Globally, digital payment methods are quickly replacing the faithful banknote. Instead of cash, purchases can now be done digitally. Over recent years, the payments market had been digitally disrupted by fintechs such that innovation is not slowing down.
A cashless future will be inevitable. The trigger for the final transition to cashless will be when cash becomes too costly to supply and accept. There are indications that change is coming slowly but surely. Banknote producers and mints are increasingly starting to consolidate and merchants are seeing the merits to cashless payments.
There are a plethora of payment methods available. The inability of cards to serve everyone everywhere has given rise to alternative payments methods like eWallets and carrier billing. Here there is a lot of development, particularly in Asia Pacific. eWallets, in particular, are mushrooming here but more importantly, the acceptance of eWallets is growing through local and regional partnerships.
We all know of the dominance of Tencent and Alibaba’s competing apps – WeChat Pay and Alipay – and how they are used everywhere in China. Beyond China, Alipay scales through volume whereas WeChat Pay scales through the opportunity to monetize. WeChat Pay’s model, that addresses user’s pain points and adds value, is therefore a more sustainable model. If one of its one million mini programs can focus on the needs of the elderly, we would solve the last bottleneck holding us back from transitioning to cashless societies.
The opportunity within the payment industry is so big that there is potential for regional players such as GrabPay, Boost and even Singtel VIA’s cross border mobile payment alliance and global payment providers to play a bigger role. If regional and global players could partner across different regions, achieving global eWallet acceptance and a viable global alternative to cash would be achievable.
The payments market is in constant flux. Competition is rife, but if we want to see a cashless society and more consumer-centric payment options, we need more global first solution providers and local first solutions providers to partner locally, regionally and globally. Global interoperability should be a central theme matched by the need to cater to local behavior, needs and preferences. Card schemes have worked this way and so should eWallet schemes.
Based on current progress with the payments industry, the highly anticipated rollout of 5G opens up multiple new opportunities, use cases and business models; if paired with payments, this can revolutionize how consumers interact and enterprises compete.
Going forward, the payments industry should work towards integrating into society so efficiently that it becomes the de facto enabler of industry digitalization on a global scale. To do this, payment solutions have to closely meet the needs of the users that they serve and have to integrate seamlessly and securely with applications that bring true value add and convenience to consumers.
The potential for the payments industry is much bigger than just replacing cash. It is an enabler of industry transformation, which we will see much more of in the coming years.
Contributed by Quah Mei Lee, Associate Director at Frost & Sullivan