Region’s m-payments market to grow 150% to reach US$500bil by 2017
‘Asia’s mobile-first culture manifesting rapidly in the m-payments arena’
MOBILE payment growth in Asia Pacific is outpacing the rest of the world, and will make up half of the global market by 2017, according to International Data Corporation (IDC).
The global mobile payments market will reach US$1 trillion in 2017, rising 124% from the less than US$500 billion in 2015.
Asia Pacific made up 40% of the mobile payment total in 2015, but will rise to make up almost 50% of the entire US$1-trillion market by 2017, according to Shiv Putcha, associate director of Service Provider Strategies at IDC Asia-Pacific.
“[Mobile payments in] Asia Pacific will rise from US$200 billion in 2015 to nearly US$500 billion in 2017.
“That would make it nearly a 150% growth over the [two-year] period,” he told Digital News Asia (DNA) via email.
Asia Pacific is expected to lead the world in mobile payment developments, IDC said in a statement.
The research and analyst firm believes that the strongest growth for m-payments will be driven in part by rising levels of m-commerce as emerging nations come online for the first time and witness an Internet boom via smartphones.
Furthermore, the limited state of credit and debit card adoption in the region will force potential m-payment behaviour to shift to using bank account-linked mobile wallets.
The recent focus on financial inclusion policies in various countries has also given a boost to connecting the unbanked, IDC said.
“Asia’s mobile-first culture is manifesting rapidly in the mobile payments arena,” Shiv told DNA.
“Alibaba’s Singles Day results and its rapidly rising mobile GMV (Gross Merchandise Volume) are indicators of the potential of Asia to lead in the mobile payments arena,” he added.
GMV is how online retailers and auction sites track the value of transactions on their platforms.
Singles Day is the China auction site’s version of the ‘Black Monday’ online sales in the United States. During last year’s Singles Day, Alibaba claimed US$9.3 billion worth of sales was conducted, according to the BBC.
“We expect many other e-commerce providers and on-demand companies to increasingly leverage on mobile payments to drive transactions,” said Shiv.
“While there will be examples of NFC-based (near-filed communications) contactless payments, we expect a big driver of growth in Asia to come from mobile wallets, especially the semi-closed variety from providers like Paytm and others growing across the region,” he added.
Paytm is an Indian-based m-commerce platform which also provides for bills payment.
“Paytm has risen from around 10 million registered wallets to over 100 million in just over a year, another example of Asia Pacific leading in the mobile payments arena,” said Shiv.
IDC said it sees a “duality” between the mature Asian markets like Australia, Hong Kong and Singapore, versus the emerging Asian economies like China, India and Indonesia.
IDC said it has been able to identify common characteristics and group these countries into three ‘clusters’ – Card Payment Leaders, Mobile Payment Leaders and Mobile Money Leaders.
The mature Asian economies will remain card payment leaders and view mobile payments as an efficiency driver with proximity solutions seeking to displace the need for physical swiping of cards.
The remaining Asian markets will look at mobile payments as a GDP (gross domestic product) booster and to address financial inclusion imperatives. Mobile payments in these markets will jumpstart m-commerce much like Alibaba has in China, IDC said.
IDC said it has also identified several opportunities for sustained growth in m-payments across Asia Pacific, excluding Japan.
NFC-based proximity solutions such as Apple Pay and Android Pay will only take hold in a few mature Asian markets as their adoption is constrained by the low penetration of NFC in smartphones and readers in emerging Asia.
Mobile wallets, especially those based on semi-closed platforms, will drive much of the growth from emerging Asian markets.
Then, there will also be a significant opportunity for mobile point of sale (mPOS) device and solution vendors seeking to address gaps in card present (CP) payment scenarios in physical locations, which require payments to be verified either by NFC or even quick response (QR) codes.
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