Mobile payments are booming in Asia. Led by China, other markets across the region are following suit, keen to leverage cashless technology to accelerate the transition to a digital society. Until now though, MNOs have been largely left behind in the region.

In sub-Saharan Africa, mobile money dominates the payments landscape, with nearly 400 million registered accounts across 133 live services. GSMA Intelligence figures for South East Asia (including the Pacific) show there are currently 95 million registered accounts across 45 live services, and rates of account ownership and usage are still low in many countries, whether due to regulatory barriers, limited interoperability, preference for over-the-counter (OTC) transactions or competition from OTT platforms.

From a mobile payments perspective, China is very much the poster-child. The rapid rise of smartphone adoption, QR codes, retailer buy-in and the network effects from life platforms (WeChat and Alipay) have set in train a virtuous circle of engagement and growth.

WeChat has around 1.1 billion monthly active users, a staggering 90 per cent of whom use WeChat Pay. Alipay, from Alibaba’s Ant Financial, has over 700 million active users in China alone. For comparison, Apple Pay has around 250 million users globally.

These platforms allow Chinese consumers to shop, chat, split bills among one another, share discounts and codes based on purchases, and securely purchase items all within the same application. GSMA Intelligence data also shows that more than two-thirds of smartphone owners in China use their devices to buy things online on a monthly basis.

Other Asian markets are catching up, seeking to emulate China’s success. The global top-ten in terms of adoption consists of seven other Asian markets, PwC data shows. Thailand and Hong Kong are second and third respectively, although the most interesting observation is Vietnam, where adoption has grown faster than any other country globally, ending 2018 on 37 per cent and expected to reach 61 per cent this year (see chart below, click to enlarge).

Keen to accelerate the use of mobile payments, the Vietnamese government passed a resolution in January 2019 to promote the use of cashless technologies to boost financial inclusion in the country. Less than a third of adults in Vietnam have a bank account and only 4 per cent have a credit card. Smartphone penetration is also in the minority (27 per cent) but this will rise to 75 per cent by 2025 as mobile device and data prices continue to moderate.

The implication is that the mobile channel becomes a scaled alternative for financial services access and vehicle in the transition to an economy far less reliant on cash-based transactions.

Vietnam’s government has recommended that a range of institutions including schools; hospitals; utilities; telecommunications; and postal companies prioritise electronic and mobile payments, and collect bills and fees via cashless means. Meanwhile the State Bank of Vietnam has been asked to develop solutions that promote the use of e-wallets, ensure widespread implementation of the QR code standard and find ways to remove limitations on electronic transactions.

The private sector is also getting involved. In October 2018, Grab, a Singapore-based transport and mobile payments platform, partnered with Vietnamese payment startup Moca to launch GrabPay by Moca, a mobile wallet integrated into Grab’s app aimed at providing reliable and affordable financial services for the Vietnamese population.

This mobile payments push is a huge opportunity for MNOs in South East Asia, who so far have not seen the same success for mobile money as in sub-Saharan Africa.

While South East Asia has seen significant growth (registered mobile money accounts grew by 38 per cent year-on-year in 2018, the fastest of any region), this masks the fact that MNOs in the region are largely playing catch-up as start-ups like Grab have come in and achieved first-mover advantage. In a reverse scenario to sub-Saharan African MNOs, which have realised the need to diversify their mobile money proposition to stay ahead, South East Asian MNOs need to do the same just to be competitive.

Such diversification could mean expanding beyond basic peer-to-peer cash transactions and offering adjacent financial services (savings, credit, insurance and wealth management et cetera) and dedicated enterprise solutions. MNOs could also look to open up their APIs to build a merchant and developer ecosystem; explore different means of monetisation, for example cash out or merchant fees, charging a percentage of interest rates on loans, or levying fees on insurance and wealth management products; and embrace partnerships with third parties to help overcome regulatory barriers.

OTTs in Asia have seen such success because they reinvented payments to sit on integrated life platforms alongside a suite of other services. MNOs in the region would do well to leverage their own strengths (wide distribution networks, large customer bases, channel access, consumer trust) to play the OTTs at their own game.

– Jan Stryjak – senior manager, core mobile research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.