The introduction of mobile phones and smartphones has resulted in a significant paradigm change. These innovations have made life easier and faster than ever before. It has also changed our method of making payments. Money transfer through mobile phones has become a new standard in the present era.
With the evolution of contactless payment processes, mobile wallets are revolutionizing transactions globally. Digital wallets in Asia are experiencing a surge in popularity. These digital wallets grew worldwide after the onset of COVID-19. During the epidemic in 2020, the number of people using digital wallets increased dramatically. This digital payment trend is expected to continue over the next five years, resulting in a 70 percent increase in the number of unique digital wallets between 2020 and 2025.
Mobile wallets have been intensively promoted in APAC economies such as China and India, which are far ahead of their Western counterparts in terms of implementation. PayTM in India, AliPay & WeChat Pay in China, LINE Pay in Japan and Taiwan, OVO, LinkAja, ShopiPay, and GoPay in Indonesia, Kakao Pay in South Korea, and GrabPay in Malaysia and Singapore are the prominent leaders in the digital wallet industry.
Market Overview of Asian E-wallets
In Asia, the world’s most populous region, the mobile payment sector has exploded in popularity without any signs of slowing down. Countries in the Asia region such as China, Japan, India, and Malaysia are adopting a cashless economy. The growth of the world’s leading E-Wallet market is due to government support, advocacy for cashless payment solutions, and the growing popularity of technology-based commercial models. According to research, smartphone users in the Asia Pacific region would have a larger preference for mobile payments than the global average.
Initiatives such as open banking have led to technology-friendly regulatory changes that have made it easier for businesses to provide e-wallets to consumers. The evolution of digital wallets and mobile payments has made business easier around the world by enabling real-time transactions.
The user base of mobile wallets will rise by 311 percent from 2020 to approx 440 million by the next 5 years in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, indicating the e-commerce boom. Based on data from the Consumer Payments Insights survey, Global Data predicted that the Asia Pacific e-wallet market will rise to $2.3 trillion by 2022.
Mobile Wallets Replace Conventional Bank Accounts
The unbanked population is higher in emerging markets. According to Boku, the unbanked population in Latin America, Central, and Eastern Europe, the Indian subcontinent. And the Middle East and Africa reached 24%, 17%, 27%, and 39%, respectively, by 2020. Since these regions’ unbanked rates remain high. Smartphone prevalence has already surpassed bank account adoption, allowing more users to browse advanced internet banking facilities.
Malaysia’s government recently declared a proposal to stimulate the digital wallet market by spending $9.6 million on three mobile wallet startups. Furthermore, Central banks in Europe are also promoting digital wallets. The Swiss National Bank is establishing a “unified payments area” that will encompass all aspects of digital payments.
E-commerce Industry Growth
The e-commerce market has gained much popularity in Asian countries as consumers are choosing e-wallets over traditional payment methods for their online shopping needs. E-wallet services are becoming increasingly popular among e-commerce customers. It is adding value to the e-wallet sector by becoming a market support system. Currently, China’s Alipay E-Wallet is the region’s E-Wallet Market leader. It is the most popular mobile payment method for online transactions as a large proportion of Asian consumers in China alone use WeChat or Alipay as their primary payment method.
Other major e-commerce companies, including Ola, Flipkart. And Alibaba, are spending extensively in establishing their own proprietary e-wallets to offer seamless payment choices to their customers. Consequently, competition in this market encourages financial service providers to produce better products that meet customer preferences.
Asian countries have also taken a keen interest in the social shopping trend as the world adopts the top digital payment trend. It will link with E-wallet uses and growth. Thus propelling the Asian continent into a more digital trend.
What’s more, consumers in the Asia-Pacific area are increasingly favoring e-wallets, believing that they offer a superior online purchasing experience.
Government Support
All governments across the ASIA region are promoting digitization, thus expanding the digital wallet app development used for their people.
For example, In 2015 the Indian government launched a digital India campaign. It aimed to convey government services through digital channels. The government had also worked with banks and financial institutions to deploy and promote E-wallet uses over traditional currency. The campaign gave quick yield and responded well.
The governments of Malaysia and China have also worked to promote digital currency. And backed private digital wallets to grow and make their countries in the top tier of digital wallet users.
Future Challenges
There is no second thought about the exponential growth of digital wallets. But there are certain challenges that can impact its popularity. The threat of hacking, fraud and leaking data are the major concerns.
Also, E-wallet businesses are facing competition from paper currency, credit and debit cards. It’s more important to localize the payment process to mass adoption of the E-wallet.
In a Nutshell
Asia holds a major part of the world’s population. It is worth noting that it gives numerous opportunities to micro investors to build their digital wallets or be part of digital payment solutions. Grab the opportunity and start investing in an E-wallet solution.
