Blockchain
Asia Pacific leads the global adoption of instant payments
APAC dominates in instant payment innovations
The Asia Pacific region is at the forefront of the adoption and implementation of instant payments, thanks to innovative technologies, widespread access to smartphones and favorable regulations. This has positioned the region as a global pioneer in instant payments, facilitating easy access to real-time payments. As most of the profitable digital-only banks are based in the region, this success is expected to increase with the growing adoption of new fintech models.
The Asia-Pacific region is home to 10 of the 13 most profitable digital-only banks in the world. The region’s desire to experiment with alternative payment options has led to improved domestic and cross-border payment capabilities, access to real-time settlements, financial inclusion opportunities and a leadership position in financial innovation. The Asia Pacific region is home to 20% of the world’s digital banks and its citizens are the most enthusiastic users of digital payments.
Emergence of digital wallets in APAC
Digital wallets in the Asia-Pacific region, excluding China, have more than doubled their share of the value of e-commerce transactions over the past five years. This trend is expected to continue to grow over the next three years. Similarly, the share of point-of-sale payment transaction value coming from digital wallets has increased six-fold over the past five years.
In particular, Southeast Asia shows substantial progress in regional payments. The volume of the real-time payments network within the market is expected to reach $2.4 trillion by 2025, an increase of 230% compared to 2020. It is also expected that more than 400 million people in the South -East Asia will use mobile wallets by 2026.
Spotlight on payments-driven growth of e-commerce in India
In India, the National Payments Corporation of India has made the Unified Payments Interface (UPI) available to non-resident Indians in ten countries, including Australia, Canada, Singapore, the United Kingdom and the United States. This move is expected to pave the way for a global remittance network. UPI and other real-time payment schemes are also expected to fuel cross-border commerce in India, offering online merchants a significant growth opportunity.
Account-to-account (A2A) payments, which reduce the cost of accepting payments for merchants while improving cash flow through immediate availability of funds, have seen a significant rise in India. A2A payments as a percentage of e-commerce transaction value rose from 12% in 2021 to 19% in 2022, and are expected to reach 24% by 2026.
The challenges in the digital payments transformation journey
Despite the Asia-Pacific region’s progressive stance on digital technology, privacy and security concerns may prevent the adoption of new payment channels. Research suggests that over 75% of consumers in the region would withdraw their support for a brand in the event of a data breach.
The World Economic Forum defines the Asia Pacific region as “ground zero for cybercrime incidents.” The rapidly evolving cyber threat landscape, the rise of malicious software, the mobilization and organization of cybercriminal groups, geopolitical conflicts, and economic uncertainty have all combined to create a favorable environment for threat actors. In the region, 60% of leaders surveyed recognized a significant shortage of dedicated cybersecurity staff in their organizations.
The varied and unpredictable behavior of consumers in the region also poses a challenge. While consumers in Hong Kong and Singapore have historically been more open to new digital payment methods such as Apple Pay, Google Pay and Samsung Pay, consumers in markets such as China, the Philippines and Vietnam tend to pay with local and regional wallets for reasons of familiarity . and comfort.
As the use of cryptocurrencies in payments continues to expand in APAC, building on this momentum will depend on close collaboration between national governments and private companies to achieve maximum impact and ensure maximum safety for consumers.
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