According to FT Confidential Research, the “use of mobile payment platforms is challenging the role credit cards play in the region.”
Credit cards were among the three most popular cashless payment methods only in the Philippines and Vietnam, the Nikkei Asia Review reported.
The penetration of credit cards was already low in the region – 2014 figures from the World Bank show it at less than 5% in Indonesia, the Philippines and Vietnam and highest, at 20%, in Malaysia – partly because of the credit checks and regulations involved.
Smartphone penetration, however, has risen rather faster and mobile payment has increased in tandem.
“In Indonesia, ASEAN’s largest economy, it appears people are skipping credit cards altogether and going straight to mobile payments,” the research noted.
These include bank-issued mobile payment apps as well as various payment platforms like GrabPay and Go-Pay in Indonesia, Malaysia and Thailand.
Anecdotal evidence suggests that the fees imposed by credit card companies on retailers are also a factor in boosting acceptance of mobile payments.
But the credit card companies – VISA and Mastercard dominate the region – face one significant advantage in that vendors usually accept multiple credit card networks.
“There are many mobile payment operators in each country and, with the exception of the bank-operated apps, no single payment platform can facilitate transactions beyond its own network,” the research said.
That may change, however, as both Indonesia and Malaysia are trialling a “real-time retail payment platform” that will enable interoperability across all payment networks.
Sourced from Nikkei Asian Review; additional content by WARC staff