The study asked more than 1,600 executives at banks, retailers and billing organisations – of which 176 were from the Association of Southeast Asian Nations (Asean) region – about their experiences, perceptions and expectations of payments and how this is shaping their behaviour.
The study found that competition and security are the most pressing e-commerce issues driving investments in payment systems in Asean.
“The need to offer a wide variety of payments is a growing trend in the past 12 months. With new competitors offering more payment types, retailers have to offer these to compete from a user experience perspective,” said Leslie Choo, vice-president of Asean at ACI Worldwide.
“Alternative payment methods are a big deal because card usage or adoption can be very low in some Asean countries.
“Social payments and mobile are also big areas of interest. Some 53% of retailers interviewed expect to increase their investments in payment systems in the next year.”
IDC agreed there is a wide variety of mobile payment options in Southeast Asia.
The more developed Asean markets, namely Malaysia and Singapore, have consumers who are more inclined to adopt digital means of transacting, such as mobile and card-based wallets and bank-led account-to-account systems, in addition to credit and debit cards, said Sui-Jon Ho, senior market analyst of IDC Financial Insights, Asia-Pacific.
Read more about payments technology in Southeast Asia
- Singapore is the first nation in the Asean region to get the Apple and Samsung mobile payment services.
- Visa opens its first innovation centre outside of the US to work with partners and customers to develop payment technology for the Southeast Asian market.
- Recent regulations in Myanmar widen the financial services market to include non-banking institutions.
In contrast, emerging Asean economies tend to have a more fragmented payments market, where the digital methods used are more hybrid to accommodate the popularity of cash, low penetration and usage of cards and the overall lower degree of financial sophistication.
The study found card payments continue to dominate in the region as a whole, with debit and credit cards accounting for 44% of all transactions, and mobile payments – such as QR codes, e-wallet and near-field communication (NFC) – accounting for 9% of transactions.
“As mobile becomes more prevalent and trusted by consumers, this number will continue to grow,” said Choo.
Asean retailers also view banks as the primary provider of payment services, according to respondents.
Growth of startups
While the incumbent financial institutions are the preferred financial service providers, startup financial technologies (fintechs) are entering Asean retailers, with 20 to 40% of retailers choosing to work with a startup.
For example, 40% would work with a startup for mobile QR code payments and location-specific payment and loyalty services.
Paul Thomalla, senior vice-president at ACI Worldwide, said: “For all of these organisations, the key takeaway is that competitive pressures are driving up spending in the marketplace. Spending small, incremental amounts will only lead to an erosion of market share,” he said.
“The payment initiators of the world want to work directly with payment operators. By doing so, they will be able to lower payment costs, reduce complexity and increase investments to stave off the threat of new competitors.”