Q&A with Kailash Madan at Primer

Kailash Madan, known for enabling commerce in both traditional and internet-first enterprises in the Asia Pacific region takes the time to make predictions for 2023. Primer’s Head of APAC, Kailash Madan talks to Payments Consulting Network’s Research Director, Catherine Batch about the digital movement that is being encouraged by the New Payments Platform (NPP) in Australia, the importance of becoming more efficient during a slowing economy and the rise in consumer expectations around seamless low-cost payment options.

CB: APAC consumers remain among the most enthusiastic adopters of digital payments in the world, can you tell me about what we can expect in 2023?

KM: In Australia, the digital movement is being encouraged by the New Payments Platform (NPP), which is supporting more innovation in the payments space with a national infrastructure for fast, flexible, data rich transactions across the country.

In other parts of the region, across Southeast Asia, there are socio-economic factors at play, with more than 70% of the population underbanked or unbanked. Despite not having access to traditional credit, e-wallet penetration among this group – many of whom are members of the informal workforce – e-wallet is set to surge to 58% by 2025.

Alongside the growth in e-wallet users is the growth of e-wallet providers. In Australia, the increasing share of mobile wallets such as Apple Pay, Google Pay and PayPal is accompanied by a growing share of payments owned by Buy Now, Pay Later (BNPL) and Open Banking providers.

Australia is just scratching the surface of what is possible. In Indonesia for example, over 40 e-wallet operators are licensed by the central bank.

While not yet a cashless society, we are fast moving in that direction, with wallets set to become increasingly digital in the months and years to come. But alongside the digital wallet explosion, there are other payment trends that are set to shape 2023.

CB: It there anything that payments organisations can optimise in 2023?

KM: Becoming more efficient during a slowing economy will be a key focus for merchants in the coming year, and payments will be an integral part of this. Automation will need to accelerate as businesses work to counter high wages and supply problems. Where possible, retailers will use automation in their back-end operations to cut labour costs and merchants will be empowered by low-code and no-code tools to accelerate this transformation.

As such, while rising cost-of-living will hurt, no slowdown in tech spending is expected. In fact, recent forecasts from Gartner expects tech spending in 2023 to rise by more than 6% from the previous year. Businesses will need to spend money to make money and invest in optimising their payments and commerce stack so they don’t lose those valuable customers at the checkout.

In Australia specifically, the Reserve Bank of Australia (RBA) recently announced that least-cost routing functionality is expected to be developed for mobile-wallet transactions, which means that there will be more opportunities for businesses to capture more payments, at a cheaper cost per transaction. In the same vein, businesses will automate data-driven decision making to reduce the opportunity costs of outdated and inefficient technologies.

CB: What must businesses prioritise in payments this year?

KM: As consumer expectations grow, the ability to seamlessly offer alternative, lower cost local payment options alongside traditional credit card transactions is no longer a nice-to-have for merchants – it has become essential.

But a newly released report from Stripe found that ecommerce merchants are struggling even today to provide a seamless checkout experience for their customers, reporting that 99% of Australian ecommerce sites make five or more basic errors that slow the checkout process. Customers don’t only want an errorless experience, they want it to be efficient, with 47% reporting that they would abandon a purchase if the checkout process takes three minutes.

These findings are further backed up by Australia Post’s 2022 Inside Australian Online Shopping – eCommerce Industry report, which found that 23% of consumers want retailers to up their game when it comes to payment options. While the need to invest in costly development time must be weighed against increasing financial pressures, the reality of consumer expectations around a seamless checkout experience will only grow.

Consumers are increasingly looking for faster, cheaper, and local payment options. Merchants who fail to offer that face the risk of losing customers to competitors, or not being able to expand into new markets. It will be businesses that can offer customers the payment methods they want, and do it well, who will come out on top in 2023.

CB: As merchants chase ecommerce growth, do you think cross border transactions will grow?

KM: Even as cost-conscious consumers and higher interest rates hinder retailers’ expansion plans, the 2022 e-Conomy SEA report recently released by Google, Temasek and Bain & Company, revealed that ecommerce – while tapering – will still grow from pandemic peaks.

In South-East Asia, the online and offline universes will merge further, and e-commerce will spread as mom-and-pop stores are digitised through an array of B2B platforms. Asia’s rapid digital transformation presents huge opportunities for merchants across the region who want to capture consumers in their own backyard, as well as the huge opportunities further afield.

While the Australian ecommerce market is booming, businesses are increasingly choosing to turn to international markets like the US, Europe and China in tough economic conditions.

As payment options continue to proliferate, businesses that want to truly capture the opportunity of the digital economy boom in Asia need to be able to provide interoperability between payment providers, allowing them to enter new markets and access new customers quickly and easily.

For these merchants, cross-border payment and settlement is a key challenge where fintech can play a positive transformative role.

CB: There has been a lot of talk about cybersecurity, is there anything that can help defences?

KM: In 2023, governments will likely step up the focus and tighten cyber controls, adding to red tape and imposing a big burden on small businesses. Cybersecurity defences are advised to become more layered and integrated to protect from increasing threat complexity but for Asia, where merchants must navigate a fragmented payment landscape, reconciling payment preferences and cybersecurity may be a challenge to solve.

In Australia specifically, widespread concern around massive data breaches means that security will be front of mind for businesses and their customers. The Australian Cyber Security Centre recently revealed a 13% increase in online crimes in the past year, with fraud and online shopping scams at the top of the list. In this context, automated fraud detection tools like Riskified, which last month launched in Australia, will become an increasingly welcomed and critical part of every ecommerce website.

Ultimately, as global economic events create uncertainty for businesses, greater flexibility and adaptability in the payments and commerce space will become more important for businesses to pivot quickly to market changes in the coming year.

Author: Catherine Batch, Research Director, Australia, Payments Consulting Network

Catherine has over 20 years of experience in strategic marketing, product management, and communications. Her experience has been gained working in London, Sydney, and Brisbane in senior management and consulting roles.​ Catherine has extensive experience in the Australian payments market launching a start-up in 2015 where she managed regulatory requirements, applied for licensing, and developed shareholder agreements.​


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