APAC leads the way in instant payments innovation.
Asia Pacific is leading the adoption and implementation of instant payments thanks to innovative technologies, widespread smartphone accessibility, and favorable regulations. This positions the region as a global pioneer in instant payments and provides easy access to real-time payments. This success is expected to further flourish as adoption of new fintech models increases, as the majority of highly profitable digital-only banks are based in the region.
The Asia Pacific region is home to 10 of the 13 most profitable digital-only banks in the world. The region’s enthusiasm for experimenting with alternative payment options has led to improved domestic and cross-border payment capabilities, access to real-time payments, opportunities for financial inclusion, and a leadership position in financial innovation. Asia Pacific has 20% of the world’s digital banks, and its citizens are the most active adopters of digital payments.
Emergence of APAC digital wallets
Digital wallets in Asia Pacific (excluding China) have more than doubled their share of e-commerce transaction value over the past five years. This trend is expected to continue to increase over the next three years. Similarly, the percentage of POS payment transactions worth digital wallets has increased six-fold over the past five years.
In particular, progress in regional payments is notable in Southeast Asia. By 2025, the size of real-time payment networks in the market is expected to reach $2.4 trillion, a 230% increase compared to 2020. Additionally, by 2026, over 400 million people in Southeast Asia are expected to use mobile wallets.
Spotlight on the growth of payments-centric e-commerce in India
In India, the National Payments Corporation of India has offered Unified Payments Interface (UPI) to non-residents of India in 10 countries, including Australia, Canada, Singapore, the UK and the US. This move is expected to lay the foundation for a global remittance network. UPI and other real-time payment schemes are expected to facilitate cross-border commerce in India, providing significant growth opportunities for online sellers.
Account-to-Account (A2A) payments, which reduce payment authorization costs for merchants while improving cash flow through immediate availability of funds, have seen significant growth in India. A2A payments as a percentage of ecommerce transaction value increased from 12% in 2021 to 19% in 2022, and are expected to reach 24% in 2026.
Challenges in the digital payment innovation process
Despite the Asia Pacific region’s progressive stance on digital technologies, privacy and security concerns may hinder the adoption of new payment methods. Research shows that more than 75% of consumers in the region would withdraw support for a brand if a data breach occurred.
The World Economic Forum refers to the Asia-Pacific region as a ‘hot spot for cybercrime incidents’. The rapid evolution of the cyber threat landscape, the rise of malicious software, the mobilization and organization of cybercrime groups, geopolitical conflicts, and economic uncertainty have all combined to create a favorable environment for threat actors. In this region, 60% of leaders surveyed acknowledged that their organization has a significant cybersecurity staff shortage.
The region’s diverse and unpredictable consumer behavior also poses challenges. Consumers in Hong Kong and Singapore have historically been more open to new digital payment methods such as Apple Pay, Google Pay and Samsung Pay, while consumers in markets such as China, the Philippines and Vietnam tend to pay with local and regional wallets due to familiarity. There is this. And convenience.
As the use of cryptocurrencies for payments continues to expand in APAC, leveraging this momentum will require close collaboration between governments and private companies to achieve maximum impact and ensure the highest security for consumers.
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