the transition to 100% cashless is going to be. The top down regulatory push towards cashless societies across Asia Pacific will see the $71.92 billion mobile payments market (excluding China and India) grow exponentially to reach $271.47 billion by 2021. The number of active customers too will double to 130.8 million users.
Although benefiting from regulatory push factor, the initial slow take up is mainly due to the drawbacks of today’s mobile phone as a form factor. This includes lack of user interface and payment flow standardization, the need for additional security features such as tokenization and biometrics authentication, effective resolution of data privacy issues and above all and the fact that it doesn’t replicate the physical wallet. The presence of local proprietary e-wallets built to differing security standards alongside global and open 3rd party e-wallets further add confusion to the market.
Despite current challenges, the market is progressing. Standardization efforts are already underway in some countries and contactless payments facility is growing. However, contactless payments facility is still far from ubiquitous i.e. it has to be available on trolleys, at toilets, for donations to churches, at tourist foreign exchanges and virtually everywhere else. There is also a lack of comprehensive solutions to cater for segments holding on to the use of cash e.g. the poor, the old, people with disabilities, people living in rural areas and short term visitors/tourists, that will complete a transaction that involves payment method, loyalty/rewards, receipts and in some instances identification.
It is clear that there is still a lot of work ahead, especially in replicating physical wallets and offering a truly seamless user experience. Ultimately, the focus now should shift to mobile payments in order to build a 100% cashless future across Asia Pacific.
Join Quah Mei Lee to gain her insights on the latest developments alongside key issues plaguing Asia Pacific. Together with an expert panel, she will then debate these issues & questions.
1. What would be the ideal mobile payment solution?
- Current focus has been to leave it to market forces to determine which solutions will prevail
- Is the confusion created by multiple solutions in the market holding back the demand for mobile payments?
- Why aren’t solutions providers offering seamless comprehensive solutions?
- Will transforming the mobile phone into a physical wallet increase take up of mobile payments?
2.What direction should standardization of mobile payments take?
- Current focus is on payment flow and acceptance of all payment methods at merchant site
- Should it include guidelines on minimum security and handling of data privacy issues?
- Should it mandate seamless comprehensive solutions that will replace the physical wallet while leaving room for competition in innovation within this broad scope?
3. What would be the final combination of efforts from industry (regulator, solution providers, merchants) that will make mobile payments go mainstream in Asia Pacific?
- Current focus by governments has been on pushing options that increase cashless transactions. In addition to this,
- Australia is looking into removal of higher value currency notes i.e. $50 and $100, but while this will help push mobile payments that is capped below $100, there are indications from India that people may revert back to use of cash and behavior switches are temporal.
- Singapore is funding cashless payment acceptance at small merchants (hawker centres). While this will take time to complete, take up is still slow elsewhere despite wide acceptance via NETS
- Malaysian tolls are going 100% cashless through use of a single payment method.
- What steps are necessary to increase take up and encourage use of mobile payment facilities?
- Should the regulator mandate use of mobile payments?
- Should the regulator mandate or encourage via incentives true ubiquitous acceptance in order to get to 100% cashless?
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