According to the 2021 Mobile Wallets Report, Southeast Asia will become the world’s fastest-growing mobile eWallet region. Mobile infrastructure and payments company Boku teamed up with Juniper Research to gather information from Asia-Pacific (APAC), Africa, Eastern Europe, the Middle East and Latin America.
The mobile wallet trends show Southeast Asia’s projected user growth to be 311% from last year to 2025. Latin America came in second with 166%, whereas the Middle East and Africa had an estimated rise of 147%. In Eastern Europe, specifically Russia, the expected user growth will be 115 million by 2025 from 34.9 million in 2020.
Emerging trends in fintech
With the current push for digitisation, many people see digital payments in Southeast Asia as the future. eWallets offer several advantages over traditional options, such as easy access and convenience when using money. They are primarily secure and can process different transactions, for example, paying the electricity bill or clearing your receipt at a supermarket.
We explore 8 fintech payment trends in Southeast Asia
Some eWallets have added benefits like reward points, discounts, promotion codes and cashback schemes, allowing users to redeem these incentives to pay for other services. Money transfers are also quick and timely. You can fund your digital wallet using your linked bank cards, increasing your access to money.
A significant aspect of fintech in Southeast Asia is the disruption they cause to established financial entities and the solutions they bring to the region’s massively underbanked market. Currently, there’s a substantial opportunity for mobile payments providers to exploit. Juniper Research found that the unbanked population in other emerging markets was 39% in Africa and the Middle East. The Indian Subcontinent and Latin America had 27% and 24% respectively, while Central and Eastern Europe were last at 17%.
Mobile wallet use in different parts of Southeast Asia
Western countries mainly use debit and credit cards for their transactions. They lean more toward card-based mobile wallets that use Near Field Communication (NFC) technology, such as Google Pay, Samsung Pay and Apple Pay. Other regions use stored value mobile wallets, a digital system that exists outside the payment cards network. Examples include China’s AliPay and GrabPay.
Here is how some countries in Southeast Asia are implementing mobile wallet use:
- Indonesia: Boku’s survey found Indonesia is the third-fastest growing cell phone market, with users tripling by 2025 and transactions also increasing from $28B to $107B. The five companies dominating their mobile payments landscape include OVO, DANA, ShopeePay, LinkAja and GoPay. OVO leads their market share with 38.2%, with the rest below 16%.
- Singapore: By 2025, Singapore will have a projected mobile wallet penetration of almost 95%. Their cell phone transaction volumes will rise from 101 million in 2020 to 1.1 billion in 2025. GrabPay leads their market share by 35.3%, with FavePay at 23.5% and DBS PayLah! 18.8%. Other options are below 12%.
- Malaysia: Malaysia has been slower than other Southeast Asian countries to integrate mobile payments. This looks set to change as their users are likely to rise from 10.3 million in 2020 to 32.6 million in 2025. GrabPay leads their market share with 38.3%, Touch’ N Go has 36.2%, and Boost has a 22.4% cut.
As plans to roll out 5G and improve online infrastructures continue in Vietnam, Thailand and The Philippines and other countries in the region, the smartphone penetration rate also rises. With large populations moving to an increasingly online world, eWallets and other fintech services are also slowly growing in the other ASEAN countries.
Digital payments in Southeast Asia will become the norm over the coming years. The unexpected arrival of the pandemic makes the surge for digital solutions a necessity. Last year, 54 mobile wallets had transactions of over $1 billion USD. In 2025, the projected number of eWallet users will be 4.8 billion, almost double the current 2.8 billion current users.
Despite the enormous potential for mobile wallet solutions, they still suffer from various challenges. Many new users struggle with the initial adoption and use stage. Some issues include losing passwords, identity theft, and customer account trouble.
Other problems are the unavailability of preferred eWallets in specific stores, delayed merchant implementation, the use of incompatible phones and insufficient customer care. Moreover, there’s a continued battle between in-store cash purchases versus the current digital approach to payments.
Fintech in Southeast Asia faces increased government regulation and a lack of proper guidelines on other financial aspects, limiting the industry’s advances.
Even so, the mobile wallet trends indicate strong growth in the future. Things will move faster once businesses take a more proactive approach to digital payments. Companies need to gather extra data and remove the inconsistency in their strategies. Investments and the emergence of better mobile payment alternatives will benefit the users, increase market competition and drive more significant innovation.