A new report by Deloitte delves into the latest developments in the cross-border payment sector in Asia-Pacific (APAC), identifying four major trends reshaping the landscape and offering significant opportunities for merchants. These trends reflect the growing integration of digital payment systems, the rise of digital wallet solutions, and advancements in payment infrastructure.
The digital payment revolution
The first trend outlined in the report is the digital payment revolution. Digital payments have become the go-to choice for payments, accounting for half of the global transaction value and a combined US$13.9 trillion in consumer spending across channels in 2023. The APAC region led this trend, contributing nearly two-thirds of global spending, with a combined US$9.8 trillion. The region also boasts the highest digital wallet penetration rates among all regions.
Digital wallets have emerged as the leading and fast-growing payment method in APAC with a projected compound annual growth rate (CAGR) of 13% through 2027. Their growing popularity has spurred continuous financial innovation, such as the rise of buy now, pay later (BNPL). In 2023, BNPL arrangements represented 4% of e-commerce transaction value, a significant increase from the mere 1% in 2020.
In 2023, digital wallets were the leading e-commerce payment method in APAC, accounting for 70% of e-commerce transaction value. Countries including China, India, Indonesia, the Philippines and Vietnam led the region in digital wallet adoption. For point-of-sale (POS) transactions, digital wallets were the leading payment method in China and India in 2023. However, cash was the top POS payment method in six APAC markets, namely Indonesia, Japan, Malaysia, Philippines, Thailand and Vietnam.
Payment interoperability
The growth of digital payment innovations in APAC has emphasized the need for connectivity and interoperability in both online and offline transactions. In the region, several countries have introduced cross-border QR code payment linkage, creating a unique interoperable ecosystem within ASEAN.
Additionally, cross-continental interoperability programs were also introduced. Project Nexus, for example, is led by the Bank for International Settlements (BIS) and aims to create a blueprint for connecting national instant payment systems to enable seamless cross-border payments.
Public-private collaborations also play a critical role in developing and promoting cross-border payments. For example, national QR payment schemes in countries like Singapore, Malaysia, Cambodia, Sri Lanka, and South Korea have partnered with Alipay+ to bridge cross-border gaps. This partnership enables tourists to use familiar payment methods while being abroad.
Digital ecosystems
Another trend highlighted by Deloitte is the evolution of digital wallets into multifunctional platforms known as “super apps,” designed to meet shifting consumer behaviors. For example, Malaysia’s Touch’N Go, initially used for toll payments, expanded into an e-wallet in 2018 and has since become Malaysia’s most popular e-wallet brand. In China, super apps Alipay and WeChat Pay have risen to prominence as global leaders in digital wallets.
The super app approach is now reshaping retail and commerce. As consumers increasingly engage in shopping through various channels, including in-store, online, and social media, super apps are helping streamline these interactions, making the shopping experience more seamless. Consequently, retail brands are increasingly adopting omnichannel strategies to enhance customer loyalty and improve the shopping journey.
For instance, in Indonesia, Bank Mandiri’s super app, Livin’ by Mandiri, offers a wide range of banking services, including POS services, stock management, and payment processing. By the end of 2023, Livin’ by Mandiri had become the fastest-growing mobile app in the country, with 22.8 million registered users.
Similarly, AirAsia MOVE, a travel super app launched in 2020, provides services such as flight and hotel bookings, ride-hailing, dining, and travel insurance. It integrates with Capital A’s financial services, such as BigPay, and leverages a strong loyalty program called AirAsia rewards to offer a comprehensive digital ecosystem.
Advancing financial inclusion and sustainability goals
Digital technology is also pivotal in advancing financial inclusion, allowing for reliable, efficient, and cost-effective services to underbanked populations and businesses. This is particularly relevant in Southeast Asia where approximately 225 million people lack bank accounts, and 39 million micro, small, and medium enterprises (MSMEs) face a substantial funding gap, according to the UN Capital Development Fund.
Digital inclusion may also help MSMEs achieve sustainability. Programme Sirius, for example, focuses on advancing sustainable practices and improving access to sustainable financing for underserved communities. The program is supported by industry partners including Ant International, Gprnt (an initiative by the Monetary Authority of Singapore), the International Finance Corporation, and APAC fintech leaders.
Furthermore, many banking and e-wallet apps now offer carbon offset programs to promote carbon footprint reduction. In the Philippines, for example, finance super app GCash launched GForest in 2019, an eco-friendly platform where users can plant digital and real trees by using GCash for digital transactions. The platform quickly gained popularity, boasting 12 million registered users who, as of December 2022, had collectively offset over 30.5 billion grams of carbon emissions.
Featured image credit: edited from freepik
