Cashless payments in APAC are not a new technology. However, the last two years have driven a digital revolution in the region regarding how people pay for things with QR codes. The COVID-19 pandemic started the transition towards digital payments out of sheer necessity. Still, now that the pandemic continues to wind down, the way people are paying for their purchases remains digital.
Emerging payments are abundant in the region. According to the Mastercard New Payments Index, over 90% of people in APAC have decided to jump on board with the latest and greatest in payment technology.
Many people in the region found themselves forced into these new types of payments because of lockdown restrictions closing in-store shopping for most everything that wasn’t considered essential. Today, we consider more than just the essentials as means of survival. This is why even with our basic needs met, people still purchased, and the digital method of making payments rose significantly. This contactless mode of payment is now something that consumers want to keep post-pandemic.
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The digitalisation of the cash consumer
Consumers are the heart of every payment-driven market. Without consumer spending, industries would not thrive as they do. When it comes to the latest digitalisation of cash payments, QR codes are the potential powerhouses of the next big revolution in consumerism. In APAC, especially, cash-dominated markets have reigned supreme. While not every market in the region will see the heavy use of this method, many are making the switch to digital payments over cash payments.
In China, the market has thrived with digital additions to cash spending, such as mobile wallet applications. Layering other functional options into those wallets is driven by the establishment and widespread use of QR codes and their heavy potential in the cash-payment market. However, cash is not likely to disappear completely anytime soon. The region is working towards bringing cash and digital payments into one compatible entity. With the road to economic recovery underway, introducing new ways to drive contactless payments may help both merchants and consumers.
Adapting to the market changes
According to reports, the popularity of QR codes in China began rising in the years prior to the pandemic because of the free messaging and calling app WeChat. In 2016 alone, over $1.26 trillion USD was spent using QR technology, and by 2027, that market is projected to hit $4.68 trillion USD. The COVID-19 pandemic is, in all probability, the primary catalyst for this rapid acceleration. According to McKinsey & Company, digital payments in the region saw a 20% increase in its digital user base, with 80% of that increase coming at the height of the pandemic.
Even with the rise of digital payments, the consumer experience in APAC is not the same as it is in other regions of the world, and it likely won’t ever be. However, the introduction of QR codes can make using digital wallets and contactless payments a more universally accessible way to pay for things in-store. Consumers are looking for flexibility as their needs and desires change, and merchants that can provide these digital options are looking to benefit from changes in the market.
Small businesses and the rise of QR codes
Small and micro-merchants do not have the same luxuries as large established companies have when introducing digital payment options. These merchants have relied solely on cash payments, and when the pandemic hit, small businesses across the APAC region felt the strain to adopt new technologies to stay afloat. Along with a heavy reliance on store-front purchases, home deliveries have been a hindrance when it comes to the transition. Without the proper space or equipment to display a QR code, these small merchants have limited options for carrying around the scannable code.
Many companies have begun introducing solutions for these problems, such as ConQR by Mastercard and BOB Financial. The technology provides small merchants and their consumers the convenience of debit and credit payments using the technology in one small tool. This method gives small merchants the resources they need to receive payment from consumers without using a smartphone or other technology that may not be feasible or possible for them. Small merchants, now more than ever, need to be prepared for life after the COVID-19 pandemic. As it appears, consumers are not only on board with contactless payments, but they prefer them.
Although merchants are beginning to see the importance of cashless payments in APAC using QR codes, the transition for many will be a long and upward battle. The digitalisation of consumer-driven industries has been taking a stronghold in the last two decades. The pandemic that stopped the world caused the market to progress further than anyone could have expected.