Digital wallets open regionwide
The adoption of digital wallets and contact-less cardbased payments by retailers in developing countries across Asia-Pacific is likely to become the standard as trust and convenience are paramount for consumers, says leading analytics company GlobalData.
Smaller retailers, street traders, corner cafes and cabbies have relied on the cash economy for decades, unable to afford card reader devices or pay the fees associated with processing electronic payments. This is rapidly changing.
“As the Indian government launched a demonetisation programme, consumers were forced to use electronic payments, though cash did not completely disappear. All types of retailers understood the need to offer cashless payment methods to remain competitive,” said Andreas Olah, lead analyst for digital retail at GlobalData.
Paytm has emerged as a popular digital wallet in India with over 200 million users. The wallet can be used for payments at all major stores, online retailers, utility bills and metro cards, as well as auto rickshaws and food stalls. The wallet’s balance can be topped up via credit or debit card, as well as through online bank transfers. The wallet can also be integrated with most point of sales solutions.
The trend toward cashless payments is not limited to India. In China many consumers prefer to use the WeChat app, which offers in-app and web-based payments and options for splitting bills. Swedish mobile payments company iZettle offers a mobile card reader which is a popular choice among many smaller retailers, cafes and restaurants. Unlike Paytm and WeChat, the device is primarily aimed at contact-less debit and credit card payments.
“Safety and trust are important factors for the increased adoption of cashless payment solutions in addition to greater convenience, including transaction speed. They feature advanced encryption technology. Secret keys used in payment transactions do not reveal passwords or other sensitive information such as credit card numbers,” said Mr Olah. “Retailers are recognising the need to accept the payment types that customers prefer if they do not want to miss out on business. Adoption rates are likely to rise for digital wallets and contact-less card-based payments, as they are becoming the standard in many countries. The biggest disruption is felt in developing countries across Asia, Latin America and Africa, where digital wallets are opening up banking services to millions of low-income consumers who’d previously relied entirely on cash and checks.”