The Asia Pacific region outpaces North America and Europe in the adoption of digital payment, with 69% of consumers in APAC has increased their use of at least one digital payment method in the last 12 months – compared with 52% in North America and 48% in Europe.
Indeed, people in the Asia Pacific are the most enthusiastic adopters of digital payment worldwide during the same time period, with 88% having used technologies such as digital wallets, QR codes, Buy Now Pay Later (BNPL), cryptocurrencies, biometrics and others.
"Consumers in the Asia Pacific region have consistently shown a willingness to adopt innovative new technologies—and payments are no exception,” said Sandeep Malhotra, executive vice president of products & innovation, Asia Pacific at Mastercard.
Mastercard last Thursday published its second annual New Payments Index, which gives a glimpse of the latest payment habits, attitudes and preferences of people across 40 markets across five regions.
The 2022 New Payments Index research was conducted by The Harris Poll and Mastercard from March 21 to April 19, 2022, surveying 35,040 respondents worldwide, including 7,004 respondents across seven markets in APAC: Australia, China, India, Japan, New Zealand, Thailand and Vietnam.
“Given the sheer speed with which payment options are proliferating, coupled with today's global climate of uncertainty in socio-economic, health and political matters, it's important that banks, governments and other stakeholders in the financial ecosystem proactively support the sustainable development of these new payment methods, including through regulation, bolstering security, and educating consumers. With reassurances such as these, it's likely we will see even more extensive adoption of emerging payment technologies in the region."Sandeep Malhotra
The Mastercard survey said that while the current pandemic has been a catalyst for the unprecedented, rapid uptake of digital payments, it indicates that the change has been lasting, with 40% of respondents in APAC cutting back on their use of cash in the last year.
Despite this swing to digital forms of payment, respondents frequently indicated that they had reservations about the security and institutional backing of these new options. In fact, when deciding which payment method to use, security had the greatest influence on consumer choice, beating out discounts/promotions, rewards and even low-interest rates.
Below are some key APAC highlights from the survey:
- Biometrics are unbeatable for convenience and security, but privacy worries remain
There's broad recognition among consumers that using biometric identification, such as fingerprint or facial recognition, is easier than remembering PINs or passwords (70%) and more secure than these traditional methods of verification (69%).
At the same time, only around half (53%) of respondents in APAC felt comfortable sharing their biometric data to save time, while 72% were concerned about which entities would have access to this data.
Despite this, 58% of consumers used biometrics more frequently in the last year, demonstrating both an enthusiasm for the technology, and untapped potential if providers are able to properly address consumers' misgivings about privacy.
- BNPL awareness is high while comfort is mixed; institutional offerings preferred
APAC is ahead of the curve with BNPL as 50% of consumers across the region say they are comfortable using BNPL today, while only 41% of consumers globally are comfortable using these instalment plans.
In particular, consumers in APAC tap on BNPL offerings for their low/no interest payments, in times of emergency and when they want to expedite bigger purchases. Looking ahead, 55% in APAC say they are likely to use BNPL in the next year.
At the same time, building trust and comfort is key as APAC consumers feel safer using BNPL solutions backed by a major payment network (67%) or their existing bank (65%), rather than from other providers.
- Broad awareness but relatively low knowledge of new digital currencies and assets
The majority of consumers in APAC have heard of cryptocurrencies (88%), non-fungible tokens (NFTs) (68%), and other digital assets—but uptake has been gradual.
For now, the focus is on investment. Among APAC consumers, 31% (and 44% of APAC millennials) report holding crypto as an investment during the past year, while future use cases that are popular among respondents include using crypto to redeem rewards, invest and make everyday payments. Regarding the latter, just under half of the respondents (46%) want increased flexibility to use crypto for everyday payments.
According to those surveyed, more involvement from governments and dependable institutions like banks (cited as the most trusted provider of digital currencies) would boost their confidence in crypto.
Diving deeper, 60% agreed that governments should regulate the cryptocurrency and stablecoin industry, while 55% would feel more confident investing in crypto or digital currencies that are issued or backed by a reputable organisation.
Asked for a third-party perspective on how digital payments is trending in APAC, Dheeraj Joshi, regional head of payments solutions consulting at Finastra commented that the industry has noticed that SMEs also moved quickly to embrace digital transformation to survive during covid and the ongoing impacts of the pandemic.
"Additionally, we are seeing concerted efforts from numerous governments in the region in the form of policies to infrastructure investments to reduce cash and increase the use of digital payments. Add to this the impact of the pandemic on digital payments and customer behaviour, it is clear that markets in APAC are providing the perfect environment for the use of digital payments to increase many times over in the coming months and years,” he added.