My recently published report, “The Mobile Payment Opportunity In Southeast Asia,” finds that mobile payments are hot in Southeast Asia, with online and mobile-based purchases already exceeding tens of billions of dollars. Venture capital firms are also investing close to $75 million in mobile payments, drawn by a combination of factors including a booming digital content market, increase in online and mobile commerce and favorable government policies.
Well aware of the mobile payment opportunity, banks are scrambling to build their own mobile payment systems. But it’s not just financial institutions that are competing against each other to provide the best mobile payment services to their customers. Surging smartphone penetration in the region has created revenue opportunities for mobile operators, credit card networks and financial technology startups, all of which are also rapidly ramping up their mobile payment capabilities to stay competitive.
The brutal reality is that there is a high risk some of the banks’ mobile payment systems will fail. How then can banks ensure the success of their mobile payment systems?
eBusiness professionals need to keep up with the shifting landscape by understanding the market trends, usage scenarios, and local mobile payment options available to consumers. We recommend that banks incorporate three market dynamics into their mobile payment strategies:
- User scenario for mobile payments varies across Southeast Asia. P2P payment growth in emerging markets differs from developed markets. We expect remittances to continue to spur P2P payment growth in emerging markets, and P2P payments will continue to account for a small share of transactions in developed markets.
- Mobile payments at physical points of sale (POS) will require time to take off. Across Southeast Asia, the mobile proximity payments market is still far from the breakthrough point due to the lack of merchant buy-in and widespread merchant acceptance. Merchants struggle to quantify the benefits of upgrading their existing POS and pay additional operating costs.
- Cross-border mCommerce is putting remote payments on a growth trajectory. An increasing number of Southeast Asian consumers are shopping on their mobile devices, and a significant portion of these are cross-border purchases. Telcos like True in Thailand and other fintech startups like Codapay enable unbanked users to make cross-border remote purchases on their mobile phones.
To ensure success, eBusiness professionals also need to overcome three hurdles that obstruct the adoption of mobile payment systems, which I have described in my report here.