Asia Pacific

Home to over 4.5 billion people (60% of the world's population). It’s a diverse region with seven of the world's ten most populous countries. It’s also one of the most fragmented regions when it comes to payments.

Yet despite its outward complexity, the region offers a number of opportunities for businesses that want to tap its enormous market potential with relatively high speed and little investment.

Markets such as China, Japan, Indonesia, and the Philippines don’t require businesses to set up a local entity to start connecting with local shoppers. From a payments perspective, this means that with the right payments partner, connecting with shoppers in these markets is pretty straightforward.

Asia Pacific
Australia

Australia

As an economic powerhouse in Asia Pacific, and one of world’s top 10 ecommerce giants, Australia is enjoying its 26th recession-free year in 2017. Its booming retail and tourism sectors have attracted worldwide attention, making Australia a great option as a base in APAC for global companies.

According to DHL ecommerce, Australian shoppers are the second-most likely in the world to buy online from overseas businesses and cross-border ecommerce is expected to grow at an average of 29% per year until 2020.

Inside tip

With no requirements to set up a local entity, a card-dominated payment culture, and a population already used to buying from international sites, Australia is a relatively easy market to enter. We recommend setting up a local entity (which is easy to do) to avoid shopper cross-border fees. Processing domestically also means you’ll benefit from the Australian Interchange fees cap.

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China

China

China is the biggest retail ecommerce market in the world, expected to reach $1.7 trillion by 2020. The country is a driving force behind mcommerce. Forbes reported that, according to data from Euromonitor International, mcommerce out-ranked desktop purchases back in 2015. And, as of 2016, 66% of digital purchases were made on a mobile device. That’s $450.3 billion in mobile purchases. The top 3 payment methods are Alipay, UnionPay and WeChat Pay.

[GUIDE] Learn more about seizing the golden opportunity in China

The three major payment methods are Alipay, UnionPay, and WeChat Pay.

  • With around 50% payments market share, Alipay is the largest alternative payment method in China. It’s owned by ecommerce conglomerate Alibaba and provides payment services for major Alibaba ecommerce platforms such as Taobao and Tmall, as well as over 400,000 Chinese businesses. It’s simple to set up Alipay, and your shoppers can enjoy a frictionless experience whether they’re shopping online, on mobile or in store.
  • UnionPay is the largest card scheme in the world by number of cards issued. It’s also the only interbank network in the market (excluding Hong Kong and Macau) linking ATMs of 14 major banks and many smaller banks throughout Mainland China. Owned by the central bank, it has a monopoly on processing CNY-denominated transactions in China. This makes UnionPay is a vital part of the payments mix for Chinese shoppers.

  • WeChat Pay is China’s fastest growing payment method. It forms part of the WeChat ecosystem, which is a social network, work collaboration tool and commerce platform rolled into one. WeChat Pay is supported online, on mobile and in-store. Transactions take place in the app, either via the retailer’s official WeChat account or via the in-app web browser. This makes it easy for you to provide a seamless shopping and payment experience for WeChat users.

Inside tip

It’s not mandatory to set up a local entity to sell to Chinese shoppers. So, with a payments partner that supports key local payment methods, China is a relatively easy market to enter - in terms of payments.

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Hong Kong

Hong Kong

Credit cards are expected to remain the most popular payment method, although mobile wallets are gaining traction among Hong Kong consumers. Alipay has launched its domestic wallet in Hong Kong, and we expect both Alipay and WeChat Pay to dominant the market in the near future. Apple Pay can be used by holders of Visa, Mastercard and American Express cards issued by participating banks.

Inside tip

It’s easy to accept payments in the domestic currency and settle in the same currency with no impact of currency conversion.

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India

India

India has traditionally been a cash-dominated economy, with cash and cheque accounting for 85% of payments. And, while we expect strong electronic payments growth in India over the next three to five years, cash on delivery (COD) still accounts for 60% of ecommerce payments.

The growth of electronic payment is very much facilitated by the Indian government, from its demonetization announcement in November 2016, to initiatives such as Rupay and UPI. Investments by global companies such as Alibaba, Softbank, Amazon and Google in mobile wallets solutions in the country will also help to push the needle.

