International Data Corporation (IDC) predicts worldwide mobile payments will account for $1 trillion in value in 2017, up 124 per cent from the less than $500 million expected in 2015.
Asia Pacific markets will contribute to this growth greatly as mobile commerce or mCommerce transactions with remote payments take off across the region.
Driven by a high number of initiatives and diverse mCommerce maturity level, Asia Pacific is expected to lead the world in mobile payment or mPayments developments.
IDC said that the strongest growth for mPayments will be driven in part by rising levels of mCommerce as emerging nations come online for the first time and witness an Internet boom via smartphones. Furthermore, the limited state of credit and debit card adoption in Asia Pacific will force potential mPayments behavior to shift to using bank account linked mobile wallets.
Shiv Putcha, associate research director, and Asia Pacific Connected Consumer Marketplaces at IDC Asia Pacific said that smartphone adoption has grown much more rapidly than general banking and card adoption in the Asia Pacific region.
Putcha added that when look across the region, it is a duality between the mature Asian markets like Australia, Hong Kong, and Singapore versus the emerging Asian economies like China, India. and Indonesia. The mature markets exhibit strong levels of banking and card adoption and will tread a similar path as mature Western economies have for mobile payments, with a focus on proximity solutions based on Near Field Communications (NFC). These will be fertile markets for solutions like Apple Pay and Android Pay.
However, Asia’s emerging markets, which account for most of Asia’s population, are unlikely to follow this path. They will more likely leverage semi-closed wallets, where consumers “top-up” their mobile wallets much like they would a prepaid mobile account by linking their bank accounts.
According to Michael Yeo, senior analyst, IDC Retail Insights said that the markets of Asia Pacific are highly diverse and each displays significantly different characteristics.
The mature Asian economies will remain card payment leaders and view mobile payments as an efficiency driver with proximity solutions seeking to displace the need for physical swiping of cards. The remaining Asian markets will look at mobile payments as a GDP booster and to address financial inclusion imperatives. Mobile payments in these markets will jump start mCommerce much like Alibaba has in China.
IDC pointed that there were several opportunities for sustained growth in mobile payments across Asia Pacific excluding Japan.
For example, NFC-based proximity solutions such as Apple Pay and Android Pay will only take hold in a few mature Asian markets as their adoption is constrained by the low penetration of NFC in smartphones and readers in emerging Asia.
Mobile wallets, especially those based on semi-closed platforms, will drive much of the growth in emerging Asian markets. Then, there will also be a significant opportunity for mobile point of sale (mPOS) device and solution vendors seeking to address gaps in card present (CP) payment scenarios in physical locations, which require payments to be verified either by NFC or even quick response (QR) codes.