It’s an exciting time for payment gateways in Asia.
Asia has the fastest-growing payments-revenue in the world over the past several years. It also has the largest volume of payments revenue in the world. In 2019 alone, Asia generated over USD 900 billion in payment revenue, nearly half the global total. Asia’s payments sector is expected to surpass USD 1 trillion in annual revenue by 2023. The pandemic has only accelerated this trend.
A recent McKinsey report identified several trends in the market that indicate that the market for digital payments will continue to grow rapidly across Asia, post-Covid 19. Here are five megatrends to watch out for in 2021 and the near future, according to McKinsey.
- Digital wallets and QR codes will become the next normal
Despite being rapid growth in digital payments, cash was still used in 71% of transactions in 2019. However, e-wallet providers and QR-enabled solutions is likely to draw more people away from using cash, especially in emerging markets. Current cashless payment methods such as credit cards will likely be optimized to be digital-wallet friendly.
- Competition between banks and payment platforms will intensify
While payment gateways are seeing tremendous growth, traditional banks still command a high level of trust among customers. As such, banks would seem to be strong contenders as payment providers, with great advantages over non-bank providers in emerging markets. However, in developed markets, experts see digital ecosystems such as South Korea’s Kakao and big tech players like Google or Facebook as having the upper hand because of their superior user experience and “super apps” that can cater to the full extent of consumers’ needs because of their connection to funding sources like bank accounts and credit cards.
This is a space where Apigate has significance expertise. Our solutions have helped numerous businesses ride the wave of growth in the digital payment space and more.
- There will be more acquisitions, with new business models emerging
As new lifestyles and business models emerge, merchant acquiring is expected to significantly change. Merchant discount rates (MDRs) are expected to decline up to 20% or more. This will force a shift from pure payments processing to monetization of value-added services, such as reconciliation, loyalty, lending, and deposits. Such value-added services could account for over 50% of acquirer revenues.
- Cross-border partnerships will accelerate
Cross-border payments in Asia usually involve long settlement times and high costs. This provides an opportunity for regional ecosystem players to disrupt this space by providing comprehensive cross-border services. Imagine a Singapore-issued e-wallet being used to pay for a meal in Jakarta or Bangkok. There is tremendous potential in this to regional players to leverage and consolidate their user base.
With our strong regional network and secure, seamless platform, Apigate is in a great position to help regional players integrate their markets into a single frictionless user experience.
Consolidation could drive value-chain “horizontalisation”
With such a fragmented payments market consolidation is likely to occur (perhaps sooner rather than later) This could happen across the value chain (e.g. networks combining with merchant acquirers) or within a specific category (e.g., e-wallets). Also, funding for fintech players continues to shrink, larger banks and tech firms may be on the lookout to make acquisitions in order to expand their product portfolios.
In such cases, Apigate is also in a great position to serve the needs of the market as our expertise is in bridging disparate systems to create a single seamless experience.
Conclusion
As the next generation API ecosystem provider whose digital payment solutions have enabled numerous digital partners across the globe to achieve rapid growth and monetisation, we are very excited with these developments and are watching the market trends closely.
While the long-term outlook for growth is bright, winning in the new normal will require players to reimagine their value propositions. Having a strong and capable partner will certainly make a difference. Contact us to see how our secure platform seamlessly integrates multiple types of digital players, such as mobile operators, e-wallet providers, e-market places and many more, to help you gain access to over 1 billion consumers across the globe.
