It may soon be possible to travel across the world without bringing out your physical wallet, thanks to the proliferation of mobile payment apps like e-wallets.
A recent Worldpay Global Report predicted that adoption of e-wallets will rise sharply within APAC, growing from 52% in 2018 to 66% in 2022. The jump is hardly surprising, given that many consumers in emerging South-east Asian countries such as Indonesia are unbanked and would therefore leapfrog to mobile commerce solutions that are not only readily available on their smartphones but also easy to set up.
Indeed, a Hootsuite report last year estimated that at least 76 per cent of internet users in Indonesia made purchases via their mobile devices. Other APAC countries that fell into the high usage spectrum include Thailand (71%), South Korea (63%) and Malaysia (60%).
It is clear that businesses need to make building convenient and robust e-payment platforms a key pillar in their strategy to win customers in this region.
“The traditional view of a bank account is changing. There is less need to have physical cash on your body – there’s going to be a paradigm shift from physical money to virtual currency,” said Eric Liebman, global head of travel, Ingenico ePayments, at a panel about payments at WiT Singapore 2019 earlier this month.
Shirish Jain, PWC’s strategy and payments director, took that hypothesis a step further, postulating that the notion of having a bank account might even disappear. He cited the e-wallet in Indonesia’s ride-hailing super app, Gojek, as an example of how consumers have become increasingly reliant on that system of payment. Given that Gojek provides a suite of services in Indonesia beyond ride-hailing – from spa treatments to food delivery – it is easy to imagine entrusting large sums of money to a single app.
For travel companies, making e-payments a key part of their customer strategy is a big challenge considering that they need to service multiple geographies.
“Depending on which country you are operating in, you need to tailor your payment methods according to the customer’s needs, and not what you think is the easiest solution,” said Remo Giovanni Abbondandolo, vice president, business development MENA, Checkout.com.
A significant chunk of all e-payments transactions in APAC is spent on travel, said Filip Filipov, vice president, strategy, Skyscanner. OTAs are adapting to the emergence of e-payment platforms, but more traditional and established businesses like hotels and airlines are still slow to change. So even though booking directly with hotels might yield cheaper prices, many consumers would turn to OTAs because the process is more seamless and offer more flexible payment methods.
“Make payments as part of the overall experience; make it invisible. Additionally, these digital payment platforms will deliver real-time customer insights using the data that has been collected,” said Jain. These insights would, in turn, help companies to finetune and better deliver a tailored customer experience, therefore winning over their loyalty.
For companies who wish to expand into markets with an existing dominant e-payments player, it would be prudent to partner or set up a joint venture with the local players. Recently, China opened up its e-payments industry to four foreign firms, including PayPal. The company was able to establish a presence in the country through an acquisition of a domestic payment platform called Guofubao (or GoPay).
For companies that wish to expand into markets in Europe, they need to make their e-payment methods PSD2 compliant. PSD2 is a Payments Service Directive that regulates the payment industry in order to ensure consistently high standards of consumer protection across all payment platforms.
The key impact of this directive is that companies will need to integrate strong security protocols and make transaction information transparent to their customers. This will not only reduce fraudulent transactions but increase customer trust and facilitate seamless online payments.
Ultimately, whoever can integrate e-payments into their services will have a leg up on the competition. In the future, e-wallets might ascend to the throne of payments methods, and consumers who do not adopt such payment methods may find themselves severely restricted in their travel options.
