India’s United Payments Interface (UPI) payments rail has achieved massive success in its domestic market that will be difficult for any future competitor to surpass. According to a new report by PwC, total UPI transaction volume is expected to grow form 131 billion in the 2023-24 fiscal year to 439 billion by 2028–29. UPI now accounts for over 80% of India’s overall retail digital payments in India and is expected to surpass 90% by 2028-29. Given UPI's success, India has sought to expand its footprint internationally and in the past few years it has become available in a number of countries from the United Arab Emirates and Bhutan to the UK and France. Yet questions remain about whether UPI can serve as a foundational platform for digital payments outside of India.
Airwallex, a plucky Tencent-backed B2B payments company founded in Australia, said on Aug. 15 that it has surpassed US$100 billion in annual processing volume, a 73% annual increase. The company, which has moved its corporate headquarters several times since its 2015 founding and is now based in Singapore, said it has seen growing volumes across all products and an annual run rate revenue of almost $500 million. While these numbers suggest that Airwallex continues to experience robust growth amid a broader fintech slowdown, it remains unprofitable.
Ant Group and Globe-backed Mynt, which operates the e-wallet GCash, is on a roll. Long one of the most valuable startups in the Philippines, it this month saw its valuation increase to US$5 billion – more than doubling its previous valuation of US$2 billion that it reached in 2021 – following a combined US$800 million capital injection from Japan’s MUFG and the Philippine conglomerate Ayala. The new funding for Mynt comes at a time when large fintech investments are hard to come by given high interest rates and more-stringent investor expectations.
When it comes to cross-border payment linkages, Southeast Asia is leading the way. Several years ago, Singapore and Thailand established the first such linkage with their respective real-time retail payment networks, making it possible for users to pay each other with just a mobile number. Since then, Indonesia, Malaysia and the Philippines have all established their own real-time payment systems. Of course, a broader regional system has always been the goal of central bankers, given the speed, efficiency and transparency it promises. With the advent of Project Nexus led by the Bank of International Settlements (BIS), that possibility may have just increased significantly.
Revolut’s PR machine has long sought to depict the company as an ascendant player in the Asia-Pacific (APAC) region. These efforts go back almost six years. Revolut entered Singapore and Japan in late 2018 and Australia in early 2019. In recent years, it has invested big in India. The UK finech unicorn talked about entering China in 2021, but those efforts to do not seem to have come to fruition.
Given the ubiquity of the Line messaging app in Japan, we were initially surprised to learn that the Line Pay app will be shut down in its home market in the end of April 2025. New user registrations will only be possible until Nov. 2024. After that, users will be able to transfer their Line Pay balances to PayPay. In a statement, Line-Yahoo stated the move is part of its governance strategy to “reorganize its businesses and integrate overlapping business areas” to expand group synergy.
Ant Group, under its Ant International arm, has been on a sustained international expansion campaign that increasingly encompasses Europe. While the company’s core cross-border payments business still targets Asia, it also sees opportunity further afield. On July 1, Ant announced that MultiSafePay, an Amsterdam-based payment service provider, had become its wholly-owned subsidiary and will integrate with the Chinese company’s Antom platform.
China’s fintech crackdown has been going on in some form or another since 2017. First, the cryptocurrency industry was hobbled. Then peer-to-peer (P2P) lending was reined in and effectively eliminated. The third act in this play has been the forced restructuring of China’s fintech giants, who have been accused of monopolistic practices – which is not untrue – but whose greater offense has been getting a little too large for their own good. Thus far, Alipay has fared much worse than Tencent’s fintech business, but one wonders if the omnipresence of the WeChat app might be a growing risk for the Shenzhen-based company. According to a recent Nikkei Asia report, it already is.
How long has Revolut been saying it has big plans for Asia Pacific? At least six years, if not longer – by our calculations. It has a presence in Australia, New Zealand, Japan, Singapore and India and at one time planned to set up shop in many other Asian countries. Yet this ethos originated in a time of low interest rates and near infinite VC funding. Revolut did not have to worry too much about profitability back then, so it could devote most of its attention to growth. At the same time, the multicurrency wallet that lies at the core of Revolut’s value proposition may not be that attractive to customers in emerging markets more focused on gaining access to core retail banking services.
Despite the best lobbying efforts of certain industry players, Australia is moving forward with long-running plans to rein in the buy now, pay later (BNPL) segment of digital financial services. Provided that the bill introduced on June 5 becomes law, BNPL firms in the country will be required to run credit checks on borrowers and hold an Australian Credit License (ACL).
