Statistics suggest that the number of global e-wallet users has increased from 500 million to 2.8 billion in just two years, between 2017 and 2020. Southeast Asia has been the fastest-growing market, with the region currently on track to become the world’s digital payment powerhouse. Why and how does this happen? Here is how Southeast Asia advances in digital payment.
Digital Payments in Numbers
According to the latest study from market intelligence firm IDC and sponsored by global payments platform 2C2P, Southeast Asia is undergoing a financial transition, with digital payment driving its development. E-commerce revenue in the region is predicted to increase by 162% in 2025, reaching US$179.8 billion, driven by shifting consumer and retail preferences. More inclusive payment choices also contribute to this growth, with digital payment accounting for 91% of total ecommerce purchases. While e-commerce is already thriving, with 222 million users in 2020, IDC predicts it will increase to 411 million users by 2025, fueled by the addition of new payment methods.
With 188.6 million additional ecommerce customers in 2025, the ecommerce sector has become significantly more accessible. The largest ecommerce payment marketplaces are expected to be Indonesia ($83 billion), Vietnam ($29 billion), and Thailand ($24 billion). With the growth in the number of e-commerce customers, there comes the need for a greater selection of payment options. By 2025, digital payments are predicted to account for 91% of overall e-commerce spending, up from 80% in 2020. By 2025, the Philippines, Vietnam, and Thailand are expected to see significant transitions, as cash usage decreases and digital payment reliance grows.
Various Payment Methods
The trends contributing to this vast growth are mobile wallets, domestic payments (real-time and online banking choices), and Buy Now Pay Later (BNPL) in addition to classic options such as cards and cash. It is logical to believe that new payment options, such as mobile wallets and buy now pay later (BNPL), are moving transactional behavior away from traditional payment methods, such as cash on delivery. BNPL accounted for 1% of all ecommerce payments in 2020 and is expected to expand to 5% by 2025, rising by 9.7 times spend value. The research also predicts the shifting market share of payment choices between 2019 and 2025 to enhance its effectiveness in strategizing cross-border expansion.
Michael Araneta, Associate Vice President, Head of Research and Consulting, IDC Financial Insights Asia-Pacific, stated a take on this digital payment growth. He claimed that Southeast Asia’s payment ecosystem is extremely fragmented, with payment methods, increased levels, and regulation varying from country to market. His organization supplied a comprehensive reference to the region’s payments ecosystem, which included regional and local payment analytics, to assist businesses understand and negotiate the region’s difficulties.
Aung Kyaw Moe, founder and CEO of 2C2P, also shared forecasts on the ecosystem of Southeast Asia’s digital payment. As the world becomes more digital, there is a potential to capitalize on the expansion of digital payments by providing safe and dependable financial services to fulfill the region’s ever-changing customer demands. Digital payments are no more a nice-to-have, but rather a need and an essential component of every business ’s operations.
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