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Published in 2021, Link
My Key Takeaways
“How customers buy, sell and pay in Southeast Asia is way overrated.”
Really?
Well, an IDC survey in 2021 demonstrated that merchants in Asia could expect an average 10% increase in sales when adding a single new popular payment method!
Here’s some of my takeaways from an IDC and 2C2P report for European and UK companies pondering over their payment strategy in Singapore and Southeast Asia (SEA). The report touches on rapidly evolving payment trends across six SEA countries – Singapore, Philippines, Thailand, Vietnam, Indonesia, Malaysia.
Mobilewallets are a major force in the SEA payment landscape
This new payment method’s share of eCommerce transactions in SEA would rise from 19% in 2020 to 27% by 2025.
By 2025, of the 250M new mobile wallet users in SEA, 100 million will come from Indonesia, and 30 million each from Philippines and Vietnam! (Pg 7)
The Buy Now Pay Later (BNPL) phenomenon
BNPL made up 1% of SEA’s total eCommerce payments in 2020 and is estimated to rise to 5% in 2025, growing by 9.7 times spend value to almost $9B.
BNPL purchase instalment plans increase conversion rates by lessening checkout friction (credit card checks, uploading documentation etc) and reducing initial costs of purchase.
Take a look at page 8 of the report for a breakdown of BNPL e-commerce spend across the six featured SEA countries.
Real Time Payments (RTP) – a convenient and often cost free option
SEA Regulators are now attempting to link their respective countries’ RTP schemes in the region. This low to zero-cost option is also highly convenient and puts even more pressure on currency conversion merchants and credit card players.
For example, Singapore’s RTP platform PayNow is being linked to Thailand’s PromptPay, allowing low cost cross-border funds transfer with just mobile phone numbers alone.
The fees will be affordable priced at less than 3 – 5% of the value of transfer, compared to 11% global average, and will be transparently displayed to senders.
This linkage is a start of a more ambitious project to create a netwoek of linked retail payment systems across ASEAN.
Need help determining the ideal payment mix for your business?
Pages 5 and 6 give a market share breakdown of existing payment methods (e.g. cards, mobile wallets, BNPL, RTP schemes) by country.
You’ll also find data on the growth potential for each payment method pre- and post-pandemic, and in 2025.
For example, a quarter of e-commerce payments in Indonesia is with mobile wallets today, and this share would become almost a third in 3 years.
For Singapore’s mature online payment landscape, cards have a very high usage rate of 70% which would remain stable over the next few years.
You want names of actual payment partners in each country?
This section maps out the payment players across different categories and SEA country, saving your teams’ sourcing time once you’ve decided on your payment strategy (Pg 10).
A list of payment pain points faced by companies in SEA
These payment challenges on pages 11-13 could in useful for the product roadmaps of EU/UK fintechs venturing into the region.
Want to outsource management of your payment solutions?
If you prefer to outsource payments management to a third party, page 14 has a good list of considerations to support your decision making process.
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A digital economy of almost $280 billion is predicted to emerge in Southeast Asia by 2025.
What’s the point of being in a region of massive growth if your customers can’t buy and pay for your products and services easily?
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About Zhilin SIM
Having worked and lived in Singapore, the Nordics, China, Spain, UK, I’m now based in Paris.
I’m fluent in English, French and Mandarin, and I’m learning Arabic because it’s a beautiful and fascinating language.
My team creates and supports one-many initiatives connecting corporate and startup ecosystems in Europe to business and innovation opportunities in Singapore and Southeast Asia.
I’m passionate about horticulture, watercolour, startups/tech as well as French cuisine, Peranakan kueh techniques and other global cuisines.
Feel free to connect with me if you think my network in Europe and Asia could be of benefit to your business and innovation activities.
