electronic payment market in asean - reciprocus.comreciprocus.com/sites/default/files/2017...

RECIPROCUSRESEARCHBRIEF

ElectronicPaymentMarketinASEANPreparedby:ReciprocusInternationalDate:February2017

TableofContents

ExecutiveSummary 2

TheAsia PacificMacroeconomicOutlook 3

GlobalFinancialCards&PaymentsOverview 4

AsiaPacificPaymentIndustryLandscape 5

AsiaPacificPaymentIndustryOutlook 7

AsiaPacificPaymentLandscape&Analysis 8

OpportunitiesSpotlightandAnalysis- Philippines 9

OpportunitiesSpotlightandAnalysis- Thailand 10

1StrictlyPrivate&Confidential

ExecutiveSummary

• Globally,consumerpaymentscontinuedtoshifttowardscardandelectronicchannelsawayfrompaperfrom2010to2015.

• TheAsiaPacificregionisanattractivegrowthopportunitygiventhesignificantgrowthincardandelectronicpaymenttransactionsinrecentyearstoaccountforover50%oftheglobalshareofcardtransactions.

• Digitalizationthroughmobilewalletsandthesignificantgrowthofthee-commerceindustry,isakeytrendtofollowforfuturegrowth.

• PhilippinesandThailandarepresentingsomeofthemostexciting,highgrowthopportunitiesintheASEANregion.ThevalueofcardpaymenttransactionsareforecastedtogrowataCAGRof15.2%and8.1%over5yearstoreachavalueofUS$91.9andUS$82.7billion,respectivelyin2021.

• GiventheamplepossibilitiesbeingobservedacrosstheASEANpaymentsmarket,wewouldrecommendthatSingaporecompaniesinthepaymentprocessingindustryconsiderexploringopportunitiesinthisregion,withaparticularfocusonPhilippines andThailand.


AsiaPacificMacroeconomicOutlook

AnalysisBreakdown


Ø WithintheAPACregion,ASEANhasthesecondhighestGDPCAGRfrom2005to2015at10%,onlyoutstrippedbyChina.

Ø StronghouseholdconsumptionexpenditurewithaCAGRof5.0%from2010to2015inASEANaswellasafastgrowingpopulationof623millionreflectstheenormoussizeofitsconsumermarketaswellashighgrowthopportunitiesintheASEANcardandelectronicpaymentmarket.

HouseholdConsumptionExpenditureCAGR2010– 2015(%)

PopulationGrowth2014– 2015(annual%)

-0.4%

0.0%

0.4%

0.8%

1.2%

1.6%

Japan China India Korea,Rep. Australia ASEAN-10%

-5%

0%

5%

10%

15%

20%

Japan China India Korea,Rep. Australia ASEAN

-4%

1%

6%

11%

16%

21%

Japan China India Korea,Rep. Australia ASEAN

GDPCAGR2005– 2015(%)

GlobalFinancialCards&PaymentsOverview

GlobalOverview


Ø Globally,thetransitionofconsumerpaymentsawayfromcashtowardscardandelectronicmethodscontinuedin2015withcashpaymentdecliningto46%ofglobalconsumertransactions.

Ø Thiscanbeattributedtoexpandingcardpaymentsinthelargestemergingmarkets,acceleratedbydisplacementoftraditionalcashpaymentchannelsindevelopedmarkets.

Ø Theyear-on-yeargrowthoftotalcardsandconsumercardtransactionsvaluegenerallyslowedfrom2011to2016,primarilyduetoweakerglobaleconomicperformanceovertheperiod,butmaintainedpositivegrowth.

Ø TheemergingAsiaregion,comprisingofHongKong,ChinaandIndia,amongothers,wasthefastestgrowingregionfornon-cashtransactions withaCAGRof25.2%overtheperiod2011– 2014.

NumberofGlobalNon-CashTransactions(billion),by Region,2011–2015

RegionCAGR'11-'14

Growth'13-'14

NorthAmerica 4.2% 12.2%

Europe 5.2% 31.6%

MatureAsia-Pacific 11.0% 8.2%

LatinAmerica 9.3% 10.7%

EmergingAsia 25.2% 6.4%

CEMEA 15.5% 4.3%

306.3330.0

355.8387.2

426.3

0

50

100

150

200

250

300

350

400

450

2011 2012 2013 2014 2015

GlobalCards&ConsumerTransactionsY-o-YGrowth(%)

0%

20%

40%

60%

80%

100%

2005 2010 2015

Prop

ortio

nofTotalCon

sumer

TransactionVa

lue,%

Cash ElectronicDirect Card

GlobalConsumerSpendingProportionbyTransactionMedium

0%

4%

8%

12%

16%

20%

24%

2012 2013 2014 2015 2016

Y-o-YGrow

th,%

Cards ConsumerPaymentTransactions

CardPaymentTransactions

AsiaPacificPaymentIndustryLandscape


AsiaPacificRegionalPerformanceØ WithintheAsiaPacificregion,differentcountriesvaryintermsofexposure

tothetraditionalbankingsystem. Thebankedpopulationovertheageof15rangesfromover90%inmoredevelopedcountriessuchasJapanandKoreatoaslowas32.9%inVietnam,asof2016.

