In the 1990s, when the Internet was in its early adoption phase in Asia, card payments were manual and time-consuming. Advanced payment technologies like NFC, or QR code-based payments didn't exist. I remember those days working as a butler in my home country Myanmar. Since there were no electronic terminals to accept payments, the hotel staff would take the embossed number on the guest's debit card and imprint it on an invoice, which would then be sent to a clearinghouse via fax. It took several days to clear a single transaction.
Fraudulent transactions were not uncommon, but there was no mechanism to monitor them. The hotel subscribed to a ’blacklist update‘service, receiving a list of card numbers periodically by fax. They would copy the list and pin it on a notice board for front desk staff to manually compare the digits. The advent of the Internet and e-payments changed everything.
An e-payment or digital payment lets customers pay for services electronically via debit/credit cards, or by direct bank deposits. Payment gateways help aggregate different payment methods and ensure the transactions are transferred securely and quickly between merchants and customers.
However, the early days of the e-payment era were challenging for businesses. Consumer trust was low because of concerns about the risk of fraud and secure transactions.
As an example, when I moved from Myanmar to Thailand, in the mid-2000s, Thai consumers who purchased flight tickets online with credit cards desired a human touch. They preferred that customer service representatives contact them by phone to confirm their transactions had been successfully processed. Consumers wanted reassurance that there was a real person on the other end of the website they were interacting with.
Today, e-payments are quick, secure, and widely adopted, and the industry is rapidly growing. As the number and types of e-payment methods increase with the advancement of technology, the future of e-payments looks to centre around the concepts of consolidation and interoperability.
In Asia, China and India are spearheading consolidation efforts. Private sector players like WeChat Pay and Alipay have taken the lead in China's digital payment sector. Meanwhile, India's collaborative Unified Payments Interface, led by the government, is driving the country's digital payment push. The initiative also encourages private firms like Google to adopt and utilise its payment rails, further promoting adoption and usability.
In Southeast Asia, Singapore combined multiple payment QR codes into a single label, Singapore Quick Response Code (SGQR), in 2018, to simplify QR payments. This allows consumers to pick their preferred QR payment option (from a dizzying array of choices from GrabPay to ShopeePay) from a merchant's SGQR label, scan the code, and quickly make the payment. In 2019, Indonesia also launched the Quick Response Code Indonesian Standard (QRIS), its answer to the increasing number of QR payment options in the archipelago.
The Monetary Authority of Singapore (MAS) has been working with the Bank for International Settlements (BIS) Innovation Hub on Project Nexus to connect the real-time payment systems of the ASEAN-5 (Singapore, Indonesia, Malaysia, Philippines, and Thailand) with minimal adaptations. It aims to create instant remittances faster and cheaper, with wider accessibility, greater transparency, and security, to support closer regional economic and financial integration.
While consolidation enhances efficiency and convenience for end users, fragmentation also offers advantages. It will boost competition amongst various payment operators to retain customers by providing enticing incentives like low fees, rewards, and improved service efficiency.
Interoperability in payments seeks to achieve a frictionless payment experience for the end user. It’s about ensuring that different components and stakeholders can function seamlessly throughout the payment ecosystem, whether it’s the integration between merchant to bank or payment provider, merchant to customer, nation to nation, or a more technical component of ensuring a consistency in user experience across different systems and digital platforms.
As touchpoints between customer and merchant continue to adapt, interoperability is required to connect to new interfaces and touchpoints. Today, QR code-based payments are popular, but this initiation interface will change as technology evolves with biometrics and face recognition technologies.
Introducing an intuitive and interoperable interface could prompt less tech-savvy communities to use e-payments. Currently, ecommerce platforms sometimes struggle to verify and approve transactions, with genuine customers prevented from transacting if the platform doesn't recognise their profile because the customer comes from a less-developed market or fraud hub. At the same time, a customer may have enough funds but lack access to a credit or debit card.
Interoperability allows for integrating security measures across different payment systems, resulting in more comprehensive and robust security and fraud protocols. The jump from the 3D Secure 1.0 authentication protocol to 3D Secure 2.0 and EMV QR standards ensure that different payment providers and payment systems around the world abide by similar principles in order to authenticate the customer, standardise the payment flow, or ensure that the transaction is legitimate and securely transmitted.
Interoperability is the way forward for the payment industry, making fund transfers easy between different payment rails and systems globally. Looking at the telecom industry - today, one can make international and domestic calls using one phone number and phone, payments are headed in the same direction.
Aung Kyaw Moe is the Founder & CEO of 2C2P, a full-suite payments platform trusted by global businesses for digital payment acceptance. With over 20 years of payment experience, Aung spearheaded 2C2P’s growth from a fintech startup to a global company of over 500 employees across Asia and Europe.
2C2P is a full-suite payments platform, helping global enterprises operating in emerging markets to securely accept payments across online, mobile, and offline channels, as well as providing issuing, payout, remittance, and digital goods services. It is the preferred payments platform of tech giants, online marketplaces, retailers, and other global enterprises.
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