What are the prospects in speeding up payments innovation in Asia?
On the topic of market trends in Asia’s payments innovation scene, Zaw Lin Htut, Chief Executive Officer of Myanmar Payment Union commented that, “In emerging markets such as Myanmar, Indonesia and the Philippines, the ticket and payments sector are still in the stage of infancy and they all share a similar problem in facing a technology gap as opposed to developed markets surrounding them as well as infrastructure issues.
“However, the huge population and expansion in the growing middle class is anticipated to change the payments industry. Many banks and financial institutions are beginning to adopt new payment methods and starting to embrace NFC, mobile payments and digital payment services. They are beginning to slowly decline paper-based currencies as well.
“The biggest challenge in speeding new payment adoption rates in emerging markets such as Myanmar remains in the development of innovative technology backed by affordable pricing.”
However, Heru Sutadi, founder of Indonesia ICT Institute remarked on financial inclusion regarding the Indonesian market, claiming that “In Indonesia, we are more concerned about the transition into a cashless society and that there are a few barriers involved. The biggest challenge would be developing a stable infrastructure in the telecommunications sector which is of utmost priority. There also heavier concerns that are directed towards preventing financial fraud and the fight against terrorism especially with the rise of unregulated cryptocurrencies in the market.
“The future for financial inclusion in Indonesia’s payments sector is to plan on how can we assure and the educate the consumer first.”
Interestingly, Silvester Prakasam, Director of Fare System Division, Land Transport Authority offered a very different perspective, “For Singapore, we are a more matured economy and E-Payment has already been optimized on a macro level. Stored value cards were implemented in Singapore’s transport system at an early age which was further backed by the government’s mandate. As a requirement on a major scale, the adoption rate for payments was naturally a rapid process.
“Beyond that, stored value cards were thought of to be a dominant method of payment although it hasn’t been materialized just yet. Why? People still do not see the need to do so due to the convenience of ATMS and the widespread belief that cash is still a convenient mode of transactions as you can see today. Studies have shown that more than 90% of the population in Singapore carry a debit card, but when it comes to topping up to their prepaid cards, more than 70% of them would still use cash.
“In order for NFC technology to kick off, it’s more of a value proposition. For now, there is no push factor unless solution providers can think of an innovative way to appeal to customers in an attempt to speed adoption rates.”
However, he continued to share with us an interesting statistic that in 2002, more than $26 billion were transacted in cash and in 2014, cash transactions remained fixated at the same amount.
Looking at this, can we truly say that we have truly adopted E-payment in developed markets? Just what then can developed markets learn from this?