Direct digital payments are set to overtake cash transactions in the Asia Pacific region by 2028, according to findings from Euromonitor International.

Asia Pacific recorded the highest digital payment transaction value in 2023, worth US$ 29,063 billion and accounting for 52% of the global total.

With cards being the most popular payment method in the region, credit and debit cards are expected to generate the bulk of new sales over the 2023-2028 period.

Credit cards are forecast to record a slightly stronger compound annual growth rate (CAGR) than electronic direct transactions.

Additionally, personal electronic direct payments are set to overtake personal cash transactions by 2028.

Card Payments Surge Across APAC

Among card payments, debit cards remain the most popular transaction type in China, boosted by a state-backed inclusive finance programme to encourage bank account openings in rural areas.

In India, credit card payment transactions recorded the highest growth in APAC. The shift to Unified Payments Interface (UPI) has drawn consumers to faster, more convenient, and secure transactions compared to wallets, contributing to the exponential growth in personal electronic transactions.

Consequently, cash transactions will continue to lose their share. Credit cards are expected to outperform debit cards in transaction value by 2028, although debit cards dominate in circulation.

In East Asia, Japan has the second-highest growth in personal card payment transactions, attributed to the country’s ‘Cashless Vision’ initiative. Debit card payments have seen a CAGR increase of 19% from 2018-2023.

Paper transactions have rapidly declined in Japan and South Korea due to the digital shift to electronic and card payments.

Japan experienced the second highest decline in retail value after China during this period. South Korea recorded the highest percentage decline in paper transactions at -39% from 2018-2023, while mobile proximity payments grew by 29%.

Digital Wallets Gain Popularity

While paper transactions remain significant in some countries, the convenience of digital wallets continues to drive adoption in the region.

This trend is particularly notable in emerging countries such as Thailand, Indonesia, China, and India. Nearly 70% of consumers in China use WeChat Pay daily, while over half of Indian consumers use PhonePe every day.

Fastest-Growing Markets

Indonesia shows the fastest-growing mode of personal payment transactions with a CAGR of 67% from 2018-2023, driven by the popularity of smartphones, increasing usage of digital wallets, mobile banking, and the Quick Response Code Indonesia Standard (QRIS) developed for cashless payments.

In developed markets, there remains potential for growth. Singapore and Hong Kong saw a CAGR of 31% and 19%, respectively, for mobile proximity payments during the 2018-2023 period.

David Zhang, Insights Manager for Payments and Lending at Euromonitor International, said,

“In Asia Pacific, embedded finance partnerships between incumbent financial organisations and fintechs, have accelerated the development of digital IDs and remote verifications.

 

Additionally, advanced credit decisioning and governments’ initiatives including payment standardisations (fast payment and QR) and subsidies have paved way for greater financial inclusion, payment diversification and cashless payment growth.”

Featured image credit: Edited from Freepik