The Transformation to Digital Payments in Asia

Transcription

1 The Transformation to Digital Payments in Asia The Point 2018 Auckland, New Zealand 27 June 2018

2 The Digitisation of Payments in Asia The markets of Asia are driving hard to digitise payments The rate of change is far higher than we have seen for the digitisation of payments in developed markets which has occurred over the last 5-6 decades. The method of digitising payments is also dramatically different. Growth Rate of Digital Payments Over Next 3 Years Emerging markets In Asia = 30.9% Global = 10.9% Capgemini: World Payments Report June

3 Emerging Markets versus Developed Markets 90% Digital Payments 10% Indonesia Cash in circulation as a percentage of GDP: ~15% 2 nd largest cash market in the world 90% New Zealand Cash in circulation as a percentage of GDP: <2% Card txns per capita > 300 p.a. EFT txns per capita > 100 p.a 10% Cash Payments 27 June

4 NZ s Road to Digital Payments Cards Good strategic planning and management over last 3-4 decades Achieving low pricing to end users has seen-: Widespread take-up of domestic eftpos cards* Ubiquitous deployment of eftpos terminals Electronic Funds Transfer High internet and smartphone penetration, coupled with bank promotion has seen very high penetration of internet and mobile banking *Debit cards used over credit cards at ratio of 3-1 (Payments NZ Research Paper Bench-marking New Zealand s Payment Systems, May 2016) 27 June

5 It s a Different Story in Asia Huge diversity in wealth distribution, education, financial literacy, culture, and values. Cash penetration still high Large part of the population unable to afford to participate in a digital economy based on cards and bank provided solutions. Majority of retailers are solo traders, hawker stalls, travelling food carts, roadside eateries, micro businesses Cannot afford a terminal or to pay merchant service fees. 27 June

6 The Drive to Digital Payments in Asia Smart Phone Penetration Smart phones Always connected Real-time payments Lifestyle applications Enabling Technology Bank Business Case Gap Banks avoiding unprofitable sectors High cash penetration Unbanked Opportunity for New Players Regulators More efficient economies More inclusive Drive down the cost of payment Game Changer 27 June

7 The Emergence of New Players Enabled by emerging technology such as mobile phones, and realtime in-app payment. 27 June

8 New Players Model Millions of active users who regularly use the provider s mobile application Social media Hailing personal transport Online shopping Lifestyle services Closed-loop in-app real-time payment enabled with a wallet Charge zero or negligible fees for payment function Opportunity to extend real-time payments Person-to-person Shopping for goods and services 2 May 2018 Pembayaran Digital Indonesia 8

9 China Alipay versus WeChat Active Monthly Users (Millions) % users active for payment* Alipay WeChat Source: ( ) techinasia; DMR, (2018) Forbes * iresearch 2 May 2018 Pembayaran Digital Indonesia 9

10 Cases in Point 27 June

11 Malaysia 2020 Government vision for Malaysia Make Malaysia a modern industrialised nation by 2020 PCRF Payment Card Reform Framework published by BNM Increase card usage Drive down cost of card usage, increase acceptance from 250,000 POS to 800,000 POS by 2020 Emergence of e-payment Players GrabPay, WeChat, Alipay ICTF Interoperable Credit Transfer Framework by BNM Defines criteria for qualifying banks and nonbanks Payments must be free under RM June

12 Malaysia The Stage is Set Three major players: WeChat Consortium of Alipay, Touch- n-go and CIMB Consortium of GrabPay and MayBank Bank Negara Malaysia ICTF requires all to be fully interoperable: In-app purchases P2P Retail at POS via QR code 27 June

13 Indonesia 10% digital 5.6% debit cards 3.8% credit cards 0.6% e-money Penetration of cards (10%) [2] Penetration of banking (36%) [3] % of retail payments[1] Penetration of smart phones 47% [4] % of market 90% cash Cash in circulation as a 15% % of GDP (2015) [5] Indonesians registered for tax [6] 10% [1] Bank Indonesia (2015) [2] World Bank (2014) [3] World Bank (2014) [4] GSMA Intelligence (2016) [5] Bank Indonesia (2015) [6] President Joko Widodo (2016) 27 June

14 A Multitude of E-Payment Providers Bank Indonesia issued regulations in May Bank Indonesia licensed e-money issuers in Indonesia 15 are non-banks 11 are banks (only BCA, and BNI support QR code) TCash by Telkomsel 2 May 2018 Pembayaran Digital Indonesia 14

15 Current Situation Banks not feeling the disruption yet New players are displacing cash, not disrupting bank provided payment services Payment Ecosystem Penetration of bank cards Penetration of smart phones Target market for new players for digital payment Penetration of cash New players are creating new customers for digital payment, new acceptance environments 2 May 2018 Pembayaran Digital Indonesia 15

16 Closed Banking Bank provided payments today The payment and the exchange of transaction data between the customer and service provider are separate Transaction and Associated Data Outside Bank Process Bank Defined Process Payment Customer Bank Interface Bank $ Service Provider Customer Account 16 May

17 Threat from Non-Banks Transaction and Associated Data Outside Bank Process Payment Bank Defined Process Customer Bank Interface Bank $ Customer Account Threat of Displacement Service Provider Customer Smart Interface Payment + Transaction and Associated Data Service Provider Customer 16 May Account 17 $

18 Open Banking Payment + Transaction and Associated Data Outside Bank Process API Bank Process Customer Smart Interface Service Provider Bank $ Customer Account Banks cannot stop third parties from creating smarter propositions for their customers.. Collaboration is the best way forward. Bank, and bank account stay at the centre of the transaction 16 May

19 Thank You