In China, the QR code has replaced cash and cards to become the mainstream payment method. In Southeast Asia, e-payments, QR code payment, and other non-cash payment options are also becoming more and more popular.
On stage at ORIGIN, an event hosted by Technode at SWITCH (the Singapore Week of Innovation and TeCHnology), COO of NETS Jocelyn Ang and Liquid Pay CEO Jeremy Tan spoke about the development of mobile payments and adoption of QR code payment in Southeast Asia.
In the past few years non-cash alternatives have started to proliferate in Southeast Asian countries, Ang said. In Singapore, most mobile apps today are equipped with an e-wallet feature. However, the market is still not seeing consolidations of e-wallet across all sectors, Ang said. China, on the other hand, has a super app like WeChat that is capable of handling payment services across different sectors.
WeChat and Alipay, the two dominant players in China, both have hundreds of millions of users as their foundations. So naturally, they have become very powerful and pervasive apps. Same goes for China’s Unions Pay which works with hundreds of banks with billions of cards issued bearing its logo. Such coherence is not observed in Southeast Asian markets.
A short history of the QR code in China and why Southeast Asia is next
When comparing Southeast Asia with China, it is important to bear in mind that Southeast Asia is a very dynamic region and not one country or one market, Tan noted. For a consolidator, in this case, a QR code payment, to be adopted across ten different countries with ten different languages, it is going to take a while—certainly, a lot longer than what it took China.
Compared to other non-cash payment methods, QR code is relatively low-cost and easy to adopt. That is why QR code is often considered as a more viable model for emerging countries as they strive to become cashless.
In Southeast Asia, QR code payment serves each country differently.
Singapore, for example, is a very card-based economy, where a large percentage of retailers already accept cards as a payment option. Ang noted that there are, however, certain areas are still cash-based. For example, most food stalls at hawker centers are not equipped with POS (point-of-sale) terminals. Payment providers and the government have been promoting QR payment specifically at these areas over the past few years. Ang noted that it is a way to get consumers acquainted with the payment method.
Unlike Singapore where QR code may come as a payment alternative to replace cash, for other emerging markets, such as Indonesia where a large portion of the population is still unbanked, QR code payment serves as a way to increase access to financial services.
When asked about whether Southeast Asia can emulate China’s QR code success, Ang named some key takeaways. First, the pervasiveness and acceptance of mobile payments. Second, the confidence and trust between users and service providers. And third, interoperability of mobile payment services.
The rapidly growing youth population along with rising internet and smartphone penetration make Southeast Asia a lucrative market for Chinese payment providers already making their foray into some countries.
This can be seen as a boon rather than a threat to local markets in Southeast Asia, Ang noted. Mobile payment providers like Alipay and WeChat Pay, in fact, have brought in technology support and innovation into the region. The increasing number of Chinese tourists in the region have also incentivized merchants to adopt Chinese mobile payment options. Tan noted that the features and services WeChat Pay and Alipay offer are still tailored to the Chinese population. To compete head to head with local players in the Southeast Asia region would require them to localize, which is not a simple task in a region as diverse and dynamic as Southeast Asia