It’s endgame for traditional payments as mobile wallets emerge victorious
Digital online spending has taken on a life of its own in fast-growing regions like the Asia Pacific (APAC), with e-commerce booming and online sales as popular as physical retail in many parts of the region. The growth has also spurred the adoption of digital payments such as mobile wallets throughout APAC, as a recent report on consumer spending patterns has indicated.
In fact, in leading territories like China, India, Indonesia and Malaysia, the latest Experian Global Insights Report has uncovered that digital payments like mobile wallets have actually overtaken classic payment methods like credit cards in popularity. Other markets are also showing a significant uptake in the adoption of mobile wallets as well as other digital means of paying that are rivaling the universally-accepted physical payment means that have been dominant for centuries.
Mobile wallets and the digital experience
Experian surveyed 6,000 consumers and 2,000 businesses across 20 countries on the significant shifts in consumer digital preferences and business strategy over the past seven years. Both consumer and business users from countries as diverse as Australia, Brazil, Chile, China, Columbia, Denmark, Germany, India, Indonesia, Ireland, Italy, Malaysia, Netherlands, Norway, Peru, Singapore, South Africa, Spain, United Kingdom and the United States all shared their insights on the local consumer and business economic outlooks, financial wellbeing statuses, online behavior, and more.
The study outlines how the growth curve of online spending has significantly increased the presence of mobile wallets, with 62% of respondents saying they are currently using mobile wallets, while 63% still rely on traditional forms of payment. Across the board, consumers said they wanted fast, frictionless, secure transactions — 81% mentioned that a positive digital experience would help cement online payments as a worthy replacement to the brick-and-mortar retail experience.
The same was found to be true for business uses. Over half (53%) of users mentioned how their online spending had shot up in the past three months, and exactly half believed that this is just the beginning, and that digital spending via mobile wallets and the like would only increase more in the next three months.
One additional business benefit with the rise and reach of new payment methods like mobile wallets, peer-to-peer (P2P), and Buy Now Pay Later (BNPL) is that businesses are also able to find options for better financial inclusion — one of the main drivers of financial technology (fintech) adoption in APAC, where one of the largest unbanked populations in the world still resides.
Besides mobile wallets, the study stated how BNPL services are gaining momentum in APAC, and are poised to replace the regular use of credit cards in some markets, including Australia (28%), China (28%) and Indonesia (32%) where usage has surged in the last six months.
Companies still have room to better meet customers’ expectations of the digital experience, as 23% of consumers surveyed globally say their expectations for the digital experience have only somewhat or not at all been met. This gap in expectations is widened further in Singapore, where only 1 in 5 consumers say businesses have completely met their expectations for digital experiences — the lowest across APAC.
Mounting financial data protection concern
The report found that APAC consumers are willing to share personal data with businesses in exchange for better services. This is likely due to the prohibitive costs associated with scaling up a lot of grassroots fintech platforms to keep pace with increasingly sophisticated APAC users as the region matures as a financial services market.
Globally, only 23% of consumers feel very confident that the businesses will address their online security concerns satisfactorily. And in a sign of increasing digital maturity worldwide, a significant 73% of digital customers now believe it is the responsibility of businesses and organizations to take their online security seriously, and not the other way around.
Over half (52%) of worldwide respondents are concerned about their online transaction security, and 63% say they’ll share their personal data for value like better services. For instance in Indonesia, 74% of consumers are ‘very’ and ‘somewhat’ willing to share their personal data, the highest in APAC. But consumers around the region are still cautious about sharing payment or transaction data, which in turn, limits the ability to fully capitalize on the data and optimally address consumers’ shifting demands.
The reluctance to fully trust these online platforms, even for APAC markets, is one of the main reasons why financial data protection is the top priority regionally. And many remain wary of their digital experiences, particularly in Malaysia, where 84% are ‘very’ and ‘somewhat’ concerned with online transactions and activities.
“As consumers in the region continue to embrace digital interactions, it is imperative for businesses to understand and be able to address consumers’ specific needs and concerns efficiently. Prioritizing data insights and technology-driven solutions are crucial for businesses to stay ahead of the game,” noted Luciano Scalise, Decision Analytics Managing Director of EMEA & APAC for Experian.