APAC’s mobile wallet adoption chips away at traditional payments’ dominance
Mobile wallet adoption in Thailand, Vietnam far exceed those in the US, the UK.
Mobile wallet adoption and usage in the Asia Pacific is poised for major growth over the next few years and further displaces traditional payment methods, according to GlobalData.
Markets in APAC have also emerged as the top adopters of mobile wallets globally. GlobalData’s 2021 Financial Services Consumer Survey found that Thailand is the top country globally in terms of mobile wallet adoption, with over nine in 10 or 93.7% survey respondents indicating that they had a mobile wallet and used it in a shop in the past 12 months. Other Asian markets Vietnam, India, and China followed.
The adoption level in the region is much higher compared to many of the developed markets such as the US and the UK, both of which only stand at 42.8% and 36.5%, respectively.
The availability of low-cost smartphones, rising Internet penetration, growing awareness of mobile payments and the proliferation of mobile wallets has resulted in Asian countries shifting from cash transactions to mobile wallet payments, noted Ravi Sharma, lead banking and payments analyst at GlobalData.
“The ongoing COVID-19 pandemic has further accelerated this trend as consumers are increasingly switching from cash to digital mode of payments, with the mobile wallet being the major beneficiary,” Sharma added.
Mobile wallets push into mainstream
Mobile wallets have increasingly become the mainstream payment method for many markets in APAC. GlobalData noted how these wallets are now widely used for day-to-day transactions at supermarkets, grocery stores, street vendors, tea stalls, fuel stations, and even inside taxis and auto-rickshaws.
“The seamless payment experience offered by mobile wallets has redefined the way consumers carry out their day-to-day activities. Mobile wallet usage is all set to disrupt the overall consumer payment space in the region with gradual decline in cash usage, a trend that is more prevalent during the current COVID-19 crisis. Increasing smartphone penetration, widespread QR code infrastructure, the introduction of instant payments, and rising consumer and merchant preference for electronic payments will continue to accelerate this trend,” Sharma said.
The high adoption of QR code payments has been a major driver for mobile wallet adoption in APAC.
“Whilst consumers benefit from the convenience and pricing benefits (cashback/discounts), it is the ‘cost-effectiveness’ that appeals to the merchants as the costs associated with mobile wallet acceptance including setting-up infrastructure (e.g. QR code sticker) and transaction fees are much lower compared to traditional card-based payment systems,” the report read.
Mobile wallets are expected to be pushed further into the mainstream with the emergence of instant payments.
Initially developed to facilitate real-time fund transfers between bank accounts, instant payments are now being extended to merchant payments, and like mobile wallets only need to use smartphones—all while offering an all-in-one payment platform that facilitates various wallets.
For example, India’s Unified Payments Interface allows individuals to make instant payments to merchants through their mobile banking app or mobile wallets such as Google Pay, PhonePe, and Paytm. The Philippines’ InstaPay and Singapore’s PayNow are other such examples.