Electronic Payment Market in ASEAN Prepared by: Reciprocus International Date: February 2017

Transcription

1 RECIPROCUS RESEARCH BRIEF Electronic Payment Market in ASEAN Prepared by: Reciprocus International Date: February 217

2 Table of Contents Executive Summary 2 The Asia Pacific Macroeconomic Outlook 3 Global Financial Cards & Payments Overview 4 Asia Pacific Payment Industry Landscape 5 Asia Pacific Payment Industry Outlook 7 Asia Pacific Payment Landscape & Analysis 8 Opportunities Spotlight and Analysis - Philippines 9 Opportunities Spotlight and Analysis - Thailand 1 1

3 Executive Summary Globally, consumer payments continued to shift towards card and electronic channels away from paper from 21 to 215. The Asia Pacific region is an attractive growth opportunity given the significant growth in card and electronic payment transactions in recent years to account for over 5 of the global share of card transactions. Digitalization through mobile wallets and the significant growth of the e-commerce industry, is a key trend to follow for future growth. Philippines and Thailand are presenting some of the most exciting, high growth opportunities in the ASEAN region. The value of card payment transactions are forecasted to grow at a CAGR of 15.2% and 8.1% over 5 years to reach a value of US$91.9 and US$82.7 billion, respectively in 221. Given the ample possibilities being observed across the ASEAN payments market, we would recommend that Singapore companies in the payment processing industry consider exploring opportunities in this region, with a particular focus on Philippines and Thailand. 2

4 Asia Pacific Macroeconomic Outlook Household Consumption Expenditure CAGR (%) 2 Population Growth (annual %) 1.6% 15% 1 5% -5% 1.2%.8%.4%. -1 Japan China India Korea, Rep. Australia ASEAN -.4% Japan China India Korea, Rep. Australia ASEAN GDP CAGR (%) 21% 16% 11% 6% 1% -4% Japan China India Korea, Rep. Australia ASEAN Analysis Breakdown Within the APAC region, ASEAN has the second highest GDP CAGR from 25 to 215 at 1, only outstripped by China. Strong household consumption expenditure with a CAGR of 5. from 21 to 215 in ASEAN as well as a fast growing population of 623 million reflects the enormous size of its consumer market as well as high growth opportunities in the ASEAN card and electronic payment market. 3

5 Global Financial Cards & Payments Overview Global Overview Globally, the transition of consumer payments away from cash towards card and electronic methods continued in 215 with cash payment declining to 46% of global consumer transactions. This can be attributed to expanding card payments in the largest emerging markets, accelerated by displacement of traditional cash payment channels in developed markets. The year-on-year growth of total cards and consumer card transactions value generally slowed from 211 to 216, primarily due to weaker global economic performance over the period, but maintained positive growth. The emerging Asia region, comprising of Hong Kong, China and India, among others, was the fastest growing region for non-cash transactions with a CAGR of 25.2% over the period Proportion of Total Consumer Transaction Value, % Global Consumer Spending Proportion by Transaction Medium Cash Electronic Direct Card Y-o-Y Growth, % Global Cards & Consumer Transactions Y-o-Y Growth (%) 24% 2 16% 12% 8% 4% Cards Card Payment Transactions Consumer Payment Transactions Number of Global Non-Cash Transactions (billion), by Region, Region CAGR '11-'14 Growth '13-'14 North America 4.2% 12.2% Europe 5.2% 31.6% Mature Asia-Pacific % Latin America 9.3% 1.7% Emerging Asia 25.2% 6.4% CEMEA 15.5% 4.3% 4

