E-wallets remained popular among consumers in Asia-Pacific (APAC), maintaining their position as the preferred payment method for online shopping and becoming more prevalent for in-store purchases, new data released by payment processing firm Worldpay show.
The growth of e-wallets in Asia Pacific comes amid a decline in cash usage and efforts from governments to connect payment systems.
The data, released as part of Worldpay’s Annual Global Payments Report, paints a positive outlook for the e-wallet landscape in Asia-Pacific, unveiling a rise in usage and projecting continued growth over the next three years.
What’s driving the e-wallet revolution in Asia Pacific?
Several factors are driving the adoption of e-wallets in Asia. For one, efforts to link domestic QR code payment systems are making e-wallets more appealing to consumers by offering convenience, cost-effectiveness, and seamless integration with existing payment infrastructure.
QR code interoperability allows users to use their favorite e-wallets for payments across different countries without worrying about currency exchange or differing payment systems. This ease encourages more people to adopt e-wallets, particularly for travel or cross-border transactions.
For merchants, QR code-based payments are attractive due to their cost-effectiveness and simplicity, as they don’t require special equipment like point-of-sale (POS) terminals.
In Asia Pacific, QR code payments have become widespread, facilitated by real-time payment rails established by central banks and bank associations. Systems such as Bi-Fast in Indonesia, UPI in India, DuitNow in Malaysia, BancNet in the Philippines and PromptPay in Thailand are providing the underlying infrastructure for the use of QR code payments and mobile payment linkage between countries, making it easier to implement interoperability initiatives.
The decline in cash usage is another significant driver of e-wallet adoption in APAC. In 2023, cash usage dropped by 12% year-over-year (YoY) and its share of regional POS transaction value decreased from 19% to 16% in 2023.
While cash remained the leading POS payment method in six of fourteen APAC markets in 2023, accounting for more than US$2.5 trillion in 2023 transaction value, its usage is forecasted to decline by -8% annually from 2023 to 2027 as consumers continue shifting to e-wallets.
Payment trends in Asia Pacific and forecasts
In 2023, e-wallets in Asia continues to be the dominant payment method online. The payment method accounted for 70% of all e-commerce transaction value, up one point from 2022’s 69% share. A total of US$2 trillion were spent online through e-wallets last year, accounting for more than 64% of global online e-wallet spend for that period.
E-wallets saw significant popularity in Australia, China, India, Indonesia, the Philippines and Vietnam, emerging as the preferred payment method for e-commerce transactions in 2023.
E-wallets achieved another significant milestone in 2023 by capturing a greater portion of POS spend compared to the previous year. In 2023, the payment method made up 50% of POS transaction value across APAC, up three points from the 47% share recorded in 2022.
A total of US$7.8 trillion was spent through e-wallets in POS transaction value in 2023, or nearly 72% of the US$10.8 trillion global POS e-wallet market.
Though e-wallets continued to gain ground in 2023, cards maintained their dominance in several APAC countries. In Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan, credit cards were consumers’ choice for in-person payments, accounting for 12% of APAC’s e-commerce transaction value in 2023.
However, this dominance is anticipated to diminish in many of these countries by 2027. In Hong Kong, digital wallets are on pace to eclipse credit cards in direct e-commerce spend within the next four years, and reach a 41% share by then. Additionally, usage of digital wallets for in-store purchases is also expected to surge, with a forecasted 15-point increase through 2027.
A similar trend is anticipated for Japan and South Korea. In Japan, digital wallets are now the fastest-growing payment method online, forecasted to expand annually by 16% through 2027, reaching a 27% share. This growth is even more pronounced for POS purchases, where digital wallets are set to grow by 24% yearly, achieving a 34% share by 2027 and becoming the predominant payment method.
In South Korea, the dominance of credit cards is expected to fade by 2027 in favor of digital wallets. By then, digital wallets are projected to comprise 42% of e-commerce transaction value, matching credit cards, and account for 41% of POS spend, making them the preferred payment method for in-store shopping. The report forecasts annual growth rates of 21% and 31% for online shopping and POS transactions, respectively, during the 2023-2027 period.
In 2023, China continued to lead all global markets in e-wallet adoption across shopping channels, with the payment method representing an estimated 82% of e-commerce transaction value or nearly US$1.8 trillion. Only slightly less dominant at POS, e-wallets accounted for 66% of POS spend in 2023, or nearly US$5.8 trillion.
E-wallets stand as the fastest growing payment method in both e-commerce and at POS in China, forecasted to grow at an annual rate of 13% to account for 86% of e-commerce spend by 2027. At POS, digital wallets are expected to grow at a 10% rate through 2027 to represent 79% of POS transaction value.
Featured image credit: Edited from freepik
