An overview of payment methods in APAC – interview with Jordan Graison, Limonetik

Friday 9 November 2018 08:07 CET | Interview

The Paypers sat down with Jordan Graison from Limonetik to discuss about the main payment methods from the APAC region

What is the size of the ecommerce market in Asia-Pacific and which countries in the region show the highest economic growth?

According to Ecommerce Foundation’s Global B2C E-commerce Report 2016, B2C ecommerce in the APAC region represents USD 1 trillion – nearly as much as the European and North American ecommerce businesses together. APAC registered a 28% growth rate, mainly driven by China, where the penetration of Internet is the highest, followed by South Korea, Japan, and Australia, with more than 90% compared to the three other countries (50% in China, with a higher rate in tier 1 and tier 2 cities – Shanghai, Beijing, Shenzhen, Guangzhou).

ASEAN (Philippines, Vietnam, Thailand, Indonesia, and others) and South Asian (Bangladesh, Pakistan, Sri Lanka, India, and others) countries experience the highest growth rate due to the rapid expansion of cheaper smartphones and mobile internet.

Based on your deep knowledge on local payment practices and preferences, can you provide us with an overview on how people pay in Asia-Pacific? Can you share some insights into payment preferences in different countries in this region?

Banking infrastructures are really disparate from country to country; however, they are strongly correlated to the economic development of each country. Some of the OECD member countries (Japan, Australia, South Korea) show greater financial inclusion than those from the ASEAN region which still remains underbanked. On the other hand, countries from the APAC region shift to dematerialised money, progressing quicker than any other area of the world, due to high mobile penetration (for example, 88% of South Korean adults possess a smartphone). Payments in Asia are about digitalisation, according to PPRO Payment Almanac 2017, since 75% of all payments are cashless (via e-wallets and cards).

While the countries in the ASEAN region are still driven by the cash transactions, highly banked countries (Singapore, New Zealand, Australia, South Korea, Japan, China and its dependencies) show natural preferences to cards and e-wallets.

Another specificity of the APAC region is represented by the dense and well-established networks of small convenience stores chains (7-Eleven, Lawson, FamilyMart, and others), allowing their customers to pay with cash for the goods they purchased online. Those convenience stores are opened 24/7 and they can be seen everywhere across some regions (ASEAN, China and its dependencies, Korea, Japan).

What is the share of cash-based payment methods in Asia-Pacific? Which countries are closer to going cashless and why? Are there any market specifics related to the pace of becoming cashless?

According to the PPRO Payment Almanac, cash-based payments account for 13% of all transactions in APAC. In China, South Korea, Taiwan, and Australia a tremendous amount of all transactions was cashless (more than 80% of transactions are done without cash). For the first three countries, the first waves of cashless transactions went from an important issuing of banking card between 1990-2000 (UnionPay cards for China, JCB/Visa for Taiwan, and local Korean schemes like BC Card, Samsung Card, or Hyundai Card). At the beginning of the 2010s, the strong influence of emerging ecommerce and social networking players (Alibaba, Tencent, KakaoGroup, Naver, or Line) can be regarded as a finalising point for this transition, and it was closely related to the emergence of mobile internet in these regions. An interesting fact about these countries is the strong presence of online shopping, due to their highly performant logistic infrastructures that drive the whole payment system towards getting rid of cash transactions. For example, it is really easy to order fresh products for a low price and a fast delivery in Korea or China. (Fresh goods are some of the most difficult to ship.)

Since Australia is one of the most banked countries in the world – with strong banking infrastructures and deeply rooted habits to shop online overseas –, it was easy for it to make the move from cash to cashless.

Which are the government drivers and industry regulatory initiatives aimed to reduce the usage of cash?

Japan, South Korea, and Hong Kong quickly adopted flexible rules regarding the use of digital wallets, especially to pay for transportation. The Octopus card in Hong Kong was launched in 1997, the Suica card in Japan in 2001, and T-Money in Seoul in 2004.

Moreover, instant payments in the clearing system show great support regarding the dematerialisation of payments as well – Japan’s Zengin system is the pioneer and it was launched in 1974! With the emergence of ecommerce, in 2010 China adopted an Internet Banking Payment System (IBPS) to ensure a quick availability of the money online. India also created similar banking services in 2010, while Australia launched an analogous service in 2018.

What local mobile wallets are successful in the region and why?

Ecommerce sets the norms for all the other retailing industries. For example, in China, Alipay was born online and switched to brick and mortar thanks to numerous partnerships with existing retailers on their platforms, and Chinese customers are expecting to get the same payment experience both online and offline. In China, South Korea, Japan, payments are also closely related to the community aspect, and P2P payments in the case of WeChat, Line, or KakaoTalk are becoming the norm. The online gaming industry also plays an important part. Gamers could not use cash in order to buy new functionalities in the massive industry of online games; therefore, they favoured e-wallets.

We are also witnessing the emergence of new players coming from the online industry – such as Grab, a Singapore-based company offering similar services to Uber and operationg a wallet for its users to pay not only for their service but also online and in-store.

About Jordan Graison

As a specialist in the Asian market, Jordan is responsible for the development of Limonetik’s international sales strategy in the B2B online marketplaces. He started his career as a sales representative at AVIAREPS, after completing a degree in Korean studies at the Seoul National University in conjunction with the French National Institute for Oriental Languages and Civilizations (Institut National des Langues et Civilisations Orientales) in Paris. Before joining Limonetik, Jordan worked for MoneyGram International, first as Operations Executive and then as Business Development Executive, Strategic Accounts.

About Limonetik

Limonetik is an online enriched payment platform (PaaS) which provides a unique ‘one stop’ shopping payment solution that connects international payment methods to marketplaces and merchants directly or through its PSPs. It delivers advanced services from collection and settlement management to reconciliation. Limonetik is the guarantee of regulation compliance.

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Keywords: Jordan Graison, Limonetik, payment methods, APAC, B2C, ecommerce, cashless, online shopping, instant payments, digital wallets
Countries: World