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As we usher in 2024, the commerce landscape of Asia Pacific (APAC) is poised for significant transformation, fueled by a stream of technological advancements and changing consumer behaviors. From Australia to Singapore, Japan to Malaysia, growth-minded leaders must continue to adapt to a digital evolution redefining the dynamics between businesses and consumers. Here are three pivotal trends that businesses across APAC should prioritize in their payments strategy this year.
The evolution of platforms with embedded payments
The emergence of platform business models, such as marketplaces and Software-as-a-Service (SaaS), has already revolutionized the business landscape, particularly for enterprises servicing small to midsize businesses (SMBs). In response to the demand for streamlined processes, platforms are now integrating payment solutions directly into their services, departing from the traditional referral approach to payment service providers and banking institutions.
Traditionally, businesses using platform models would redirect users to separate payment service providers, necessitating the assembly and management of their payment setup. However, this method is becoming obsolete as businesses seek more integrated solutions. The shift towards embedding payments directly into existing offerings enables users to set up transactions with a single click. This not only enhances customer satisfaction but also improves brand loyalty and introduces new revenue streams for the platforms.
Our recent Embedded Finance Report found that 35% of SMB survey respondents are using an embedded payments service provided by their platform (up from 30% in 2021). In addition, 69% of these users would switch to a platform that offered a more integrated payments experience. Equally compelling is the fact that leading platform businesses are already seeing up to 80% of their revenue coming from embedded payments.
“Businesses that embrace the opportunity presented by platform payments and embedded finance early will set themselves up for increased operational efficiency, reduced costs, faster payouts, and a more seamless payment experience for their customers,” says Adyen APAC President, Warren Hayashi.
“The integration of payments into the fabric of business processes is a strategic move that reflects the industry's commitment to staying ahead of the curve and delivering unparalleled value to users.”
The rise of portable in-person payment devices
The advent of portable in-person payment devices, including those compatible with Android and iPhone operating systems, is reshaping the physical shopping experience – and not a moment too soon. New perceptions of the ideal shopping experience, sparked during the pandemic, are having a significant impact on consumer behavior and checkout expectations. Our research shows that over half of APAC shoppers (57%) are prepared to leave a store if they can’t check out using their preferred payment method. This is higher than the global average of 55%, and even reaches 66% in Hong Kong.
Portable or mobile payment devices offer businesses enhanced flexibility, affordability, and operational efficiency, allowing for customization within existing systems. The newfound ability to accept payments anywhere in the store is not only transforming transaction processes but also influencing store design and layout.
Portable payment terminals are eliminating the need for traditional cashier stations, prompting retailers to rethink their store layouts. The result is dynamic and interactive spaces that prioritize engaging and customer-centric experiences over static payment points. Swiss sportswear brand On launched a flagship store in Tokyo that effectively blurs the digital and physical to elevate the checkout process to a memorable, sophisticated experience. This shift towards physical stores as “experience centers” is evident across APAC as businesses leverage these devices to create a more immersive shopping environment.
The benefits extend beyond mere transactional convenience. Retailers utilizing portable payment devices are experiencing increased customer satisfaction, reduced wait times, and improved operational agility.
“In a market where consumer expectations are constantly evolving, these new devices allow retailers to reinvent the in store experience taking into account the preference of the modern, dynamic consumer,” says Warren.
Strategic use of payments data to foster loyalty
A shift in the use of payments data is emerging as a key driver for success. This goes beyond mere technological advancement; it represents a strategic move to empower businesses to independently harness the power of their data rather than relying solely on external sources.
Across APAC, customers have become more price-conscious in response to stubborn inflation, spending more time finding the best deals, and expecting to be better-rewarded for brand loyalty through more personalized experiences and promotional offers. Our research found that last year, 36% of consumers in APAC opted to wait for big-ticket sale events, such as Singles’ Day, Black Friday, or the year-end holiday shopping season. In Australia, 59% of businesses reported an increase in customer expectations because of the cost-of-living squeeze.
Consumers are also keen to engage more with the brands they buy from – especially when there’s a compelling offer on the table. More than in previous years, shoppers are now open to downloading a retailer’s app if it will give them access to more customized and relevant loyalty rewards. 39% of APAC consumers want the in-store shopping experience to be more interesting or exciting – hitting 56% in Malaysia, where more consumers enjoy using in-store technologies.
Yet despite this growing consumer sentiment, nearly half of APAC retailers reported that they don’t have a system in place to reward loyalty. And even in traditionally customer-oriented Japan, as many as 83% of retailers don’t use a customer relationship management (CRM) system to better understand and connect with their consumers (learn more about Japan’s delayed adoption of tech in retail in our podcast series).
There is an opportunity for brands to win over customers and generate loyalty by connecting online and offline channels to facilitate a more data-driven, personalized shopping experience. Our research has highlighted the growing trend of businesses linking in-store and online transactions to customer profiles, enabling the strategic use of first-party payments data. This secure, data-centric approach is becoming a cornerstone for revenue growth and marketing strategies, offering businesses the ability to create more targeted marketing campaigns and personalized promotions that truly resonate with their audience.
“Consolidating online and offline to integrate transaction data and insights will drive new and stronger marketing strategies for omnichannel,” says Warren. “With a surge in demand for tailored interactions, businesses are recognizing the untapped potential within their datasets.”
As they leverage this data to understand consumer preferences and behaviors, businesses can create targeted marketing campaigns, loyalty programs, and personalized promotions that truly resonate with their audience.
Refining your payments strategy for growth
The fusion of technology and strategic insights is set to propel businesses into a new era of commerce, where the seamless integration of payments with memorable experiences becomes the cornerstone of success in the dynamic markets of the region.
As you prepare to navigate the complexities of 2024, ensure your payment strategy is striking the right balance between key trends and long-term growth goals. Look for opportunities to optimize your setup to improve operational efficiency, create immersive shopping experiences, and build lasting customer loyalty for years to come – there are always more than you think.
The key is setting yourself up with a strong payments provider that can do most of the leg-work on your behalf. If you choose to partner with Adyen, you’ll have a powerful engine behind you that’s always evolving ensuring your business is always ready for the latest opportunities.