Digital Payment: Future Isn't About Cash And Cards
As smartphone adoption rises in India, the digital payment market is seeing a rapid growth. A survey by ACI Worldwide ranks India second in the smartphone wallet usage in Asia Pacific, after China.
Digital methods of payments are set to grow in tandem with shared economy services in Asia Pacific, especially for transactions where convenience, speed and seamlessness are valued. Examples of these transactions include taxi hire and car sharing services where 10 percent of respondents in the region are already paying for them with smartphone wallets.
The top reason why consumers are choosing online payment services is the offer of faster and more efficient payments, followed by trust in online payments, and better rates compared with other methods of payment.
“The region is rapidly moving toward real-time or immediate payments, driven by customers’ demand for faster and more efficient payments. Non-financial services have added to the dynamic competition, extending payments from online and mobile ecosystems into peer-to-peer payments within social apps such as WeChat and Line,” said Rachel Hunt, marketing director, Asia Pacific & Japan, ACI Worldwide.
Findings across Asia Pacific highlighted that newer methods of payments with mobile platforms, such as smartphone wallets and online payment tools, are being driven by increasingly sophisticated Gen Y consumers aged 25-34 years old.
“The rising behavioural complexity in the younger consumer demographic is driving a shift in digital payment methods, and the choice is no longer simply between cash and cards. We are seeing a rise in unique Shared Economy business models, and non-bank financial services are quickly experimenting with new mobile solutions to cater especially to unbanked populations in emerging markets,” said Shekhar Ganapathy, general manager, South Asia, ACI Worldwide.
“Banks need to embrace these disruptions in order to innovate long-term winning strategies. We are entering a new era in payments, with developments focused on financial technology and customer experience that will shape our purchasing behavior on the mobile platform,” said Shekhar.
While the banks are part of the payment industry, a need has been felt for greater collaboration in the payment ecosystem (banks, retailers, telco and fintech companies), as consumers diversify their payment behaviours from debit card to bank transfers to online payment services.
Emerging markets have the potential to be a key force in driving new non-bank financial services, with these markets scoring higher in their intention to use new services on average (nearly twice as likely for smartphone wallets).
* The need for seamless and integrated payments within applications is crucial, given the increasing usage of Shared Economy services across Asia Pacific and a continued dependence on cash. Smartphone payments are very likely to replace cash as 62 percent of respondents were already showing a high intent to use in the future.
* The increased need for financial institutions to focus on security and real-time fraud management to safeguard the rising volumes of immediate and card-not-present payments for both the banked and under-banked in Asia.
(Image courtesy: www.freeimages.com/Eric Gross)
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