Ø TheAsiaPacificregionhadthegreatestgrowthincardpaymentvalueofallregions,withaCAGRof28.4%overtheperiodof2011– 2016.Itaccountedforapproximately54%oftheglobalcardpaymenttransactions,withavalueofUS$13.1trillion.

Ø ThisgrowthwasprimarilydrivenbytheemergenceofChina’sfinancialcardmarket.In2016,ChinaalonecontributedUS$1.7trilliontothecardpaymenttransactionvalue,makingupapproximately86%ofthegrowthinAsiaPacific.

AsiaPacific54%

MiddleEastandAfrica

2%

NorthAmerica25%

Europe16% LatinAmerica

3%

ShareofGlobalCardPaymentTransactionValue,by Region,2016(%)

0

20

40

60

80

100

Japan SouthKorea

India China Indonesia Vietnam

%ofB

ankedPo

pulatio

n

%ofBankedPopulationovertheageof15,2016(%)

0%

10%

20%

30%

40%

50%

0

2

4

6

8

10

12

14

2011 2012 2013 2014 2015 2016

US$trillion

CardPaymentTransactionsValue,US$trillion Growth,%

CardPaymentTransactionsValueinAsiaPacific,US$trillion

AsiaPacificPaymentIndustryLandscape


KeyTrendsandDevelopmentsin2016

ImpactofMobile

Ø ThemobilepaymentsindustrysawthearrivalofnewmobilepaymentmethodssuchasApplePay,whichwasintroducedtotheUSmarketin2014.InAsiaPacific,SouthKoreaandJapanwerefirsttoadoptmobilepaymentsfollowedbyChinaandTaiwan.TheshareofretailingvaluecomingfromtheinternetwillbethehighestgloballyinChinain2020,atanestimated22%.

0%

4%

8%

12%

16%

20%

2012 2014 2016 2018 2020 2021World AsiaPacific Europe NorthAmerica

InternetRetailingasShareoftotalRetailValue,2012– 2021forecasted(%)

175.0%

44.3% 43.3% 59.6%

18.0% 28.5%

73.0%

0%

50%

100%

150%

200%

0

100

200

300

400

500

600

700

China USA UnitedKingdom

Thailand Japan Australia SouthKorea

M-Com

merceM

arketV

alue

,US$bn

2016M-CommerceMarketValue,US$billion CAGR2013-2016

GrowthofE-commerce

Ø Akeydriverofmobileandelectronicpaymentshasbeentheincreaseininternetretailing.Althoughnoteveryregionhasmadesignificantinroads,theglobalshareofallretailingmadethroughtheinternetisexpectedtoreach13%by2021,upfrom8.5%in2016.Asiaisprojectedtohavethehighestshareofretailingonline,with17.3%,followedbyNorthAmerica,with16.4%,in2020.

TopM-CommerceMarketsbySizeandGrowth

AsiaPacificPaymentIndustryOutlook


AsiaPacificCard&ElectronicPaymentOutlookØ Thevalueofcardsandelectronicpaymenttransactionsare

forecastedtogrowataCAGRof9.5%overtheperiod2016– 2021,toreachavalueofUS$20.6trillion.

Ø ThisgrowthisexpectedtobesupportedbythesteadygrowthinthenumberoffinancialcardsincirculationintheAsiaPacificregion,ataCAGRof3.9%over5yearsto25.1billioncardsby2021.

Ø Thereisalsocontinuedgrowthinthepercentageofbankedpopulationabovetheageof15amongthefastgrowingeconomiesintheAsiaPacificregion,whichisexpectedtosustainthegrowthofcardpaymenttransactionsintheregion.

0%

4%

8%

12%

16%

5

9

13

17

21

25

2016 2017 2018 2019 2020 2021

US$,trillion

CardPaymentTransactionsValue,US$trillion Growth,%

ForecastedGrowthofCardPaymentTransactionsValue,2016– 2021,US$trillion

0%

1%

2%

3%

4%

5%

0

5

10

15

20

25

30

2016 2017 2018 2019 2020 2021

Num

bero

fFinancialCards,billion

NumberofFinancialCardsinCirculation,billion Growth,%

ForecastedGrowthofNumberofFinancialCardsinAsiaPacific2016– 2021,billion

India, 92%

Philippines,78%

China, 69%

Indonesia,55%

Vietnam,33%

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015 2016

PercentageofBankedPopulation(15+)

AsiaPacificPaymentLandscape&Analysis

APAC

ThailandandthePhilippinesareexamplesofhighgrowth

opportunitiesintheAPACregion

AmericasEMEA


Population:68.0millionTotalGDP(2015):US$395.2billion10-YearCAGR:7.6%

Philippines

Thailand

Population:100.7millionTotalGDP(2015):US$292.5billion10-YearCAGR:11.0%

“The pace of technological innovation across Asia Pacific is unprecedented and creating enormous opportunity for any company that touches the growing payment ecosystem”

“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”

