In APAC, it’s alternative payments galore. With a spectrum of internet and credit card penetration levels throughout, many markets have begun developing independent payment solutions to overcome the limits of their local banking infrastructure.
According to the eConomy SEA 2019 report by Google, Temasek and Bain & Company, digital payments are expected to exceed $1 trillion by 2025. The rise has helped South-east Asia’s unbanked population access financial services online. Indonesia and Vietnam’s internet economies growing over 40% each year, followed by Malaysia, Thailand, Singapore and Philippines growing 20-30%.
Predictably, all the leapfrogging that has put APAC ahead of more traditional markets like Europe and the USA has created a highly fragmented landscape.
For payment technology providers like Ingenico ePayments, which offers multiple payment integrations for e-commerce businesses, this makes the market both a playground and minefield, as new digital payment services gain traction. Multi-solution providers must determine which new solutions it wants to work with, and which it should work around.
In an interview with Neil D’Souza, country manager, SEA, Japan and Australasia, Ingenico ePayments, he identified the company’s strategy for growth, handling security and fraud, and which travel players are most in need of an online payments makeover.
Payments: the last piece in a very fragmented puzzle
Addressing the market’s fragmentation, D’Souza outlined some of the trends he saw changing within the online payments space.
“In the last few years… [APAC] is making significant efforts towards the digitisation of payments. It’s not easy to become a cashless society… but every country is investing in and really giving room for startups to grow. The whole ecosystem is coming up with various tools to achieve the transition.”
However, despite positive growth, D’Souza explained that the level of diversity within APAC has meant the region’s development has been inconsistent across countries. Key metropolitan areas representing 15% of the population account for over 50% of the internet economy, though there is much room to grow beyond major cities.
“[APAC] is not like one country or the EU… where it has its own regulations, dynamics, requirements [and so on]. Also in terms of internet penetration and banking infrastructure, it’s still very challenging.”
It puts pressure on payment providers like Ingenico ePayments to develop and offer business tools that can overcome each market’s respective obstacles. To do so, D’Souza explained that Ingenico works through partnerships and acquisitions, to have an arsenal of solutions for multiple markets offered through them as a single provider.
Said D’Souza, “when we talk about e-commerce businesses, the one thing in common is that the customer is in the centre of everything… and payments are the last piece of the puzzle.” Being able to provide localised payment methods that customers are comfortable with are critical to completing the online shopping journey.
“We have to go market by market and decide which are key for us, and where we see our customers’ need more than others – in-demand, with high growth potential,” explained D’Souza. “We also look at unique markets which are difficult to work with, like Russia… to have a first-mover advantage on an international scale.”
Security is everyone’s problem, not just payment providers
As online payments rise, there is also the rise of security risks and fraud – an issue that affects all players along the transaction line. “The next big thing is how do you create a more secure environment for consumers to transact online? It’s a key area of focus for every market and every player within it.”
While growth is positive, it comes with an inevitable increase in consumer risks. “The more apples you have, the more rotten apples you’ll get.
“The fact is, developed nations have being doing this for years and we are leapfrogging but we still need to catch up [in regulations]. We have grown in numbers but… we are not there from an infrastructure and security perspective,” D’Souza explained. “We will need to pull focus away from ‘how to make the sale’ to ‘how do I make it safe?’”
D’Souza is clear that this is not something a payment or e-commerce company can achieve alone, as he says that every player involved holds some accountability. While security might come at the cost of the ‘seamless customer experience’, he argued that consumers readily recognise and favour having security procedures (e.g. re-entering a PIN) in place when transacting online.
“We will soon see things like the mandating of security procedures coming into Asia, but at the same time, what Europe has mandated now, Asia had done from the beginning. There are countries that have actually leapfrogged this stage too – like India and Malaysia.”
He continued to explain that while larger steps have been made at a regulatory standpoint or country level, there is a balance to be struck in how security procedures filter out bad transactions without losing the good ones. “If rules are too strict, then you also risk losing good transactions.”
Differing levels of development in payments and security are not limited by geography. D’Souza argued that in travel, “there are industries well behind others in terms of understanding the risks and impact [payments and security] will have on their brand.”
D’Souza applauded OTAs and airlines because of their tech-forward mentalities, which have guided their approaches to payments and security, although he called out the hospitality industry directly for its lack of tech-readiness when it comes to payments, security, and protecting customer data, citing examples like Marriott’s hack in 2018, affecting 383 million guests.
“While the world is talking about PCI fraud, if you try call a hotel and book a room, you [still] have to send over your credit card information… your data is at risk constantly.”
Though likely no longer a challenge for larger hospitality groups, it is understandably difficult for smaller independents to know where to begin with setting up secure online payments for their properties. D’Souza recommended first defining their payment requirements clearly, to help identify which payment providers are best suited to their needs.
