Asia Payments Research
Will GCash go public by year-end?
GCash is by several measures the most successful e-wallet in the Philippines. There is no question it has a massive user base – 81 million active users and 2.5 million merchants and social sellers as of May. What’s more, according to the company’s leadership, it became EBITDA profitable three years ahead of schedule, though it has declined to be more specific than that. While the global economic environment is not optimal for an IPO, GCash itself is doing well enough that it can probably afford to go ahead with the listing before year-end.
For the longest time, the China payments market was an oligopoly of the privileged three: first the state-owned UnionPay, and then as the country transitioned to mobile payments, Alipay and Tenpay. U.S. card giants like Visa, Mastercard, and American Express as well as PayPal could only look on with envy and frustration as Beijing kicked the can down the road on boosting market access – which was supposed to have been complete by 2006 per the conditions it agreed to upon accession to the World Trade Organization in 2001.
The paramountcy of the SWIFT interbank messaging network to cross-border payments can be measured in many ways, and SWIFT itself likes to do so with its data on transaction numbers and amounts. For instance, as of December 2022, Swift had recorded an average of 44.8 million FIN messages (payments and securities transactions) per day during the year, a year on year rise of 6.6%.
Earned wage access gains popularity in Asia
Across Asia’s emerging markets, earned wage access (EWA) has been gaining traction rapidly in the past two years. In a nutshell, EWA platforms allow employees of a company to access a portion of their earned pay before payday. EWA is catching on fast in some of Southeast Asia’s largest emerging markets where per-capita GDP remains relatively low and significant portions of the population are either unbanked or underbanked.
This commentary was written in collaboration with Banking Circle.
The majority of cross-border payments are currently carried out via telegraphic transfers supported by SWIFT’s network of correspondent banks. These transfers are often criticized for being slow and expensive. A transfer can take several days to complete, while the World Bank estimates the average cost of a transaction to be about 6% of the transfer value.
Why is BNPL resilient in Indonesia?
It’s all about financial inclusion: That’s why buy now, pay later (BNPL) is continuing to grow briskly in Indonesia, why regulators are maintaining a light touch, why venture capitalists and others keep pouring money into the country’s BNPL firms. Indonesia has an unbanked population of 181 million that is larger than the populations of most countries and many more underbanked people. Interest-free (if you pay on time) installment payments seamlessly integrated into e-wallets could become a dominant form of de facto credit in the country.
U.S. payment giants play the long game in China
The largest U.S. payments firms have had their eyes on the China market for decades, in some cases since the country kicked off economic reforms in 1978. They have waited with the utmost patience to gain access to the colossal Chinese payments and cards market, valued at US$21 trillion in 2021 by research firm Global Data. In recent years, American Express and PayPal have made some incremental progress in the China market as Beijing has gradually permitted more foreign investment in its payments sector.
The future of cross-border payments in Asia is atomic
Defining atomic settlement
Atomic settlement refers to exchanging assets between two parties in a single transaction, typically instantaneously and often without intermediaries. This can be particularly useful in cross-border payments, as it allows for faster and cheaper transactions compared to traditional methods that rely on a more comprehensive network of correspondent banks or other financial institutions to facilitate the transfer.
Airwallex is set for expansion in China
China’s payments market has been gradually opening to foreign competition in recent years for different reasons. On the one hand, the Chinese government is wary of allowing a couple of tech giants to indefinitely monopolize a market worth US$3.5 billion at the end of 2022, according to Daxue Consulting. On the other, financial services is one sector of the economy in which Beijing wants more foreign investment. It is against this backdrop that we should evaluate the prospects of Airwallex in China now that the Australian-founded and Hong Kong-based firm has secured an e-payments license for the China market.
Japan’s affinity for cash has made it a relative laggard in adopting digital payments, especially compared to neighbors like Korea and China. Japan only broke the 30% milestone for cashless payments in 2021, partially due to the pandemic. In contrast, Korea was almost 94% cashless in 2020, while China was not far behind at 83%, according to the World Economic Forum.
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A commentary in collaboration with Banking Circle.
Large banks have long dominated cross-border payments in Asia Pacific thanks to their control of traditional correspondent banking networks and until recently, the lack of viable competitors. Banks have been particularly dominant in B2B payments as the barrier to entry is higher than in the retail segment.
Why Meta is missing the boat on Asia’s fintech boom
Meta makes almost all of its revenue from advertising. The company has long known it needs a new engine of revenue growth, but it waited too long to introduce payments and explore fintech in general.
In Asia, where fintech growth has generally been much faster than in Meta’s home market of the United States, the company has faced market barriers in some cases and intense competition overall. At this point, it may be able to gain some payments market share in certain Asian countries with WhatsApp Pay, but it will be an uphill climb.
How proxy addressing is reshaping real-time payments in Asia Pacific
A commentary in collaboration with Banking Circle.
The advent of proxy-enabled national real-time payment (RTP) systems has become an integral part of Asia Pacific’s digital financial services market landscape in recent years, driven by central bankers’ determination to make financial flows faster, more efficient and more widely accessible. Southeast Asian countries have been among the most proactive in the development of such real-time payment systems, which have been rolled out domestically first and then gradually expanded into the cross-border space.
The epochal e-wallet evolution in Asia Pacific
A commentary in collaboration with Banking Circle.
Mobile wallets are increasingly a preferred payment method across Asia Pacific, from China to Southeast Asia to Australia. Though e-wallet use in the region was growing steadily prior to the pandemic, the abrupt shift to online and contactless commerce in early 2020 supercharged mobile wallet adoption. This has important implications for Southeast Asia – where many people remain unbanked or underbanked and credit cards have yet to gain a strong foothold outside of Singapore and Malaysia.