China’s cashless evolution is a remarkable story, as the country transitioned in less than two decades from a cash-first society to one with an 86% mobile payments penetration rate. The comprehensive ecosystems of Alipay and WeChat Pay have made payments in China among the most convenient and frictionless in the world with one important caveat: One must be within the domestic Chinese payments ecosystems, with a Chinese bank account that can be tied to the payment apps.
On May 8, Paytm’s share price hit a nadir of 317.45 Indian rupees (US$3.80). While since then the company’s stock has risen top about 369 rupees, Paytm continues to face a slew of challenges. The Indian fintech giant’s stock has fallen about 49% in value over the past year and 76% since its November 2021 IPO.
Those who do not follow China’s payments sector closely may not have heard of LianLian Digitech, a Hangzhou-based fintech firm that presides over an ascendant cross-border payments network and counts among its strategic partners American Express. LianLian has leaned hard into market segments not dominated by the traditional Chinese payments duopoly of Alipay and Tenpay, whether by partnering with a global card giant like Amex on renminbi clearing in China’s domestic market or by capitalizing on a growing appetite among China’s e-commerce sector to do business overseas.
Alipay is continuing its cross-border expansion with new partnerships, including one with Mastercard focused on remittances. The company is at the same time steadily developing the Alipay+ platform and has its eye on expanding to Indonesia, Southeast Asia’s largest economy and one of the most important in Asia Pacific for fintech. While the various expansion efforts may not seem interconnected at first blush, there is a common theme: Alipay can no longer count on China’s domestic market for high margins and fast growth.
India’s $357.5 billion payments sector has proven challenging for the U.S. tech’s giants. Only Google has established a strong foothold, while Facebook, WhatsApp and Amazon have been unable to grow their market share substantively, despite their respect strengths in social media, messaging and e-commerce.
It would be inaccurate to call retail payments on India’s paramount United Payments Interface (UPI) rail a full-fledged duopoly, but Google Pay and Walmart-backed PhonePe do dominate this market with a combined 86% market share. PhonePe currently has a 48.3% share of UPI retail payments, while Google Pay has 37.6%. Paytm has a share of about 9%. No other company even has a full 1% share of the UPI market.
Although the narrative in the financial industry is that digital is better, that is not always the case. Many rural economies across Asia operate on a largely informal and cash basis. A few factors are driving this. Firstly, there is often a lack of infrastructure to support cashless payments, such as limited internet access or banking services. Secondly, the rural populations often have a general distrust or lack of familiarity with digital payment systems. Additionally, the informal nature of many businesses in rural areas lends itself to cash transactions, which are perceived as more straightforward.
While the buy now, pay later (BNPL) concept has proven immensely popular with consumers worldwide, developing a sustainable business model as a BNPL focused fintech is a challenging endeavor. For that reason, it is always noteworthy when a BNPL firm reaches the profitability milestone. The Philippines’ Billease, founded in 2017, appears to have done so in 2023.
Vietnam is one of the most promising markets for fintech in Southeast Asia, with the payments segment continuing to lead the way. While talk of Vietnam going truly cashless is premature, there is a steady transition to digital payments in the country. Data compiled by the State Bank of Vietnam show that non-cash payment transactions increased by 63.3% in volume and 41.45% in value in January, compared to the same period in 2023. Many Vietnamese banks now have over 90% of their transactions conducted via digital channels.
Ant International’s global expansion efforts have grown increasingly strategic since the launch of its Alipay+ and its pivot to boosting interoperability among e-wallets in Asia. While it is difficult to measure the financial success of these efforts, the growth of Ant’s international payments network in the last 18 months has been impressive and the company has smartly pared back its presence in certain markets due to geopolitical pressures. With international travel having recovered to pre-pandemic levels, Alipay+ likely has significant room to grow, especially in neighboring countries.
Singapore-based payments fintech Nium has been busy expanding internationally as it seeks to put itself in the most favorable position possible ahead of a planned IPO in 2025. In recent months, Nium has expanded on multiple continents, from South America to different parts of Asia.
It has been a rollercoaster seven weeks for India’s preeminent fintech Paytm, which on January 31 was accused by the Reserve Bank of India (RBI) of “persistent noncompliance.” To be precise, it was Paytm Payments Bank that the RBI named, and it is the payments unit of the company that ceased to exist as of March 15. The good news for Paytm is that the RBI’s crackdown on its payment bank is not a lethal blow – and was never intended as such.
With funding for fintech startups having fallen precipitously from the days of ultra-low interest rates and a focus on growth at all costs, a reality is setting in: Disrupting the giants of incumbent financial services is no easy task. In many cases, it has proven elusive.
