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Going digital: New trends disrupting the APAC payments market

Going digital


According to the research and consulting firm Frost & Sullivan, the B2B payments market in the Asia Pacific (APAC) is developing at a fast rate.

The company has pointed out that this growth is mainly due to the increasing adoption of eCommerce and fintech solutions in the region.

In its new report titled “Growth Opportunities in the Asia-Pacific B2B Payments Market, Forecast to 2025”, Frost & Sullivan estimates the business-to-business payments market to double in revenue from 2018’s $671.32 billion to $1,356.28 billion by 2025 at a 10.5% compound annual growth rate (CAGR).

According to the analysts, Indonesia represents one of the greatest growth opportunities in B2B revenue in the APAC, featuring a 54.2% CAGR. For comparison, Vietnam’s fast-expanding market only has a CAGR of 40.2%, the researchers uncovered.

Based on the report, this fast growth is a signal of new payment trends in the Asia Pacific.

Digital Payments Transformation

Due to the COVID-19 pandemic, there’s a growing demand among consumers for cashless transactions.

According to a MasterCard poll, tap-and-go payments had grown 2.5 times faster than their non-contactless counterparts for grocery and drugs store products in the APAC between February and March 2020. Furthermore, the company added that the Asia Pacific is the worldwide leader in cashless payments.

And, according to Frost & Sullivan, businesses increasingly adopt digital payments and alternative solutions, fulfilling the growing consumer demand for cashless transactions while enhancing their services for customers.

Digital payments allow organizations to create new, more innovative business models and revenue streams while offering an improved customer experience for their users.

Furthermore, with multiple solutions on the market, electronic invoicing is increasingly gaining ground to paper invoicing in the APAC, the researchers stated.

In addition to identifying the trends, Frost & Sullivan recommends business-to-business payment providers to:

  1. Create innovative payment products addressing both the cash flow and working capital challenges of SMEs.
  2. In collaboration with major card networks, create virtual credit card offerings for enterprise customers.

Partnerships Among International and Local Businesses

According to Frost & Sullivan, strategic partnerships between major participants on the global and local markets in the industry is key to facilitate digital transformation and raise the B2B payment adoption in the Asia Pacific.

Indeed so, multiple companies have identified this trend to innovate and offer better customer experience.

As part of a global service, e-wallet provider STICPAY has partnered with local financial institutions in multiple Asian countries to enhance its payment solution by introducing cost-efficient and fast local bank wire to its users.

“Our local partnerships with banks allow STICPAY customers to deposit and withdraw their funds without the high costs and long processing times of international wires. As a result, we have experienced a 88% increase in transaction volumes in Asia amid the first months of the pandemic, with an average monthly growth rate of 28% on the continent. The demand is so great that we are planning to expand our local bank wire service to additional countries and regions in the near future,” James Bay, STICPAY’s Customer Service Director, said.

dLocal follows the same trend for its cross-border payments network, allowing merchants to integrate local payment methods in emerging countries to fulfil consumer demands and add a level of convenience to the service.

Moreover, the digital payments company SafetyPay teamed up with the eCommerce company Rappi to provide instant reconciliation and cash solutions for consumers without cards and those who are afraid of fraud.

Increased Cryptocurrency Adoption for Cross-Border Transactions

For a fraction of the costs of traditional cross-border payment solutions, cryptocurrencies allow both businesses and consumers to execute fast international transfers without third-parties.

Because of this reason, digital assets present an attractive way for businesses in the APAC to increase the efficiency of their payment networks. Therefore, Frost & Sullivan considers it as a possible solution for cross-border settlement.

Due to the blockchain’s open and transparent nature – the underlying technology powering cryptocurrencies –, both end-users and payment service providers can trace back digital asset transactions to their origins.

According to Frost & Sullivan researchers, the above feature of cryptocurrencies allows participants to identify potentially compromised transfers.

Central bank digital currencies (CBDCs) are also gaining momentum globally.

By combining fiat currency and the benefits of cryptocurrency payments, CBDCs allow governments to leverage innovative technology to cut down their expenses and provide financial inclusion to the unbanked while more efficiently combatting fraud and illicit activities.

Among all regions, the APAC is in a leading position as China is already piloting its digital yuan CBDC project in multiple cities across the nation.



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