Symbolizing good luck and fresh starts, CNY has also become a pivotal period in a brand’s sales calendar.
The Chinatown shophouses are painted red, the lanterns are glowing and the dragons are ready to dance. As Southeast Asia’s (SEA) most iconic festival, Chinese New Year (CNY) is an occasion to spread joy and best wishes by people and brands alike.
Every year, SEA brands experience significant surges in sales as consumers rush to make their CNYs the best yet. And now, given the widespread adoption of the week-long celebration and the availability of e-commerce, CNY is connecting Southeast Asians across multiple national borders as they purchase their gifts from their own markets and overseas.
However, to enable this, SEA needs a digital payment infrastructure that spans multiple nations. This will help people working and living overseas and allow more online shoppers to send items and gifts across borders, showing their love and good wishes when their physical presence may not be possible.
Staggering growth
In particular, online retail is now dominating many brands’ sales turnovers, increasing the pressure on marketers to have the perfect campaigns, user experience and payment options to meet this surge.
Between the end of 2022 and 2026, SEA’s e-commerce market is projected to triple at a compound growth rate of 22% and will reach around US$230 billion in gross merchandise volume.
Driven by high smartphone penetration and thriving online marketplaces such as Lazada, Shopee and Sendo, SEA residents are purchasing everything from clothes, consumer electronics, beauty products, home and living goods and food online. Markets such as Indonesia, Vietnam, Thailand and the Philippines currently have the highest growth in mobile users. Meanwhile, Singapore and Malaysia already have smartphone penetration of well over 80%. Global estimates suggest that Asia as a whole accounts for 65% of mobile commerce – worth a staggering US$1.6 trillion.
Scores of brands have already unveiled new limited-edition Year of the Dragon products or standout campaigns featuring some of China and SEAs’ most quintessential images – as seen with Prada’s Wong Kar-wai-inspired ad. CNY gives marketers and creatives an abundance of material to work with.
However, reaching consumers with these campaigns is futile if there are no means to enable seamless and cost-effective purchases. For this, bands need to use a payment infrastructure that meets the regulatory requirements, linguistic differences and currencies for the millions celebrating across all of SEA.
Faster, more affordable payments
Various payment methods contribute to SEA’s e-commerce gross merchandise value (GMV), spanning cards, domestic payments and mobile wallets. Even cash plays a critical role, with payment upon delivery still a popular choice in markets such as Thailand and Cambodia.
However, forecasts indicate that the GMV of cash payments is anticipated to plateau compared to other evolving payment methods. Moreover, since the COVID-19 pandemic, more than half of SEA consumers are using cash less frequently, with almost two-thirds of these users located in Indonesia and Vietnam.
SEA is one of the leading markets in cross-border digital finance. Due to deep smartphone penetration, the use of QR codes as a payment tool is soaring in popularity. According to an analyst report, the number of users of QR payment apps in Singapore, Malaysia and Indonesia reached almost 1 million people as of July 2023 and is forecasted to grow by 78% by 2025 up to 1.77 million users.
The introduction of new initiatives to link cross-border payment systems through the use of QR codes is likely to drive this growth. As of September 2023, all six major economies of ASEAN have now launched bilateral agreements or memoranda of understanding (MoUs) to launch QR code payment linkages with other member states.
As more nations join these agreements, more brands will be able to offer cross-border payments at faster and cheaper rates. For ASEAN’s roughly 10 million overseas workers, this access to payments will serve as a lifeline for remaining connected with loved-ones during the holiday season.
Mobile or e-wallets are also increasingly popular, largely due to their tight integration with food delivery and ride-sharing applications. According to a study, so-called ‘super apps’, which offer multiple solutions through one ecosystem, and financial technology apps have attracted the most funding in SEA over the past decade. These fit perfectly into younger, digitally-savvy Southeast Asians’ demands for integrated and interoperable services that fit their spending and lifestyle habits.
For the millions of Southeast Asians who take an intra-ASEAN vacation over the CNY period, connected digital wallets will offer increased convenience, security, reduced costs and reduced risk. No longer will vacationing tourists feel the hassle of exchanging and safely storing cash. Instead, they will gain an enhanced tourism experience that will in turn provide a boost to ASEAN’s overall economy.
During CNY, marketers had a golden opportunity to creatively blend tradition and technology to ensure a prosperous start to the Year of the Dragon. This Lunar New Year has no doubt reflected SEA’s rapidly growing shift to digital consumption and payments. Indeed, if the wallet is now digital, why not the red envelope?