6 Asia Pacific Payment Industry Landscape % of Banked Population over the age of 15, 216 (%) Card Payment Transactions Value in Asia Pacific, US$ trillion % of Banked Population Japan South Korea India China Indonesia Vietnam US$ trillion Card Payment Transactions Value, US$ trillion Growth, % Share of Global Card Payment Transaction Value, by Region, 216 (%) Asia Pacific Regional Performance North America 25% Middle East and Africa 2% Europe 16% Latin America 3% Asia Pacific 54% Within the Asia Pacific region, different countries vary in terms of exposure to the traditional banking system. The banked population over the age of 15 ranges from over 9 in more developed countries such as Japan and Korea to as low as 32.9% in Vietnam, as of 216. The Asia Pacific region had the greatest growth in card payment value of all regions, with a CAGR of 28.4% over the period of It accounted for approximately 54% of the global card payment transactions, with a value of US$ 13.1 trillion. This growth was primarily driven by the emergence of China s financial card market. In 216, China alone contributed US$ 1.7 trillion to the card payment transaction value, making up approximately 86% of the growth in Asia Pacific. 5

7 Asia Pacific Payment Industry Landscape Key Trends and Developments in 216 Impact of Mobile The mobile payments industry saw the arrival of new mobile payment methods such as Apple Pay, which was introduced to the US market in 214. In Asia Pacific, South Korea and Japan were first to adopt mobile payments followed by China and Taiwan. The share of retailing value coming from the internet will be the highest globally in China in 22, at an estimated 22%. Growth of E- commerce A key driver of mobile and electronic payments has been the increase in internet retailing. Although not every region has made significant inroads, the global share of all retailing made through the internet is expected to reach 13% by 221, up from 8.5% in 216. Asia is projected to have the highest share of retailing online, with 17.3%, followed by North America, with 16.4%, in 22. Internet Retailing as Share of total Retail Value, forecasted (%) 2 16% 12% 8% 4% World Asia Pacific Europe North America M-Commerce Market Value, US$ bn Top M-Commerce Markets by Size and Growth % 44.3% 43.3% % China USA United Thailand Japan Australia South Kingdom Korea 216 M-Commerce Market Value, US$ billion CAGR

8 Asia Pacific Payment Industry Outlook Asia Pacific Card & Electronic Payment Outlook The value of cards and electronic payment transactions are forecasted to grow at a CAGR of 9.5% over the period , to reach a value of US$ 2.6 trillion. This growth is expected to be supported by the steady growth in the number of financial cards in circulation in the Asia Pacific region, at a CAGR of 3.9% over 5 years to 25.1 billion cards by 221. US$, trillion Forecasted Growth of Card Payment Transactions Value, , US$ trillion % 12% 8% 4% There is also continued growth in the percentage of banked population above the age of 15 among the fast growing economies in the Asia Pacific region, which is expected to sustain the growth of card payment transactions in the region. Percentage of Banked Population (15+) Card Payment Transactions Value, US$ trillion Growth, % Forecasted Growth of Number of Financial Cards in Asia Pacific , billion India, 92% Philippines, 78% China, 69% Indonesia, 55% Vietnam, 33% Number of Financial Cards, billion % 4% 3% 2% 1% Number of Financial Cards in Circulation, billion Growth, % 7

9 Asia Pacific Payment Landscape & Analysis The pace of technological innovation across Asia Pacific is unprecedented and creating enormous opportunity for any company that touches the growing payment ecosystem Americas EMEA APAC Thailand and the Philippines are examples of high growth opportunities in the APAC region Technology and digitization are transforming the way in which we serve our clients. Consumer preferences are changing and a generational shift in behavior is driving consumers to new digital channels As the payment form factors continue to change, it is safe to say, you will be swiping a physical plastic card at the point-of-sale less and less often, so it becomes more and more important to integrate all of our services into the platforms where our customers are already going Thailand Population: 68. million Total GDP (215): US$ billion 1-Year CAGR: 7.6% Philippines Population: 1.7 million Total GDP (215): US$ billion 1-Year CAGR: 11. 8

