Southeast Asia, being a vibrant economic hub, possesses a diverse payment landscape that positions it as an ideal hub for the expansion of a digital economy. Within this region, several significant trends are reshaping the payments landscape.
FREMONT, CA: Southeast Asia is the centre of a thriving economy, and it also has a very diverse payment landscape, which makes it a suitable location for the growth of a digital economy. A few vital trends are transforming the payments landscape in this region.
Buy Now, Pay Later is the Future
The increased usage of Buy Now, Pay Later, also referred to as BNPL, has had an enormous impact on the payment industry, especially in Southeast Asia. BNPL is a payment solution that, true to its name, enables consumers to make purchases, and allows them to pay at a later date.
It is generally interest-free and the payments are commonly made back in instalments. It offers easy credit access to consumers who do not have access to conventional methods of credit and can aid in boosting sales for retailers, decreasing basket abandonment, and improving customer loyalty. Naturally, BNPL has become a very important and popular tool for the promotion of financial inclusion, improvement of market efficiency, and enhancement of competitiveness of e-commerce companies.
As its popularity grows, there is a necessity to protect consumers, ascertain the financial stability of BNPL providers, and prevent predatory lending practices. Clarity regarding guidelines and transparency of processes can help avoid customers from consenting to financial agreements that they do not understand, which may be fraudulent or may charge excessive fees. Establishing regulations around BNPL can also prevent providers from constructing options that entrap consumers into a cycle of debt.
The Growth of National and Cross-border Real-time Payments
The creation of mobile technology and the implementation of proxy payment methods have popularised real-time payment methods in Southeast Asia. In Singapore, real-time payments have reached the streets, as hawkers are also using QR code payments for their stalls, which was primarily brought about by the COVID-19 pandemic when cashless was preferred.
Real-time payments allow users to make payments directly from their bank accounts, without requiring the recipient’s bank account details, which aids in the adoption of real-time payments across the region. Other advantages of real-time payments include decreased transaction times, as well as decreased costs for money transfers, which help in the improvement of economic growth, and money is always on the move and in use.
The Rise of E-commerce and Mobile Payments
The e-commerce market in the region of Southeast Asia is on a steady rise, and this growth is brought about by numerous factors. These include the employment of mobile internet, social media, government support, the influence of the pandemic, and the middle class.
Additionally, the increased use of super-apps that provide a spectrum of services including e-commerce and payment services is only boosting the growth of e-commerce. Merchants and their technology partners have to buckle up for the exponential growth that e-commerce is predicted to undergo and make space for digitisation in order to gain a competitive advantage.
