By Hoang Nguyen, Tech in Asia
Rapid economic expansion, a young population, and low-cost smartphones and tablets are creating tech-savvy generations across Southeast Asia.
Philippines leads Southeast Asia in mobile payment adoption.
Major e-commerce players such as Groupon, eBay, Rocket Internet, and LivingSocial have ventured into Southeast Asia, making significant investments into these markets. With increasing penetration of e-commerce into Southeast Asia, global payment companies such as PayPal are investing in the region.
But as they do, stiff competition is being demonstrated from a number of local players such as MOL (Malaysia) and 2C2P (Thailand). MOL is now one of the biggest payment companies in Southeast Asia, with 60 million annual transactions, and yearly revenues over $300 million. 2C2P is a Thailand-based e-payment company with a smaller scale but already having expanded offices and operations to over seven other markets in the region.
While the industry’s potential is obvious, technology investors and global payment providers should be wary of rushing into these markets without understanding the cultural and regulatory differences of each country, which affect how merchants and consumers behave.
For example, Philippines has a stronger acceptance of mobile payments while Malaysians prefer internet payment.
A tailored strategy then, which considers the unique stages of each market’s development, factoring in technology, infrastructure, consumer preferences, and regulatory environment, is far superior to a regionalized blueprint approach.
Internet, mobile network and banking
Three key underlying infrastructure drivers needed to facilitate online payment are ease of internet access, mobile usage, and banking penetration.
Ease of Internet access
Internet access is instrumental to boosting online payment. In total, the six largest economies in Southeast Asia are home to an online population in excess of 160 million, representing internet penetration of 28 percent. Singapore leads the region with an internet penetration of 75 percent, while Indonesia has the lowest internet penetration at 22 percent.
Across all the markets considered, urban populations have higher penetration rates than rural areas. For example, internet penetration in Vietnam’s two biggest cities is over 50 percent while the nationwide rate is 34 percent.
Mobile usage
Important to expanding online payment options and seen as the future of the industry, mobile phones are widely used across the region. In addition to excellent mobile network coverage, mobile phone subscriptions often exceed 100 subscriptions per 100 inhabitants, indicating wide prevalence of dual-SIM and multiple device users. Only Myanmar has less – 11 subscriptions per 100. The rate peaks with Singapore at 153 subscriptions per 100.
Read the full article by Hoang Nguyen from Tech in Asia.
