Asia Payments Research

The Philippines is accelerating digitization of payments, both domestically and cross-border, in line with a goal of the country’s central bank (BSP) for 50% of retail payments to be cashless by 2023. One of the most important new developments in this space is the link-up between the respective real-time and QR  payments systems of the Philippines and Singapore.

Australia's long buy now, pay later (BNPL) honeymoon is winding down at last. One of the reasons BNPL has been so lucrative in Australia is that the platforms have not yet been constrained in the way credit cards are. However, for consumers and the overall financial services market, Australia’s imminent BNPL regulation is for the best. Far from innovation killing, regulation should compel BNPL platforms to address problem areas in their business model and ultimately make it more sustainable.

The buy now, pay later (BNPL) craze is sweeping Asia Pacific, growing briskly in markets from Australia to Indonesia. Like many other segments of fintech, BNPL is present in Taiwan, but the situation is a bit different from elsewhere. Major online retailers in Taiwan have offered interest-free installment payments for years, but typically in cooperation with major banks, which are authorized lenders. Dedicated BNPL platforms are another story.

Compared to many of its neighbors, Thailand has been digitizing its financial sector at a slower pace. Southeast Asia's second-largest economy has no digital banks – not even any framework for digital lenders – and until recently, no fintech unicorns. Ant Group-backed Ascend Money is Thailand’s first.

It was only a matter of time before buy, now pay later (BNPL) caught fire in India. All of the necessary elements are in place, from high internet connectivity and low credit card penetration to booming fintech investment and strong demand for alternative digital-first credit. A flurry of deals in recent months signify BNPL’s ascendancy on the subcontinent.

The delay of Kakao Pay’s US$1.3 billion IPO signifies a toughening regulatory landscape for the company and fintech overall in South Korea. For years, Kakao's fintech business in South Korea grew largely unfettered. Neither incumbents nor digital competitors – there were very few – posed a serious challenge to the firm, while regulators seemed content to take a relatively hands-off approach to its digital finance business. That’s all over now. What remains to be seen is whether this is a bump in the road or a harbinger of a rough ride to come.

In recent years, Asian countries have begun experimenting with instant cross-border payments on alternate payment rails, as covered in depth in a recent white paper by Kapronasia and ACI Worldwide. The idea is to enable instant, affordable and transparent payment flows using state-of-the-art digital technology. While much of the activity has been in Southeast Asia, India is an important player in this space as well given the prominence of its United Payments Interface (UPI) platform. The advent of the link-up between Singapore’s PayNow and UPI – slated to go live by July 2022 – marks an important step forward for real-time cross-border payments in the region.

Jakarta-based Xendit is Southeast Asia’s latest fintech unicorn, hitting a US$1 billion valuation after a Series C fundraising round that raised US$150 million led by Tiger Capital Management with participation from returning investors Accel, Amasia and Goat Capital. It has now raised a total of US$238 million. Xendit is best known for its digital payments infrastructure.

Singapore-based Nium became Southeast Asia’s first B2B payments unicorn in late July following a series D funding round that raised more than US$200 million. Nium is using that substantial capital injection to support an ambitious international expansion plan that includes the United States, Europe and India.

PayPal has long been one of the world’s preeminent online payment companies, but to stay at the forefront of the industry it needs to capture new market segments and build a larger presence in Asia Pacific, the fastest-growing region for digital finance. Targeted acquisitions will be integral to PayPal’s strategy, hence the recent purchase of the Japanese buy now, pay later (BNPL) platform Paidy for US$2.7 billion.

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