New year, new
paths to chart. As the world reopens, businesses and payment providers will
face intense competition for attention and spend, amidst a backdrop of economic
uncertainty. Moving into 2023, here are five trends in Asia Pacific’s payments
landscape we’re watching closely.
1. Help small businesses go big
As ecommerce grows, small
businesses must tap on the tools benefiting their larger peers or risk falling
behind. It’s not just about setting up an online storefront anymore. Larger
retailers will continue innovating with unmanned checkouts, self-pick-up
options and payment methods that enhance the shopping experience.
To start, small businesses
must increase digital payment acceptance and authorisation rates. It’s equally
important to adapt to new shopping habits, such as such as livestreaming, and
social commerce.
2. Bridge a fragmented landscape
The proliferation of
contactless payments, mobile wallets, QR-based payments, account-to-account
transfers, and buy-now-pay-later schemes have provided consumers with many
options to pay. Adding to the digital payments pie are key developments in
central bank digital currencies (CBDCs) across the region, with Greater China
and India leading the charge in piloting their retail CBDCs this year. However,
these options will become increasingly disparate, as many providers operate in
closed-loop systems.
This fragmentation will hit
small businesses hardest, as they grapple with which payment option to
offer. The ease, availability, and security of the payment technology remain as
shopper’s main deciding factors. Shoppers are most likely to abandon their
carts if they are unable to use their desired
payment options.
Interoperability is key to closing
the gaps, allowing consumers and merchants from different markets and payment
schemes, to do business seamlessly around the world.
3. Jump aboard the rise of
contactless transit
Mobile
contactless payments will grow in popularity across Asia Pacific, fueled by
uptick of digital wallet launches in Malaysia, South Korea, Thailand and
Vietnam. We see transit as the gateway to drive contactless penetration deeper.
In our
experience, consumers who start using contactless payments for their commutes, will
begin to do so at nearby retail such as newsstands and convenience stores, and then
into supermarkets and restaurants. At Visa we implemented more than 40 new
transit projects in Asia Pacific in 2022, with more to come in 2023.
4. Fraud becomes more sophisticated
The digital commerce
environment in 2023 will remain the richest target for cybercriminals, led by
well-funded criminal enterprises that can attack at scale compared to
individual actors in the past. In markets such as Australia, governments are
running specialised cybersecurity taskforces at an intensity never seen before.
Tokenisation remains a key
pillar of defense against fraudsters, enabling businesses to authenticate transactions
with more accuracy while guarding consumer data. When transactions are
tokenised, fraud rates decrease by 28 percent and approval rates increase
by three percent. As tokenisation is being adopted at scale as we have seen in
India, everyone in the ecosystem benefits, including consumers, businesses,
issuers, acquirers and fintechs.
5. The move to open data is
closer than ever
Australia has long led the
open banking movement in Asia Pacific, but the rest of the region is catching
up. Central banks in Indonesia, Malaysia, the Philippines and Singapore are
making strides in developing open data frameworks that will shape the future of
open banking, fresh off the heels of digital banks that launched in 2022.
These frameworks pave the way
for future data-sharing between banking and non-banking organisations, which has
huge potential to give consumers greater access to financial services. As data
partnerships increase, more financial institutions will embed their services,
such as credit and installments solutions, into consumer-facing marketplaces
and super-apps.
This move also brings renewed
focus on data privacy and protection. A Visa study found more than 80 percent
of consumers expressing concerns over the privacy of their data shared between
organisations. As businesses create personalised experiences and consumer
journeys backed by open data, success will also depend on trust that must be
progressively built with consumers.
In 2023, businesses
will see fresh opportunities in the open digital economy, coupled with the need
to combat new types of fraud and to help small businesses catch up with their
larger peers. Consumers will have more ways to pay, yet the payments landscape
will become more fragmented, making interoperability a key focus area for
ecosystem players to collaborate on.
As we enter an
exciting year, now more than ever is the time for businesses to re-examine their
operations and rethink their business and payments strategies.
