Payments in Southeast Asia: Insights and learnings for Australia

SEA payments

With nearly half a billion Internet users, Southeast Asia (SEA) is one of the fastest-growing digital economies with a consumer base that’s largely mobile-first and digital-native. It is also a region where governments and regulators are committed to building a digital ecosystem with the necessary infrastructure and investments for a sustainable future.

 

Digital payments are becoming increasingly interwoven into the daily lives of the people in this region. On one hand, you have developed markets like Singapore and Brunei, and on another, emerging markets like Cambodia, Laos, Myanmar, Thailand, Malaysia, Indonesia, Vietnam and the Philippines.

 

Fintech innovation is ripe, with many players entering the scene with new business models and the industry becoming more competitive and fragmented. For digital payment services to rise to the top, the key challenge is creating trust with consumers while also providing solutions that are affordable, simple and accessible.

 

1. Dominance of the super apps and digital wallets

More than ever, every aspect of consumers’ lives are being conducted through mobile apps and digital wallets, from online shopping to ordering food. In response to these changing consumer behaviours, companies have expanded their services to offer everything a consumer would need on a daily basis through a form of digital wallet known as ‘super apps’. 

 

Super apps are an ecosystem of apps that customers would use as a part of their everyday life thanks to the seamless, integrated and efficient experience. These platforms are an amalgamation of several services including eCommerce, payments, booking, gaming and rewards. The term was first coined for the likes of Alibaba’s Alipay and Tencent’s WeChat Pay in China but in more recent years has now extended into other players such as Grab (Singapore), Gojek (Indonesia) and Zalo (Vietnam).  

 

Another related area is the growth of social commerce, where users can use social media platforms to promote, buy and sell products and services. In Southeast Asia, social media has now surpassed in-store shopping to become the second most popular shopping format after eCommerce.

 

You may be wondering if super apps are so ingrained into the lives of consumers in Asia, why doesn’t it have the same traction across the rest of the world? The answer is two-fold: firstly, a lack of consumer trust in handing over our data to a single entity and secondly, stricter data privacy regulations in the Western world, particularly in the European Union and the US. 

 

While no single super app dominates our market in Australia, we are seeing increased interest in and adoption of social commerce. The dominant social media platforms of today offer marketplaces and shopping features, allowing merchants a new way to reach customers and drive sales.

 

2. Financial inclusion using digital payment innovations

With 290 million of the population who are unbanked in this region, financial inclusion has emerged as a key policy priority for governments across Southeast Asia. Thanks to high mobile ownership, digital wallets have been a game changer in removing the need for bank accounts and giving consumers easy access to financial services, particularly people in remote and underserved areas. 

 

Some of the initiatives driving greater adoption of digital payments include:

  • – The Philippines government distributed COVID-19 financial aid via the PayMaya e-wallet to its unbanked citizens in 2020.
  • – Thailand’s PromptPay, which enables users to transfer funds instantly and securely using just their mobile phone number or national ID number, has enabled people to receive and send money without needing a bank account. As of 2021, over 70 million people have registered for PromptPay, which is more than the country’s population.
  • – Singapore launched a ‘Hawkers Go Digital’ program in 2020 to encourage hawkers to adopt contactless QR code payment service by engaging with ambassadors and using cash incentives to drive usage.

 

In Australia, we do not face the same challenges in accessing financial services, with debit and credit cards being our most popular form of payment. We can, however, take away learnings from some innovations arising from this region, in particular, as Australia tackles the creation of a national digital identity ecosystem.

 

3. Emergence of blockchain-based businesses

Blockchain technology is also gaining traction in Southeast Asia and is being used to facilitate cross-border transactions and to provide a faster, more secure and transparent way of making payments. It is expected to become increasingly important in the region in the coming years.

 

How Novatti is enabling people in Southeast Asian countries to pay and be paid from any device, anywhere.

 

Transforming bill payments with ChinaPayments and Novatti BillPay

Since 2017, Novatti’s ChinaPayments has been providing international students, new migrants and the wider Chinese community a simple and secure way to pay their Australian BPay® bills using payment methods such as UnionPay, WeChat Pay and Alipay. 

 

With a strong uptake amongst Chinese users, this has created an opportunity for Novatti to extend its bill payments service to other Asian-Pacific regions through our new Novatti BillPay platform. Novatti BillPay enables users in Australia and overseas to pay their Australian bills through various digital wallets in the currency they prefer, such as Malaysia Ringgit, Philippine Peso, Indonesia Rupiah, Hong Kong Dollar, South Korean Won and Thai Baht.

 

Scaling our operations with ATX Malaysia

Novatti has been partnering with ATX Malaysia Sdn Bhd since 2015 and acquired the company in October 2021 to scale our operations across Southeast Asia.

 

ATX is recognised as one of the top 50 Southeast Asian start-ups, offering various B2B and B2C payment services. Since its establishment in 2014, ATX has grown to include 150 bill payment and reload products with 31,000 touchpoints, 65 e-wallet partners and 65,000 agents through their various brands. 

 

Making waves with our Ripple partnership

Our partnership with Ripple began in 2020 with an initial focus on targeting cross-border transactions between Australia and the Southeast Asia region. We utilise RippleNet’s On-Demand Liquidity (ODL) service for remittances between Australia and the Philippines, leveraging XRP for instant, cross-border payments. In 2021, we also expanded our service to Thailand by partnering with the first Thai bank, Siam Commercial Bank (SCB), through RippleNet.

Want to learn more about how Novatti is helping transform payments for Southeast Asian residents, migrants and other communities? Get in touch with the Novatti team or subscribe to our mailing list below to hear our latest updates.

Adel Shahin

Adel Shahin

Marketing

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