Here are some of the reasons why Southeast Asia is a digital payment superpower
We are continually being disrupted by digital technology, whether we like it or not. The number of e-wallet users worldwide increased from 500 million in 2017 to 2.8 billion by 2020, according to figures collected over a two-year period (between 2017 and 2020). However, although the rate of digital development varies from nation to country, Southeast Asia has been the fastest-growing market worldwide. The area is now set to overtake the United States as the world's digital payment superpower.
Southeast Asia is undergoing a financial change led by digital payments, according to a new IDC analysis commissioned by global payments platform 2C2P. The survey also predicts that e-commerce expenditure in the area would grow by 162 percent by 2025, reaching US$179.8 billion, with digital payments accounting for 91 percent of all transactions by that time.
As it stands, according to a recent analysis by Google, Temasek Holdings, and Bain & Company, more than 75 percent of the population in six key Southeast Asian nations has access to the internet, and a majority of them has done some online shopping at least once. Additionally, according to the research, more than 60 million individuals in the area accessed digital services for the first time as a result of Covid-19 — with 20 million of those people doing so in the first half of 2021.
According to IDC, shifting consumer and retail behaviors, as well as more inclusive payment choices, will be the driving forces behind the increase. As IDC points out, e-commerce is already flourishing, with 222 million users in 2020, and the industry is expected to develop even more, reaching an anticipated 411 million users by 2025, thanks to new payment methods that are becoming more widely available.
To argue that new payment mechanisms such as mobile wallets and buy now pay later (BNPL) are moving transactional behavior away from traditional payment methods such as cash on delivery would be an understatement. It was reported that "BNPL accounted for 1 percent of all ecommerce payments in 2020 and is expected to climb to 5 percent in 2025, expanding by 9.7 times spend value," according to the survey.
A new digital payment behemoth is on the rise.
According to the survey, Southeast Asia's development is exploding, owing in large part to the fact that the e-commerce business is becoming more accessible. According to the International Data Corporation, there will be 188.6 million additional e-commerce consumers by 2025. Indonesia (US$83 billion), Vietnam (US$29 billion), and Thailand (US$24 billion) are expected to be the greatest markets for e-commerce payments in the next years, according to predictions.
In addition, IDC predicts that with the influx of new e-commerce users, a greater variety of payment services would be necessary in the future. In addition, IDC predicts that the Philippines, Vietnam, and Thailand would see significant transitions, with reducing cash use and growing digital payments usage by 2025.
Interestingly, the survey highlighted that local payment solutions, such as mobile wallets, are favoured throughout Southeast Asia because of their simplicity of use and convenience. Mobile wallets and BNPL are predicted to expand by 30 percent and 58 percent, respectively, in the area between 2020 and 2025. According to IDC, Indonesia will be at the forefront of the mobile wallet revolution, with over 100 million new mobile wallet users expected by 2025.
Dashveenjit Kaur | 11 November, 2021. “Here's Why Southeast Asia Is a Digital Payment Powerhouse.” Tech Wire Asia, 17 Nov. 2021, https://techwireasia.com/2021/11/heres-why-southeast-asia-is-a-digital-payment-powerhouse/.
E-Conomy SEA 2021. https://services.google.com/fh/files/misc/e_conomy_sea_2021_report.pdf. Accessed 26 Nov. 2021. Accessed 26 Nov. 2021.