In Asia Pacific (APAC), customers are embracing new payment methods such as digital wallets and buy now pay later (BNPL) arrangements for their online purchases, found a new research by Stripe in partnership with Edgar, Dunn & Company.

A survey of APAC consumers found that 46% are preferring digital wallets including GrabPay and Boost for their online purchases over other payment methods, surpassing significantly North America and Europe where just 20% are choosing digital wallets are their preferred online payment method.

Online sales are reflective of these preferences. In China, businesses recorded a two-fold increase in sales from Chinese consumers when offering Alipay, a popular mobile and online payment platform, while in Australia and New Zealand, two major BNPL markets, businesses saw a 27% increase in sales when they offered Afterpay, a popular BNPL provider.

Digital wallet usage for e-commerce leads in India, Thailand

In a number of APAC countries, digital wallets are already topping the list of e-commerce customers’ preferred payment methods.

In India, e-wallet Paytm is the most popular online payment method, used by 85% of shoppers and preferred by 20%, according to separate research by paytech firm Rapyd. Similarly, in Thailand, Southeast Asia’s second largest e-commerce market, e-wallet True Money is the preferred online payment method.

In Singapore, although e-commerce customers mainly use credit cards, e-wallets are seeing greater preference than usage, indicating future growth in coming years. In 2021, e-wallets are expected to comprise 22% of all sales, Rapyd estimates.

South Korea is showing a similar trend. While Shinhan card is the most used payment method, most customers name digital wallets including KakaoPay and Samsung Pay as their favorite payment method for online transactions.

BNPL, a hot sector in APAC

In APAC, BNPL is gaining prominence. Hoolah, a Singaporean BNPL provider also operating in Malaysia and Hong Kong, has experienced a 600% surge in order volume from May 2020 until May 2021, and is now working towards expanding into other Asian markets.

By 2027, the global BNPL market is expected to reach US$33.4 billion, surging at a compound annual growth rate (CAGR) of 21.2% between 2020 and 2027, according to report by Coherent Market Insights. APAC is set to be the fastest growing region during the forecast period, owing to increasing mobile Internet users.

APAC’s booming BNPL sector is evidenced by the increasing number of payment firms, fintech companies and incumbent banks looking to get a slice of the market. Square’s announcement to acquire Australian BNPL leader Afterpay is the latest development in this space.

The transaction, which would be valued approximately US$29 billion (A$39 billion), aims to accelerate Square’s strategic priorities for its Seller and Cash App ecosystems by integrating Afterpay’s BNPL capabilities into these two business units.

Afterpay has presence across four markets, namely New Zealand, the US, Canada and the UK, where it operates under the Clearpay brand. In the first half of fiscal year ended December 31, 2020, Afterpay reported global sales of US$10.1 billion, a year-on-year 112% growth, and added nearly 23,000 new customers daily to its platform.

According to data analytics and consulting company GlobalData, Afterpay accounts for 7.7% share of the total Australian e-commerce market, up from 5.5% in 2020. As of June 30, 2021, Afterpay counted over 16 million consumers and nearly 100,000 merchants globally.

APAC’s e-commerce opportunity

In APAC, e-commerce activity is booming. 61% of consumers surveyed by Stripe in APAC said they have increased their online shopping in the past year, and over one-third indicating at least doubling it. By 2023, retail e-commerce sales in the region are projected to be greater than the rest of the world’s sales combined, the report says.

Despite this, the Stripe research found that most APAC merchants are still not set up to take advantage of this opportunity. Many businesses are still not offering popular digital wallets like GrabPay, Apple Pay, Alipay and WeChat Pay, nor allowing customers to save their payment method for future use.

Other common issues include not offering a guest checkout experience, and not allowing customers to create an account by connecting to a social media profile.

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