Is China’s e-payments tech ready for the rest of Asia?
China, unlike Japan and the US, has leapfrogged from cash to mobile payments, bypassing the payment cards system. This has bred a booming third-party mobile payment ecosystem which has become the envy of many other markets. Many observers believe the ability to adapt these e-payments and other financial tech infrastructure for other Asian countries will go a long way in determining the success of this payment model. In mainland China itself, the biggest technology giants including Alibaba, Baidu, and Tencent are the backbone of the local e-payments landscape, leveraging their data-driven products to offer mobile financial services for both businesses and retail consumers. Mobile payments, through the use of popular e-wallets such as WeChat Pay and AliPay are the dominant way to make contactless payments, accounting for nearly 90 percent of the Chinese market. As the local market becomes saturated, fintech firms from China are forced to spread their wings abroad, and the evolving mobile payments scene in southeast Asia may be the next logical market.
Southeast Asian countries (collectively known as ASEAN nations) already play host to a massively underbanked population, who are rapidly adopting alternative fintech solutions as mobile internet connectivity and mobile payment methods become increasingly widespread in the region. In Indonesia alone, for example, the value of e-payments is expected to exceed US$15 billion in 2020, while Singapore and Malaysia have seen a rapid shift towards adopting e-commerce and online payment systems. These methods are outpacing the growth of traditional retail and physical payments in the last few years. But, in competing for ASEAN market share, the likes of WeChat must tussle with local upstarts such as Grab, which has grown from a ride-hailing service into the e-wallet space in order to adapt to local payment demands.
In order to compete more effectively in other parts of Asia, Chinese fintech products will need to diversify their service offerings beyond just storing value via e-wallets. For instance, several leading mobile payments consortiums from China have applied for virtual banking licenses in Hong Kong and Singapore, including Alibaba’s Ant Finance, Bytedance, Tencent, and Ping An. These firms will be looking to provide online credit-sourcing and insurtech facilities to meet a different range of needs outside of mainland China. Operating outside of China also means these services will be subject to a different variety of regulatory controls in each country, that will take views of cybersecurity and data privacy very differently to Chinese regulators. Adapting to such varied operational climates will be key to Chinese mobile payments showing a resiliency that will help them thrive beyond the homeland.