Southeast Asia is home to the country with the fastest internet on earth (South Korea). It is also home to some countries with the lowest rates of internet penetration. The differences in internet growth and adoption are stark. For example, Singapore has an 81% web penetration, while Vietnam is at 45%, according to statistics. The Philippines rings in at 44%, while Indonesia currently sits at 28% penetration. And India is still at a startling 14%, even though internet companies both domestic and abroad have been not only eyeing the Indian web markets, but actively investing in them. The focus for many of these countries working to implement more internet access is on mobile because of smartphones’ increasing cost efficiency in comparison to PCs. And naturally a part of the growing mobile internet scene is the mobile payment industry — one that many Southeast Asian countries have been reticent to embrace for a variety of reasons, but one that will become a huge part of the region’s web growth over the next several years.
Indeed, in mid-October, research firm Forrester released a forecast for the mobile payments sector of Southeast Asia. The research looks at how local banks are trying to figure out how to navigate the mobile payments landscape, and understand the future of the mobile commerce systems that are proliferating. One report says that banks that are launching their first mobile payment systems or improving existing offerings are trying to decide if they should develop capabilities in house or with a third party. If they want to get in on the mobile payment scene, should they build out their own systems or partner with other technology companies to strengthen their mobile payment strategies? There are options, and there is a burgeoning financial technology market in Southeast Asia as well — of which local governments and telcos are taking note. The pieces are falling into place for a hefty mobile payment market in the region.
Another report points out the more obvious factor: the increased adoption of smartphones in Southeast Asia is the driver for this mobile payment build-out. As Forrester forecasts smartphone penetration to grow to 230 million units by 2017 from 175 million this year, there will be a natural confluence of users and mobile-based shopping/retail. Security has been the biggest hindrance to the mobile payment market — users should be cautious. But with banks coming on board, and perhaps partnering with financial tech companies and other third parties, there could be a significant uptick in the popularity of m-payments over the next few years. Forrester’s figures roll in at a predicted $22 billion for online and mobile-based purchases in the region in 2015.
As some global household names like Apple and Samsung look to Southeast Asia to introduce their mobile payment systems that have taken off well in other regions (Samsung is based in South Korea), this market will be pushed even further along. Forrester isn’t alone in its predictions; groups across the board are looking at the potential for the m-payment market. Global financial company Visa reported in its 2015 Regional eCommerce Monitor Survey (in which it surveyed 11,760 people across Asia-Pacific earlier this year) showed that the gap between online purchases made on desktop versus mobile is shrinking; m-commerce activity has increased by 22% year-on-year. And the market isn’t scheduled to slow down any time soon.