Digital payments must deliver benefits across a complex value chain involving customers, banks, acquirers, clearinghouses, card schemes, regulators, and merchants. It is a complex endeavor, and to capture the digital payment opportunity, digital business pros at banks and fintech firms must:
- Use research to understand target customers and how to delight them. Different customer segments have different payment needs and concerns. To develop a digital payment offering that brings value to consumers, closely research the needs of your target customers. Most players in this space tend to focus on younger consumers — the main users of digital payments. But our research also shows that more consumers aged 35–44 are adopting them — a key segment that typically represent a significant portion of a bank’s revenues and margin. Also, un/underbanked customers hold great potential for those institutions that know how to design and run the right operating model to serve them.
- Design and enable differentiated and trusted experiences. In-depth research will help design and enable value propositions that attract the right customers who will find the experience they offer extremely compelling. In digital payments, security and privacy sit at the core of this differentiated value, as they are key enablers of trust. Neither customers nor merchants will put money at risk with an unknown brand when they are already familiar with traditional payment patterns with predictable outcomes. Your digital payment offering should be more secure and privacy-protected than existing, familiar means of payment.
- Never forget the merchant community. Simply promoting digital payments by giving financial incentives to merchants is no longer enough; you must also empower these merchants with digital services and help them transform themselves from brick-and-mortar businesses to digital businesses. In China, Alipay has announced its new three-year strategic plan to help 40 million merchants digitalize their operations by collaborating with 50,000 ISVs and developers. It aims to empower merchants with digital technology and help them boost efficiency and improve customer experience.
- Effectively collaborate with partners to build digital payment platforms. Digital payments play a core role in establishing platform business models; they can attract more customers, yield more data, and fuel the expansion of the platform to adjacent industries — as shown by digital giants in China. Building a successful platform requires you to collaborate effectively with and bring value to partners and get their support. Helping partners within your payment platform magnifies your own achievement — and your success depends on the ability to maximize the ecosystem and deliver value to all stakeholders.
While the usage of digital retail payments is rising across Asia Pacific (AP), individual geographies vary in their digital payment maturity significantly. Specific local characteristics like consumer behaviors, payment ecosystems, and financial regulations make this a very diverse market. For further information on individual markets’ digital retail payment landscapes, you can read the Forrester report, “The State Of Digital Retail Payments In Asia Pacific,” which analyzes six markets in AP: Australia, mainland China, Hong Kong, India, Japan, and South Korea.