Alternative payments have gained significant prominence among online shoppers in the Asia-Pacific (APAC) region with payment solutions such as mobile and digital wallets displacing traditional payment methods like cash and cards, says GlobalData, a leading data and analytics company.
According to GlobalData’s E-Commerce Analytics, e-commerce payments in APAC (covering 16 countries) are estimated to increase by 16.7% in 2021 to reach US$2.8 trillion, due to an accelerated shift towards online shopping among consumers. The value is anticipated to rise further at a CAGR of 12% to reach US$4.3 trillion in 2025.
The APAC e-commerce market has been growing at a robust pace over last few years supported by rising Internet and smartphone penetration, growing middle class population and tech-savvy millennials. Social distancing measures as well as closure of physical stores due to lockdown amid COVID-19 made online shopping even more appealing for consumers.
Ravi Sharma, Lead Banking and Payment Analyst at GlobalData, comments: “The adoption of alternative payments in APAC has occurred well ahead of that in the West and now they are gradually replacing cash and cards.”
The rising smartphone penetration coupled with large unbanked population has helped in growth of alternative payments in the region.
Sharma adds: “The COVID-19 pandemic has further supported this trend as consumers are increasingly shifting to online channel and opting for digital payments, thereby benefiting these alternative payment tools.”
Alternative payments are now accounting for lion share in the e-commerce market across several APAC countries. According to the GlobalData’s 2021 Financial Services Consumer Survey*, in China–the largest e-commerce market globally–alternative payment solutions are set to account for more than 70% of the e-commerce transaction value in 2021, increasing from 51.2% in 2017.
A similar trend could be seen in other Asian markets like India, Hong Kong, Australia, and the Philippines, where these payment tools account a substantial share for 59.6%, 45.5%, 43.2%, and 30.6%, respectively.
Convenience, speed and security are cited as the most important factors by survey respondents for using alternative payments for online purchases. Rewards and other pricing benefits associated with these solutions also entice shoppers to use these payment solutions.
Sharma concludes: “The usage of alternative payments is poised for major growth in the next few years in APAC, disrupting the overall consumer payment space in the region with gradual decline in cash usage. Increasing consumer demand for online shopping amid the pandemic, rise in smartphone penetration, and growing acceptance of these tools will further drive their usage in coming years.”
This article has been republished with permission from Global Data.
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