In many developed countries across the globe, digital payments are considered to be an issue of convenience. In developing countries, such as the countries of Southeast Asia (SEA), digital payments are revolutionising economies and financial markets. Here is a look at how SEA online payment solutions are making developing countries into upcoming mega markets for digital consumer finance.
The Digital Revolution of Southeast Asia
Southeast Asia is currently witnessing a digital payment revolution, which in turn is spurring a financial and economic revolution. According to a report by IDC, by 2025, digital payments will lead to a growth of 162% in e-commerce. The report looks at emerging payment trends such as e-wallets, Southeast Asia e-banking payment solutions, and other digital payment solutions along with traditional payment modes like cash or credit/debit cards. While SEA already has a staggering e-commerce industry, the report predicts that by 2025, e-commerce will make even more inroads with more people accessing e-commerce options.
Here are a few factors driving this explosive growth:
During the Covid-19 pandemic, the countries of SEA saw 400 million new internet users in the first year itself. The pandemic triggered a wide-speeding adoption of e-commerce and a need for contactless payments, which has not since abated. However, around 70% of SEA’s adults are underbanked or unbanked[i]. Moreover, the region’s economy is fuelled by micro, small, and medium enterprises (MSMEs) that want an increased access to digital payments and digitised lending. Expanding the Southeast Asia e-banking payment solutions will be a key to the region’s prosperity in days to come.
Ripe for Change
When it comes to digital payments in the region, surprisingly, Indonesia has emerged as the largest market. The country has traditionally valued cash payments but is now rapidly shifted to digital payments such as through mobile payment gateways. This change has been expedited by the country’s central bank, which has introduced a mandatory Quick Response Code Indonesia System (QRIS). The QRIS is intended to encourage digital payments among MSMEs and consumers who have trouble accessing credit cards and other financial services. In the Philippines, 97% of digital retailers accept online payments. SEA is also one of the largest receivers of overseas remittances and so, mobile payment gateways have partnered with banks to offer inexpensive international transfers.
The Crucial Role of Banks
To facilitate SEA online payment solutions, banks in the region are improving payment systems and processes. Southeast Asia e-banking payment solutions facilitate multi-currency, rapid, and real-time payment transactions on secure payment platforms. Banks can meet the needs of MSMEs that are so crucial for the economy of the SEA region, thus, stimulating the micro commerce dominating the region’s economic activities. The banks can encourage cross-border transactions, which can encourage e-commerce expansion and globalisation by developing well-integrated services for both merchants and consumers alike.
Reputed firms in this region offer a wide range of services for the SEA region, from bank transfers to online payment solutions to e-wallets or QR code payments.< Next post - “Revival of the Memory: Bruce Lee’s Home in Metaverse” 2022 Prev post - Southeast Asia’s Rising Digital Payments Landscape >