10 Opportunities Spotlight and Analysis - Philippines Card Payment Transactions Value, US$ bn Card Payment Transactions Value by Issuer, 215 % M-Commerce Value, US$, mn % 2 Others 22% BDO Unibank 17% US$, billion % 1 5% Card Payment Transactions, US$ bn Growth, % HSBC Holdings 6% G-Xchange 8% Metropolitan Bank & Trust 1 Citibank 12% Bank of the Philippine Islands 13% Smart Communications 12% US$, million M-commerce, US$ mn Growth, % Why Philippines? Philippines Within ASEAN, the Philippines was the second fastest growing market for card payment transactions with a CAGR of 17.5% over the period The value of card payments are also forecasted to grow at a CAGR of 15.2% over 5 years, to reach a value of US$ 91.9 billion in 221. Philippines M-commerce value is also forecasted to grow at a rapid CAGR of 46.3% over , to reach a value of US$ 76.4 million. According to the Consumer Payment Attitudes study conducted by Visa in the Philippines in 215, Filipinos are increasingly becoming receptive to contactless payment due to its convenience, security, and ease of use. Government agencies such as The Bureau of Internal Revenue began accepting Philippine-issued cards in 216 for payment of taxes, interest, and other fees. Agencies such as the Home Development Mutual Fund, Land Transportation Office have also launched their own card payment facilities. With increasing consumer spending, new cards are targeted at high-spending consumers including the affluent class and young professionals. One such example is Citibank s Citi Prestige credit cards to benefit clients with at least PHP1 million s worth of business. 9

11 Opportunities Spotlight and Analysis - Thailand Card Payment Transactions Value, US$ bn Card Payment Transactions Value by Issuer, 215 % M-Commerce Value, US$, bn US$, billion % 2 15% 1 5% Card Payment Transactions, US$ bn Growth, % Citicorp Securities 8% Bangkok Bank 1 Others 2 Bank of Ayudhya 11% Kasikorn Bank 22% Siam Commercial Bank 13% Krung Thai Bank 16% US$, billion M-commerce, US$ bn Growth, % Why Thailand? Thailand Thailand is another example of a high growth market for card payment transactions with a CAGR of 9. over the period The value of card payments are also forecasted to grow at a CAGR of 8.1% over 5 years, to reach a value of US$ 82.7 billion in 221, making it the third largest market for card payment transactions in ASEAN. The M-commerce value in Thailand is also forecasted to grow at a rapid CAGR of 3.1% over , to reach a value of US$ 98.3 billion. Despite the innovation of physical cards, changing from magnetic strip to chip- based cards, digital payment methods are making headway in the payment industry. One such example is PromptPay, which makes fund transfers easier for consumers, by only requiring the recipients National ID or mobile number. E-wallet is a relatively new payment channel in Thailand. Major e-wallet players are mostly mobile network providers, such as Jaew Wallet by Dtac, AIS mpay and WeCard by True Money. The government initiated a National e-payment project in 216, with the aim of improving the payment system and moving Thailand towards being a cashless society, starting with PromptPay, then extending POS acceptance, e-tax and government e-payments, as well as public education and communication across various stages. 1

12 About Reciprocus We specialize in assisting small and medium-sized businesses with expansion intooverseas markets: Selecting and Structuring Route to Entry; Mergers, Acquisitions, Joint Ventures; Distributorships, Franchising andlicensing; Capital Raising. For more information about our practice, visit our website at: IE Singapore Assistance The Singapore Government co-funds up to 7 of the third party professional fees for internationalization activities under the following schemes: Market Readiness Assistance Grant: Market assessment, market entry and business matching activities. Global Company Partnership Grant: Market research, scouting for overseas partners and due diligence activities. More information available at: 11

13 Contact Details Reciprocus International International Plaza 1 Anson Road #1-22 Singapore 7993 Tel: Fax: Reciprocus Americas Empire State Building 35 5th Ave, Suite 761 New York, NY 1118 Tel: Fax: Reciprocus Europe Taefernstrasse 22a 545 Baden-Daettwil Switzerland Tel: Fax: David Emery Chairman david@reciprocus.com Robert MacPherson Junior Partner robert@reciprocus.com This report has been prepared by Tun Lin Win (February 217), based on a review of publicly available information and existing market intelligence on-hand at Reciprocus. 12