Online shopping drives expansion of alternative payments’ use in APAC
China’s alternatives will account for 70% of e-commerce transaction value in 2021.
Alternative payments have gained significant prominence amongst online shoppers in the Asia Pacific (APAC), with e-commerce payments expected to increase at a compound annual growth rate (CAGR) of 12% to reach $4.3t in 2025, according to a study by GlobalData.
E-commerce payments in APAC, covering 16 countries, are estimated to increase by 16.7% in 2021 to reach US$2.8t, data from GlobalData’s E-Commerce Analytics showed. This is due to an accelerated shift towards online shopping among consumers.
The rising smartphone penetration coupled with a large unbanked population has helped in the growth of alternative payments in the region.
“The COVID-19 pandemic has further supported this trend as consumers are increasingly shifting to online channels and opting for digital payments, thereby benefiting these alternative payment tools,” Sharma added.
Alternative payments now reportedly account for a lion share in the e-commerce market across several APAC countries. China alternative payment solutions alone are set to account for more than 70% of the e-commerce transaction value in 2021, increasing from 51.2% in 2017, according to GlobalData.
A similar trend could reportedly be seen in other Asian markets like India, Hong Kong, Australia, and the Philippines, where these payment tools account for a substantial share for 59.6%, 45.5%, 43.2%, and 30.6%, respectively.
The usage of alternative payments is poised for major growth in the next few years in APAC, disrupting the overall consumer payment space in the region with a gradual decline in cash usage, Sharma said.
“Increasing consumer demand for online shopping amidst the pandemic, rise in smartphone penetration, and growing acceptance of these tools will further drive their usage in coming years,” Sharma added.