Embrace digital payments now to profit from tomorrow’s seamless ecosystem
Ankur Kanwar Head of Transaction Banking & Cash Management, Singapore & ASEAN, Global Head of Cash Structured Solutions Development
1 Apr 2022
Changing customer expectations are accelerating the adoption of digital payments across ASEAN as companies respond to the demand for simpler, faster and more flexible payment options. While organisations have made progress incorporating digital payments into their business models, the rapid pace of change, combined with increased regulatory support, means the business community needs to keep digital payments at the top of the corporate agenda.
Indeed, the growth in ASEAN digital payments has been truly remarkable. In 2021, the gross transaction value of digital payments in the region had grown almost 20 per cent to USD707 billion from 2019 and is forecast to reach USD1,169 billion by 2025.1
The prime driver of this trend is changing customer expectations, namely the preference for a simpler and instantaneous user experience in terms of how payments are made.
From QR codes and e-wallets to using a friend’s mobile phone number to transfer money, customers increasingly expect convenience, timeliness and control of payments options on an integrated platform.
Digital payments deliver new regional opportunities
Strong regulatory support is propelling this market development. ASEAN governments have been quick to recognise the benefits of digital payments and in response have built new digital infrastructure to accelerate their growth. Real-time payment platforms such as Singapore’s Fast and Secure Transfer (FAST) and PayNow are helping to spur the shift to digital payments and are no longer confined to just working in a single country.
In 2021, Singapore and Thailand launched the world’s first real-time retail payment systems linking PayNow and PromptPay2. For Singapore, more linkages with other ASEAN countries, including Malaysia3 and the Philippines4, are set to come.
And this is just the start. We are heading towards a future where ASEAN can be borderless and the region is connected by a digital payment ecosystem, in which there is a common digital language across real-time information exchange and instantaneous payments in the region.
It is a future where businesses and consumers can enjoy seamless and contactless cross-border payments in their local currencies, without worrying about fluctuating exchange rates or varying regulatory restrictions on currency conversion and transfers. This development will see the business community benefitting from a more time- and cost-effective payments and collections process that can better serve their customers.
Solutions to fit every size of company
For ASEAN to realise the opportunities of digital payments will require companies of all sizes and across all sectors to embrace cashless transactions. Of course, the change will not happen overnight, as many companies have to contend with legacy infrastructure that cannot easily accommodate digital payments. Changing that infrastructure requires considerable investment. And with so many payment choices available, companies need to understand which ones are right for them before embarking on a significant upgrade of their systems.
As daunting as this transformation may sound, it does not have to be difficult. The key is to partner with established financial institutions that can offer tailored solutions to meet the particular needs of an organisation. For instance, there are many digital payment options that do not require new, costly technology which are ideal for businesses looking for minimal technical effort.
An example of this type of ‘lite-touch’ solution is what is known as a payment link, a solution that Standard Chartered offers. This allows a company to generate a web link that is sent to the customer through an email or a secure message. When the customer clicks on the link, they are taken to a payment gateway powered by Standard Chartered which is already populated with the customer’s payments details. The payment link system allows companies to adopt digital payments without the need for new technology or additional investment.
We expect a virtuous cycle of increased adoption across the region as technologies evolve to provide added advantages to the corporate sector. As more companies join in the digital payments ecosystem, it will attract further participation from other players.
Digital payments are not new, but they can create tremendous opportunities. The past couple of years have created a sea change in customer expectations and seen positive industry trends which lowered the hurdles for companies to adopt digital payments.
This digital payments trend is not going away in ASEAN, so the choice for businesses is clear: embrace the new future of transactions or get left behind.
The writer is Head of Cash Products, Singapore & ASEAN and Global Head of Structured Solutions Development, Cash Management, Standard Chartered Bank
1 e-Conomy SEA 2021, Google, Temasek, Bain & Company