How To Get The Most Out Of Asia Pacific s ecommerce Boom

How To Get The Most Out Of Asia Pacific s ecommerce Boom

AGENDA Understanding the APAC Region Spotlight on the South East Market Spotlight: Indonesia Market Spotlight: Thailand Market Spotlight: Vietnam What to Watch

UNDERSTANDING THE APAC REGION

ASIA PACIFIC Region accounts for nearly 75% of global payment transactions Revenues are growing faster in APAC than any other region in the world Consumers are shifting away from cash and toward electronic payments Payments market is far from comparable, with stark differences country-to-country Cash intensive economies are seeing strong growth in cashless transactions 4

ASIA PACIFIC Payment method share 60% of the world s population Expanding middle class, increasing Internet penetration and improving infrastructure Bank Transfer 11% Other 1% $770 billion annual ecommerce sales Highest B2C sales of any region worldwide Cash 13% Cards 41% 51% has access to bank account or financial institution Young generation willing to embrace cashless payment methods e-wallet 34% Cards e-wallet Cash Bank Transfer Other 5

SPOTLIGHT ON THE SOUTH EAST

SOUTH EAST ASIA BANGLADESH POPULATION 157 million INDONESIA POPULATION 264 million MALAYSIA POPULATION 32 million INTERNET PENETRATION 48% INTERNET PENETRATION 54% INTERNET PENETRATION 78% SMARTPHONE PENETRATION 5% SMARTPHONE PENETRATION 21% SMARTPHONE PENETRATION 65% E-COMM / DIGITAL SALES $120 million E-COMM / DIGITAL SALES $11 billion E-COMM / DIGITAL SALES $530 million PHILIPPINES THAILAND VIETNAM POPULATION 104 million POPULATION 68 million POPULATION 96 million INTERNET PENETRATION 63% INTERNET PENETRATION 82% INTERNET PENETRATION 66% SMARTPHONE PENETRATION 23% SMARTPHONE PENETRATION 41% SMARTPHONE PENETRATION 35% 7 E-COMM / DIGITAL SALES $1.3 billion E-COMM / DIGITAL SALES $2.9 billion E-COMM / DIGITAL SALES $2.6 billion

NAVIGATING THE MARKET OPPORTUNITIES CHALLENGES CONSUMERS Young and optimistic consumer base with an increasing spending capacity and willingness to spend World s third largest region of internet users more people online than entire U.S. population (Google/Temasek report, 2017) MOBILE TECHNOLOGY 250 million smartphone users, with 72% of ecommerce transactions completed via mobile, driven by 3G and 4G network expansion Card penetration relatively low (except for Singapore). Bank transfers and Cash on Delivery are the top performing payment methods. ewallet and prepaid cards are growing rapidly MARKET LANDSCAPE Local entity required for operation Settlement can only be made to a local bank Tax withholding for repatriation LICENSING Need license to operate License is industry and size agnostic No region-wide license licenses differ country-to-country 8

MARKET SPOTLIGHT ***** INDONESIA

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INDONESIA MARKET SPOTLIGHT Population: 264 million - Growth: 1.9% - Average age: 28.3 years GDP growth: 5.2% Local currency: Indonesian Rupiah (IDR) Banking Penetration: 36% Credit Card Penetration: 2% VAT/GST: 10% 11

INDONESIA MARKET SPOTLIGHT E-Wallet, 5% Cards, 7% Cash on Delivery, 42% Retail Outlet, 1% Bank Transfer, 45% Payment Options: Cards: Credit card penetration is low Debit card requires extra steps to be used online Bank Transfer: Virtual Account can be paid via ATM, online/mobile banking Online banking E-wallet: Doku Go-pay (from Go-Jek) OVO (from Grab) Retail Outlet: Alfamart Indomaret 12

INDONESIA MARKET SPOTLIGHT Non-cash movement is ongoing Bank Indonesia s payment system and currency management policy includes three key non-cash strategies: 1. Encourage domestic retail payment instruments -- Debit & Credit Cards, ATM, EDC (electronic data capturing machines) 2. Expand electronification programs 3. Provide a balanced response to digital economy development 13

MARKET SPOTLIGHT ***** THAILAND

THAILAND MARKET SPOTLIGHT Population: 68 million - Growth: 0.3% - Average age: 37.7 years GDP growth: 3.2% Local currency: Thai Baht (THB) Banking Penetration: 78% Credit Card Penetration: 6% VAT/GST: 7% 16

THAILAND MARKET SPOTLIGHT Payment Options: Cards, 16% E-Wallet, 2% Bank Transfer, 82% Cards: 54 million debit cards 20 million credit cards Majority of the cards belong to Visa and Mastercard network Bank Transfer: Increased notably due to higher number of smartphone users and banks development of mobile banking applications E-wallet: True Money mpay Paysbuy 17

THAILAND MARKET SPOTLIGHT E-Payment usage grows steadily Bank of Thailand pushed forward the development of electronic payment systems infrastructure as part of the National e-payment Master Plan, including two projects: 1. PromptPay: alternative payment service, using national ID #/mobile #/corporate tax # for money transfer; 39.3 million registered users as of 28-Feb-2018 2. Card Usage Expansion: Install Electronic Data Capture (EDC) to accept cards, lower Merchant Discount Rate (MDR) 18

MARKET SPOTLIGHT ***** VIETNAM

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VIETNAM MARKET SPOTLIGHT Population: 96 million - Growth: 0.9% - Average age: 30.5 years GDP growth: 6.2% Local currency: Vietnamese Dong (VND) Banking Penetration: 31% Credit Card Penetration: 2% VAT/GST: 10% 22

VIETNAM MARKET SPOTLIGHT Payment Options: Cards, 10% E-Wallet, 6% Bank Transfer, 84% Cards: 116 million cards issued from 40 banks 80% cards are issued from top 7 banks 90% debit cards user will be directed to bank page to complete transaction 10% credit cards high transaction fee (4-5%), can be used for crossborder payments Wallet: Vi Viet ZaloPay 123pay Baokim MoMo Payoo VTCPay 23

VIETNAM MARKET SPOTLIGHT ecommerce is still a young market, despite increasing internet connectivity, youthful population and low service cost, due to: - Lack of trust in ecommerce - Large unbanked population - Inadequate cybersecurity - Lack of delivery services State Bank of Vietnam (SBV) continues to modernize the payment system, create and facilitate favorable condition to encourage non-cash payment Highest conversion rate (65%) and lowest basket size ($23) in Southeast Asia 24

WHAT LIES AHEAD?

WHAT TO WATCH FOR IN SOUTHEAST ASIA Internet economic growth will continue to exceed expectations - predicted to grow to $200 billion by 2025 (Google/Temasek) Consumers leaping directly from cash to digital payments Mobile payments to spark greater inclusion of those who have previously fallen outside conventional banking systems 26

CONTACT US FOR MORE INFORMATION Rossini Zumwalt Emergent Payments MD, Chief Payment Officer rossini.zumwalt@emergenttech.com www.emergentpayments.net 27