Alternative payment methods such as mobile wallets now account for just over half of ecommerce transaction value in Asia Pacific, according to research from GlobalData.
The Apac online shopping market is booming, predicted to hit $1.6 trillion this year, rising to $2.3 trillion in 2022. And, with the likes of China's Alipay becoming near ubiquitous in its massive home market, shoppers are increasingly ditching traditional payment methods in favour of digital wallets.
In the first quarter of 2018, alternative payment methods accounted for 51% of the total ecommerce transaction value in Apac, up from 49% in the last quarter of 2017. Meanwhile, payment cards accounted for 28% of transaction value, bank transfers 15%, and cash and cheques six per cent.
In China, Alipay remains the most popular payments tool overall, with a 41% share, followed by WeChat Pay with 7.1%, which was introduced by Tencent to leverage the popularity of its social media app, which has a huge customer base of around one billion.
Alternative payment tools are less popular in other countries but still account for nearly one third of the total e-commerce transaction value in Australia, with PayPal being the preferred offering.
Meanwhile, in India the major push towards electronic payments came from the government with the 2016 demonetisation initiative helping to displace cash to a large extent in favour of alternative payments. However, digital wallets saw their popularity subside slightly this year, partially as a result of the cash supply restoring to normalcy and the central bank tightening KYC procedures for digital wallet users.
Ravi Sharma, senior payments analyst, GlobalData, says: "Adoption of alternative payments in the Apac region has occurred well ahead of that in the West. Asia’s card infrastructure and payment behavior are not well entrenched and therefore alternative payment tools offer a welcome substitute to cash.
"Rising smartphone penetration coupled with a large unbanked population has also turned the region into a potential growth market for alternative payments."