As Asia Pacific ventures into the brave new world of future payments, how long will it take until it reaches its kingdom come?
The mobile payments space in Asia Pacific has seen an impressive growth spurt when it comes to the expansive mobile payment user population over the years and with the region being predicted to see the fastest e-commerce growth, it is only inevitable that mobile technology will continue to play a supreme role in ensuring a consistent market growth.
“Asia-Pacific is predicted to see the fastest e-commerce growth, and mobile technologies will play a more important role as this market grows. North America and Western Europe, which have been slower to adopt mobile payments technologies, will also see growth,” said Kevin Dallas, WorldPay Chief Product and Marketing Officer when speaking to Mobile Payments Today.
As Asia Pacific holds home to three of the largest non-cash payments in the world with South Korea, Japan and Australia representing the region’s biggest markets; let’s have a look at how these three countries manage to pull through their weight in the world of innovative payments.
In South Korea’s well-developed non-cash payments markets, electronic card payments accounted for over 60 percent of total volume growth in 2010 with high penetration rates through the combination of credit, debit and prepaid cards. The explosive growth rate in cards is also attributed by government tax incentives and aggressive marketing efforts by card issuers. However, debit-card usage continues to be relatively low in comparison to other developed economies.
Although the volume of non-cash payments has seen a surge of up to 8.5 billion transactions in 2010, non-cash transactions are considered to be relatively low for a developed market. Credit cards accounted 81 per cent of the total 2010 volume for payments. The popular “Osaifu-Keitai” mobile wallet developed by NTT DoCoMo allows consumers to further drive mobile payment transactions higher especially with Japan’s ongoing and developed payments infrastructure.
In Australia, the payment system is still in the phase of evolution and is moving away from bilateral clearing and shifting towards setting up hub infrastructures that enable future growth. With the support of The Reserve bank of Australia’s Payments System Board, stakeholders and regulators involved are able to cooperate in promoting innovation and opening the market to newcomers and investors.
Frost & Sullivan estimates that mobile payments could top $3.6 billion at a compound annual growth of 14.8 per cent in the Asia Pacific region, indicating an increased growth rate of more than 100 per cent in five years.
With Japan and South Korea leading the region in the adoption of mobile payments due to owning one of the most advanced mobile cultures in the world together with the rapid adoption of mobile banking services in the emerging mobile market regions such as Indochina, Indonesia and the Phillipines, the Asia Pacific region is a force to be reckoned with in the mobile payments sphere.
It’s also impossible to rule out the fact that China is currently being touted as the world’s largest smartphone market in the world with plans to further add and additional 400 million smartphones for the year 2014 together with India owning the fastest growing smartphone market with a 167 per cent growth in Q4 2013 according to Gartner.
Let’s also not forget that in several Asian countries as well, mobile penetration rates exceeds the access to traditional banking services. MasterCard also indicated that there are around three times more mobile phones than bank cards in China, thus creating opportunities in the mobile payments sphere to drive millions of Asian consumers to adopt mobile phones as a primary portal to the online space.
Undoubtedly, the mobile payments market carries immense potential for additional growth and that issues such as fragmented services and solutions are unavoidable in Asia Pacific’s conquest in achieving total domination in mobile payments due to the extensive demographics permeated throughout the region.
Nevertheless, these can be resolved with technology providers catering solutions to the different markets with selective access technologies, business models and partners while keeping in mind the different regulatory conditions in doing so.
Asia’s varied market makes it an impressive and attractive portfolio for investors to flock in and it’s definitely a matter of time before Asia Pacific emerges as dominant player in the mobile payments stream; but what’s interesting is that given the region’s eventual success, will it be then able to remain united in its efforts to maintain sovereignty?