The role of mobile payments in e-commerce has become increasingly important over the past few years. As a growing proportion of global trade is now occurring online there is a large potential opportunity for digital and mobile wallets. In the five years to the end of 2016, Chinese payments via digital wallets grew to over $500bn, up from around $98bn in 2012.
The world has been transfixed by these staggering statistics, driven by the proliferation of Alipay and WeChat’s Tenpay. However, there are several other markets in Asia Pacific where the prospects for mobile payments growth are equally bright.
As per GlobalData’s Payment Cards Analytics, the most exciting markets for digital wallets are in Asia Pacific, where even China’s huge growth rate only ranks in the middle of the pack. Digital wallet payments in India grew by over 2,200% in the five years to the end of 2016, and both Vietnam and Indonesia are exciting markets that recorded exponential growth over the past five years.
In markets such as Vietnam and India, where there is a large untapped market along with an underdeveloped payment infrastructure, the environment is right for new digital payment providers, because while growth rates have been impressive, absolute volumes and values still have a long way to go.
For example, at the end of 2016 the value of transactions made by digital wallets in India reached $5.5bn – a low figure given that the country accounts for almost 20% of the global population. Yet the future outlook is extremely positive. Consumers and merchants alike have already embraced Paytm, which offers QR code-based mobile payments, while India’s government is pushing for a national QR standard to help bring digital payments to the unbanked. Going forward the market should demonstrate several years of very high mobile payments growth – enough to focus the world’s attention on markets other than China.
Most importantly for the significant underserved population in the developing parts of Asia Pacific, the proliferation of digital wallets will reduce their dependence on cash. Down the line, digital wallets will bring myriad benefits to consumers in the region, including accessible and affordable payments and financial services, and beyond.
By Arnie Cho, Senior Consumer Payments Analyst