OpportunitiesSpotlightandAnalysis- Philippines


PhilippinesØ WithinASEAN,thePhilippineswasthesecondfastestgrowingmarketforcardpaymenttransactionswithaCAGRof17.5%

overtheperiod2011– 2016.Ø ThevalueofcardpaymentsarealsoforecastedtogrowataCAGRof15.2%over5years,toreachavalueofUS$91.9

billionin2021.Ø Philippines’M-commercevalueisalsoforecastedtogrowatarapidCAGRof46.3%over2016- 2021,toreachavalueof

US$760.4million.Ø AccordingtotheConsumerPaymentAttitudesstudyconductedbyVisainthePhilippinesin2015,Filipinosareincreasingly

becomingreceptivetocontactlesspaymentduetoitsconvenience,security,andeaseofuse.Ø GovernmentagenciessuchasTheBureauofInternalRevenuebeganacceptingPhilippine-issuedcardsin2016for

paymentoftaxes,interest,andotherfees.AgenciessuchastheHomeDevelopmentMutualFund,LandTransportationOfficehavealsolaunchedtheirowncardpaymentfacilities.

Ø Withincreasingconsumerspending,newcardsaretargetedathigh-spendingconsumersincludingtheaffluentclassandyoungprofessionals.OnesuchexampleisCitibank’sCitiPrestigecreditcardstobenefitclientswithatleastPHP1million’sworthofbusiness.

WhyPhilippines?

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

2011 2012 2013 2014 2015 2016

US$,billion

CardPaymentTransactions,US$bn Growth,%

CardPaymentTransactionsValue,US$bn

BDOUnibank17%

BankofthePhilippineIslands

13%

SmartCommunications

12%Citibank12%

MetropolitanBank&Trust

10%

G-Xchange8%

HSBCHoldings6%

Others22%

CardPaymentTransactionsValuebyIssuer,2015%

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

120

2013 2014 2015 2016

US$,m

illion

M-commerce,US$mn Growth,%

M-CommerceValue,US$,mn

OpportunitiesSpotlightandAnalysis- Thailand


ThailandØ ThailandisanotherexampleofahighgrowthmarketforcardpaymenttransactionswithaCAGRof9.0%overtheperiod

2011– 2016.Ø ThevalueofcardpaymentsarealsoforecastedtogrowataCAGRof8.1%over5years,toreachavalueofUS$82.7billion

in2021,makingitthethirdlargestmarketforcardpaymenttransactionsinASEAN.Ø TheM-commercevalueinThailandisalsoforecastedtogrowatarapidCAGRof30.1%over2016- 2021,toreachavalue

ofUS$98.3billion.Ø Despitetheinnovationofphysicalcards,changingfrommagneticstriptochip- basedcards,digitalpaymentmethodsare

makingheadwayinthepaymentindustry.OnesuchexampleisPromptPay,whichmakesfundtransferseasierforconsumers,byonlyrequiringtherecipients’NationalIDormobilenumber.

Ø E-walletisarelativelynewpaymentchannelinThailand.Majore-walletplayersaremostlymobilenetworkproviders,suchasJaew WalletbyDtac,AISmPay andWeCard byTrueMoney.

Ø ThegovernmentinitiatedaNationale-Paymentprojectin2016,withtheaimofimprovingthepaymentsystemandmovingThailandtowardsbeingacashlesssociety,startingwithPromptPay,thenextendingPOSacceptance,e-taxandgovernmente-payments,aswellaspubliceducationandcommunication acrossvariousstages.

WhyThailand?

CardPaymentTransactionsValue,US$bn CardPaymentTransactionsValuebyIssuer,2015% M-CommerceValue,US$,bn

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

60

2011 2012 2013 2014 2015 2016

US$,billion

CardPaymentTransactions,US$bn Growth,%

KasikornBank22%

KrungThaiBank16%

SiamCommercialBank13%

BankofAyudhya11%

BangkokBank10%

CiticorpSecurities8%

Others20%

0%

20%

40%

60%

80%

0

5

10

15

20

25

30

2013 2014 2015 2016

US$,billion

M-commerce,US$bn Growth,%

AboutReciprocusWe specialize in assisting small and medium-sizedbusinesses with expansion into overseas markets:

• Selecting and Structuring Route to Entry;• Mergers, Acquisitions, Joint Ventures;• Distributorships, Franchising and Licensing;• Capital Raising.

For more information about our practice, visit our websiteat: www.reciprocus.com.

IESingaporeAssistanceTheSingaporeGovernmentco-fundsupto70%ofthethirdpartyprofessionalfeesforinternationalizationactivitiesunderthefollowingschemes:

MarketReadinessAssistanceGrant:Marketassessment,marketentryandbusinessmatchingactivities.

GlobalCompanyPartnershipGrant:Marketresearch,scoutingforoverseaspartnersandduediligenceactivities.

Moreinformationavailableat:http://www.iesingapore.gov.sg/Assistance.


ThisreporthasbeenpreparedbyTunLinWin(February2017),basedonareviewofpubliclyavailableinformationandexistingmarketintelligenceon-handatReciprocus.

ContactDetails

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Tel:+65-6225-9986Fax:+65-6225-8223

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