India’s United Payments Interface (UPI) payments rail is the most successful initiative of its kind. Domestically, UPI has achieved a dominance that no other payments rail is likely to surpass. According to a report by PwC, it is projected that daily UPI transactions will reach 1 billion by FY 2026-27, representing approximately 90% of India's non-cash transactions. 2024 started with UPI transactions processed in January reaching a record high of INR 18.41 trillion. Given UPI's success, India has sought to expand its footprint internationally and in the past few years it has become available in a number of countries from the United Arab Emirates and Bhutan to the UK and France. Yet questions remain about whether UPI can serve as a foundational platform for digital payments outside of India.
It increasingly appears that India’s fintech unicorn Paytm has a way forward from the regulatory pressure it is facing, but the company will have to part ways with its payments bank and restructure accordingly. To that end, India's Financial Intelligence Unit (FIU) on March 1 imposed a penalty of 54.9 million rupees (US$662,565) on Paytm Payments Bank for violations in reporting illegal money routed through its accounts. Given that Paytm overall has a market capitalization of almost US$3.3 billion, the fine itself is manageable, but the loss of its payments bank will require that the company rejig its operations to remain competitive.
Both Razorpay and Paytm are Indian fintech unicorns that have at different times struggled with mercurial regulators, but that’s about where the similarities end. Razorpay has focused only on the B2B segment, while Paytm has tried to gain a foothold in both retail and non-retail payments. While both companies have relied heavily on venture capital investment, Razorpay has very little, if any exposure, to China in this regard, while Ant Group’s stake in Paytm is coming under increasing scrutiny. With Paytm’s payments bank in mortal danger and Razorpay preparing to move its domicile from the U.S. to India while planning an IPO, the two fintech unicorns are both at inflection points. However, just one of them is ascendant.
The Reserve Bank of India’s (RBI) harsh crackdown on Paytm has shaken up the subcontinent’s fintech sector. If Paytm were to lose its payments bank due to the RBI’s directives, not only would the future of India’s largest fintech look more uncertain, there also could be unpredictable knock-on effects that reverberated throughout the industry. While the RBI’s move initially appeared to be abrupt, recent media reports suggest that the regulator had issued multiple warnings to the company over dealings between its payments bank and its payments app over the past two years that were not heeded.
Long a cornerstone of the business of Indian fintech giant Paytm, the company’s payments bank may have entered its twilight. While the Reserve Bank of India (RBI) has previously barred the payments bank from onboarding new customers, this new directive issued on January 31 is more comprehensive and foreboding. It appears the payments bank will no longer be operational after February 29, with just a few exceptions. India's central bank said it took the action due to "persistent non-compliances and continued material supervisory concerns in the bank” – which it did not specify.
Singapore-based payments firm FOMO Pay has been expanding internationally on several continents. The company, which is a partner of Ripple, recently received a Money Service Operator license for Hong Kong and last week announced its expansion into Africa. It also recently secured a partnership with Mastercard and Z Bank.
India’s most prominent fintech unicorn has steadily improved its financials in recent years in a push to reach profitability sooner rather than later. In the October to December period, Paytm posted an operating profit – which the company defines as core profit before cost of employee stock options – for the fifth consecutive quarter. The figure was 2.19 billion rupees, a significant improvement over 310 million rupees during the same period a year earlier. Consolidated revenue, meanwhile, increased 38% to 28.5 billion rupees, with its payments business contributing 61% to the total. Despite these solid numbers, the company could face some headwinds in the months ahead.
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We recently wrote about how Google Pay has defied the odds in India, a crucial fintech market where both American tech and credit card giants have struggled to carve out a niche. The Google Pay app continues to hold a roughly 35% market share of the paramount homegrown payments rail United Payments Interface (UPI) in India, while WhatsApp Pay and Amazon Pay each have less than 1% and PayPal is absent altogether.
While regulatory uncertainty continues to hang over its domestic operations, Ant Group is not letting that get in the way of its ambitious global expansion of which the Alipay+ platform is a key part. The number of partnerships/tie-ups between Alipay+ and various entities is growing briskly and increasingly spans the whole of Asia, from Sri Lanka to Korea to the United Arab Emirates as well as Europe the United States.
One of the most promising segments of digital financial services in India is remittances. Unlike traditional banking, it is not completely dominated by incumbents, and the massive Indian diaspora population ensures that demand will be robust for years to come. 2023 was another big year for Indian remittances – though not as big as 2022.
Singapore-based multicurrency wallet YouTrip announced on January 3 that its users can now hold up to S$20,000 (US$15,025) in their e-wallets and have an annual spending limit of S$100,000, up from S$5,000 and S$30,000, respectively. The new maximum limits are the same as those recently adjusted upward by the Monetary Authority of Singapore (MAS).