Adoption of digital payment solutions is likely to rise further in Asia-Pacific, says GlobalData
With safety, trust and convenience emerging as important factors, the adoption of digital wallets and contactless card-based payments by retailers in developing countries across Asia-Pacific is likely to rise further and become a standard, says leading data and analytics company GlobalData.
Traditionally, smaller retailers, street traders, corner cafes and cabbies relied on the cash economy for decades and could not afford to buy card reader devices or pay the fees associated with processing electronic payments. However, things have started to change rapidly over the past few years, most noticeably in India.
Andreas Olah, Lead Analyst for Digital Retail at GlobalData, says: “As the Indian government launched a demonetization program, consumers were forced to use electronic payments, though cash did not completely disappear. As a result, all types of retailers understood the need to offer cashless payment methods to remain competitive.”
Paytm emerged as a popular digital wallet in India with over 200 million users. It can be used for payments across all major stores, online retailers, utility bills, and metro cards, as well as auto rickshaws and food stalls. The wallet’s balance can be topped up via credit or debit cards, as well as through online bank transfers. It can also be integrated with most point of sales (PoS) solutions.
The trend towards cashless payments is not limited to India; however other countries use different approaches. For example in China, many consumers prefer to use the all-round app WeChat for payments. It offers in-app and web based payments, as well as options for splitting bills and paying friends and family members without any hassle.
In Europe, Swedish mobile payments company iZettle offers a mobile card reader which is a popular choice among several smaller retailers, cafes and restaurants. Unlike Paytm and WeChat, it is primarily aimed at contactless debit and credit card payments, although it also offers traditional chip and PIN. iZettle also offers an e-commerce platform that small retailers can set up with minimal effort.
Olah concludes: “Safety and trust are important factors for the increased adoption of cashless payment solutions in addition to greater convenience including the speed of the transaction. They feature advanced encryption technology, and secret keys used in payment transactions do not reveal any passwords or other sensitive information such as credit card numbers.
“Retailers are recognizing the need to accept the payment types that customers prefer if they do not want to lose out on business. Adoption rates are likely to rise for digital wallets, as well as for contactless card-based payments as they are becoming the standard in many countries. The biggest disruption is occurring in developing countries across Asia, Latin America, and Africa where digital wallets are also opening up banking services to millions of low-income consumers who have previously relied entirely on cash and checks.”
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