- Mastercard is preparing for the future of payments in which cryptocurrencies, digital currencies and blockchain will play a vital role for consumers and businesses
- The payments giant is also in talks with various central banks, including China, to explore broader cross-border use of their digital currencies.
- It is also evident that APAC’s enthusiasm for QR codes, digital wallets and cryptocurrencies exceeds global averages.
Digital payments have never been more important to the Asian financial services ecosystem than today. Asia has surpassed all other regions in terms of payment revenue growth in recent years. The continent is also the largest contributor to global payments revenue, generating more than US $ 900 billion in 2019, almost half of the global total. In the wake of the pandemic, enthusiasm for a wider range of payments has accelerated in Asia-Pacific, according to Mastercard.
For a better perspective, the use of digital payments in Asia has increased 2.5 times in 2020, compared to the pre-Covid era. The role of payments across Asia banking landscape has also grown, now accounting for 44% of aggregate banking income, compared to a third in 2007.
Mastercard Southeast Asia Emerging Markets Division President Safdar Khan recently spoke with Tech Wire Asia at the future of payments within ASEAN and he pointed out that cashless and digital payments were already on the rise in that part of the world even before the pandemic hit. âUnsurprisingly, the pandemic has increased the need, awareness and demand for cashless payments as more and more people now adopt this method of payment, which is a way to stay safe, reduce contact with surfaces – as well as being efficient and practical, âhe said. .
Key behaviors that are here to stay
Khan noted that some of the key behaviors that Mastercard has seen, and is confident they will stick around for the long haul, include traction for contactless payments, a better perception of QR codes, a growing demand for more choice in payment methods, as well as a greater preference for e-commerce and online shopping. Security concerns, according to Khan, are a priority for Asians when it comes to trying new payment methods.
âOur global research in 2020 found that 91% of consumers in the Asia-Pacific region were using tap-and-go payments. And, in the same study, 75% of people in the Asia-Pacific region said they would continue to use contactless payments even after the pandemic was over. The combination of these two data indicates that this is a strong sign that consumers are seeing the long-term benefits of having a safer and cleaner way to pay, paying faster and being more. socially responsible, âhe said.
Even QR codes have gained popularity in APAC compared to the rest of the world. â76% of consumers in APAC perceive new payment methods such as QR codes as cleaner and 71% of people in APAC see QR codes as more convenient for in-person payments, primarily because consumers use their own mobile devices, âKhan said TWA.
the New Mastercard Payments Index 2021 found that 80% of respondents in the Asia-Pacific region said they now prefer to shop at stores that have both an in-person and online presence. Interesting way, e-commerce last year’s spending also gained momentum thanks to older consumers who once preferred traditional stores and markets. Overall, e-commerce revenue in APAC is expected to reach $ 2.1 trillion by 2025.
Khan also reiterated that the future is in virtual card payments, “but it will take some time to become a mainstream choice.” However, he said earlier innovations like NFC technology have gained momentum, allowing fintech startups like digital wallet providers to now offer wider, easier, and faster payment choices.
âExample: In recent years, digital wallets have grown to over 150 vendors in the AP region. South East Asia in particular, is growing incredibly fast. In Indonesia this year, 41 licensed e-wallet platforms were approved by government regulators – a significant number for a single market. In addition, our Mastercard 2020 impact study showed Malaysia had the highest mobile wallet usage in Southeast Asia at 40%, ahead of the Philippines at 36%, Thailand at 27% and Singapore at 26%, âhe said. declared.
Key trends shaping the future payments landscape in Asia
Among the many trends that will shape the region’s future payments landscape include a continuing shift towards contactless payments, the growing popularity of Buy now, pay later, and the rise of real-time payments (RTP). Even cryptocurrencies are expected to gain more interest as a form of payment.
Regarding the role of Mastercard in the world of digital currencies, Khan said the group is a facilitator of another form of cashless payment Payments. âFor Mastercard, support a CBDC [Central Bank Digital Currency] is to add another fiat currency that can be accepted and processed on our networks. We are here to create a interoperable payment network that transcends borders, âhe explained.
Yet Mastercard as an organization believes it is still too early to say how cryptocurrencies will play out. âBut for a cryptocurrency to be successful, it has to have characteristics similar to today’s fiat currencies – be safe, stable, reliable, widely adopted and easy for consumers to use,â Khan said.
With the launch of Mastercard’s CBDC test platform in 2020, the card issuer has already seen its first success with Island Pay and the Central Bank of the Bahamas, to deliver the first digital payment card linked to a currency. The test platform allows central banks to better identify and develop digital currency launch strategies and create an ideal regulatory environment.
Mastercard is also in talks with several central banks around the world, including the People’s Bank of China (PBOC), to enable the cross-border use of their respective digital currencies. Khan clarified that Mastercard is not there to recommend people start using crypto-currencies. âMastercard is gearing up for the future of crypto and payments right now and Mastercard is here to enable customers, merchants and businesses to transact in a whole new form of payment the way they want,â he said. he added.