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The era of greater mobile wallet payments in Asia Pacific

Minh Ha Truong Nov 10, 2023 8:25:04 AM

Of the roughly 2.8 billion mobile wallets active globally, almost half are found in the Asia-Pacific region. The surge is primarily driven by countries like India and China – with China ranking as one of the leading nations worldwide for mobile wallet utilisation, with 84% of those surveyed stating they possess and use a mobile wallet. 

Yet this rise of mobile wallet payments is more than just a regional trend. Instead, a closer look can reveal the underlying factors behind the shift, the region’s habit for harnessing and then localising technological innovations, and the role of partnerships. 


Underlying Demographic Factors 

Historically, APAC has displayed an ability to “leapfrog” conventional technological phases – bypassing older systems directly to newer, more efficient solutions, exemplified by the rapid adoption of mobile banking over traditional banking infrastructures in many of its regions. As one example, over 78% of Indonesians access the internet via their mobile phones, bypassing desktops entirely. 

This has not occurred by chance. Instead, several demographic factors have played a role: the unprecedented pace of rapid urbanisation is bringing millions to cities, creating hubs of innovation and demand for new services. There is also the rise of a prospering middle class, with increased disposable income and aspirations, seeking better and more efficient services. 

Lastly, a digitally native younger generation, having grown up with technology at their fingertips, is more adept at embracing and demanding digital solutions. As a result, mobile wallets have emerged as the ideal solution due to this audience's preference for speedy, streamlined, and safe transaction methods. 


Creating Integrated Ecosystems

The key thing to note is that APAC's mobile wallets are no longer just about payments. They shape societal behaviours and have evolved beyond mere payment tools, as they are now comprehensive ecosystems addressing a wide array of consumer demands. Arguably, this evolution is not just a technological one but is also a social one – with the mobile payment ecosystems in APAC being truly integrated with a wide range of other services.  

Superapps like Kakao and Gojek have transformed from ride-hailing apps to all-encompassing financial hubs where users can shop, invest, order food and even access micro-loans. For many consumers, these platforms have become an integral part of daily life, streamlining a myriad of tasks and needs into one accessible interface. Whether it's ordering groceries, topping-up savings, or grabbing a ride across town, the versatility of these super apps cater to the diverse and evolving needs of their vast user base.

Beyond helping in day-to-day life, there is also an increased digital transformation of age-old practices and cultural traditions. For example, China's ancient tradition of the red envelope (hongbao) during the Lunar New Year. In 2018, Tencent's WeChat introduced a digital hongbao feature, with the average user sending out dozens or even thousands of red envelopes to their friends and family. This saw over 768 million users, sparking competition with firms like Alibaba and Baidu, with millions of digital red envelopes expected to be sent each year.


The Power of Strategic Alliances in Payments

As well as the digitalisation of practices that further integrate mobile wallets into consumers’ day-to-day habits, strategic B2B partnerships have also played a crucial role in accelerating APAC’s mobile wallet success. Such partnerships have enabled a rich tapestry of payment services within one app, with virtual cards, cross-border payments and BNPL common place,..

This is demonstrated by Malaysian transportation-turned-superapp Grab, which has collaborated with global fintechs to to build a rich network of financial services..Employing a focus on both consumer-facing features and extensive technical infrastructure, including fraud prevention and card management, Grab has built a financial powerhouse with a plethora of other integrations built on top. By building a bedrock of innovative payment infrastructure, Grab made inroads into the daily lives of its users, increasing stickiness and enabling a vast network of seamless integrations.

There are also payment giants like Alipay forming international partnerships beyond APAC with international airports, hotel chains, and shopping districts. One of these is a collaboration between Changi Airport Group (CAG), Liquid Group and Ant Group – meaning that in Singapore's Changi Airport, retailers accept Alipay, catering to Chinese tourists accustomed to this payment mode. As well as this, Singapore residents can now make payments with the Changi Pay digital wallet to scan and pay for purchases when visiting China.

In conclusion, the era of greater mobile wallet payments in the Asia Pacific region has been driven by several underlying demographic factors. The creation of rich integrated ecosystems through super apps has only driven growth, and this has been further accelerated by strategic alliances between firms. Overall, these have come together to position mobile payments at the forefront of the region's financial future. 

A suitable mobile banking environment requires more than tech alone; it takes full partner network management and a clear understanding of rights, responsibilities, liabilities and more. With BPC, We build, launch, onboard and maintain large marketplace environments and know what it takes to help you build yours.

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