APAC consumers ahead in Digital Payments uptake: Mastercard Research

Account to account transfers, digital wallets, QR codes are the most popular digital payment methods; Greater focus needed on building trust in new technologies amidst continued global uncertainty. 

Consumers in the Asia Pacific region remain among the most  enthusiastic adopters of digital payments in the world, with 88 percent having used technologies like  digital wallets, QR codes, Buy Now Pay Later (BNPL), cryptocurrencies, biometrics and others in the last  year. What’s more, 69 percent of APAC consumers increased their usage of at least one digital payment  method during the same period, demonstrating momentum. In comparison, only 52 percent of  consumers in North America and just 48 percent in Europe, (regions where consumers tend to be more  guarded and cautious about emerging payment technologies) increased their usage in the same way. 

The latest data on payment habits, attitudes and preferences was published in late August in Mastercard’s  second annual New Payments Index (NPI): a global consumer survey spanning 40 markets across five  regions, including seven in APAC: Australia, China, India, Japan, New Zealand, Thailand and Vietnam. 

While the COVID-19 pandemic was the catalyst for the unprecedented, rapid uptake of digital payments,  the latest research indicates that the change has been lasting, with 40 percent of survey respondents in  APAC cutting back on their use of cash in the last year. Despite this swing to digital forms of payment,  respondents frequently indicated that they had reservations about the security and institutional backing  of these new options. In fact, when deciding which payment method to use, security had the greatest  influence on consumer choice, beating out discounts/promotions, rewards and even low interest rates. 

Sandeep Malhotra, Executive Vice President, Products & Innovation, Asia Pacific at Mastercard, said,  “Consumers in the Asia Pacific region have consistently shown a willingness to adopt innovative new  technologies—and payments are no exception. Given the sheer speed with which payment options are  proliferating, coupled with today’s global climate of uncertainty in socio-economic, health and political matters, it’s important that banks, governments and other stakeholders in the financial ecosystem  proactively support the sustainable development of these new payment methods, including through  regulation, bolstering security, and educating consumers. With reassurances such as these, it’s likely we  will see even more extensive adoption of emerging payment technologies in the region.”

Key takeaways from the report:

Biometrics unbeatable for convenience and security, but privacy worries remain 

There’s broad recognition among consumers that using biometric identification, such as fingerprint or  facial recognition, is easier than remembering PINs or passwords (70 percent), and more secure than  these traditional methods of verification (69 percent). At the same time, only around half (53 percent) of  respondents in APAC felt comfortable sharing their biometric data to save time, while 72 percent were  concerned about which entities would have access to this data. Despite this, 58 percent of consumers  used biometrics more frequently in the last year, demonstrating both an enthusiasm for the technology, and untapped potential if providers are able to properly address consumers’ misgivings about privacy.

BNPL awareness is high while comfort is mixed; institutional offerings preferred

APAC is ahead of the curve with BNPL as 50 percent of consumers across the region say they are comfortable using BNPL today, while only 41 percent of consumers globally are comfortable using these  installment plans. In particular, consumers in APAC tap on BNPL offerings for their low/no interest  payments, in times of emergency and when they want to expedite bigger purchases. Looking ahead, 55 percent in APAC say they are likely to use BNPL in the next year. At the same time, building trust and  comfort is key as APAC consumers feel safer using BNPL solutions backed by a major payment network  (67 percent) or their existing bank (65 percent), rather than from other providers.

Broad awareness but relatively low knowledge of new digital currencies and assets

The majority of consumers in APAC have heard of cryptocurrencies (88 percent), non-fungible tokens (NFTs) (68 percent), and other digital assets—but uptake has been gradual. For now, the focus is on  investment. Among APAC consumers, 31 percent (and 44 percent of APAC millennials) report holding  crypto as an investment during the past year, while future use cases that are popular among  respondents include using crypto to redeem rewards, invest and make everyday payments. Regarding  the latter, just under half of respondents (46 percent) want increased flexibility to use crypto for  everyday payments. 

According to those surveyed, more involvement from governments and dependable institutions like  banks (cited as the most trusted provider of digital currencies) would boost their confidence in crypto.  Diving deeper, 60 percent agreed that governments should regulate the cryptocurrency and stablecoin  industry, while 55 percent would feel more confident investing in crypto or digital currencies that are  issued or backed by a reputable organization.