[ARTICLE]: How to win with Dynamic 3D Secure

Inside tip

3D Secure is mandatory on all domestic debit card transactions in India, where second-factor authentication actually has a positive impact on authorization rates. We recommend applying 3D Secure to all transactions for the Indian market.

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Indonesia

Indonesia

With a 200 million population Indonesia is one of the largest, undeveloped market opportunities in Asia. It’s poised for enormous growth, with market size expected to rise to $11 billion in 2019.

The bright outlook is driven by demographic trends. Less than 40% of the population is online, bank penetration is under a quarter, and the number of debit and credit cards issued is at only 15%. Like many developing economies, the shift online is happening through mobile, with over 90% of online users in Indonesia going online via their phone. But bear in mind: Cash on delivery is still the most popular payment method for retail goods.

[GUIDE] Reach 600 million shoppers in Southeast Asia

Inside tip

Indonesia is a highly regulated market, where a local entity is typically required to process locally, And the Indonesian rupiah (IDR) cannot be repatriated. However, Adyen makes it possible for you to offer domestic payment methods in Indonesia with settlement in USD.

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Japan

Japan

Japan is the world’s fourth-biggest ecommerce market. It’s a cash-dominated market where cash on delivery is popular. This is possible with Konbini, which allows customers to pay for online purchases in 24/7 convenience stores. Local credit card JCB is also popular, as are international credit cards.

Inside tip

Like-for-like cross-border settlement is possible in Japan, so shoppers aren’t impacted by cross border fees, which makes it a smooth experience. With Adyen you can support Konbini without a local entity.

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Malaysia

Malaysia

Like Indonesia, Malaysia is enjoying rapid ecommerce growth, driven largely by mobile. Yet there are some significant differences between the two markets. Malaysian shoppers are comparatively open to cross-border shopping, with 40% of online transactions cross-border. And, among Southeast Asian markets, Malaysia is second only to Singapore in terms of credit card penetration and usage.

The growing use of mobile devices may speed Malaysia’s ecommerce growth, as mobile payments can be made from a prepaid wallet instead of a bank account. This is particularly interesting when you consider that 8% of the population doesn't have a bank account.

Inside tip

Malaysia has strong financial regulatory controls, and the Malaysian Ringgit is a non-tradable currency that can’t be settled outside the country. But the good news is that processing cross-border payments through an international acquirer doesn’t trigger an International Issuing fee for the shopper. So if you take this approach, you’re not impacted when processing Malaysian Ringgit cross-border. Local issuers expect 3D Secure authentication, so we recommend routing all transactions via 3D Secure.

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New Zealand

New Zealand

Online shopping is very much the mainstream in New Zealand. In 2015, Nielsen Research reveals that almost 2 million shoppers purchased online, spending about $3 billion in total. Travel is the most popular online purchase, followed by clothes and entertainment.

The Philippines

The Philippines

The Philippines is probably one of the most underestimated ecommerce markets in Southeast Asia. As the second most populous country after Indonesia, its ecommerce market can expect an annual growth rate of 101.4% until 2018. This is driven mainly by high mobile penetration. Filipinos are among the most prolific mobile users in the world, and smartphone penetration is now 30% of the population.

Inside tip

A local entity is not required and cards can be processed cross-border without international fees. We recommend that international merchants keep cards cross-border and enable local payment methods as well. Authorization rates tend to be lower in the Philippines than other markets, mainly due to the young generation being less willing to pay for digital content. We see lower conversion rates especially for content like games and music downloads.

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Singapore

Singapore

Despite being the smallest country in both size and population, Singapore is considered to be the financial hub of Southeast Asia.

South Korea

South Korea

South Korea is the third-largest retail ecommerce market in Asia Pacific (after China and Japan). The average South Korean shopper holds an average of four credit cards, and around 80% of online transactions are card-based.

Inside tip

Most local cards are co-branded with Visa and Mastercard, and require a market-specific authentication process – which only works in Internet Explorer – in order to be approved. While this authentication process will likely no longer be mandatory in the near future, it will still be widely used for some time, and merchants entering the market should therefore keep it in mind when formulating a payments strategy.

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Thailand

Thailand

Thailand has huge ecommerce growth potential. Online retail transactions currently account for as little as 0.5% of the industry, but it’s growing by an estimated 30-35% annually. With internet penetration estimated at 60% and mobile the primary access device for most new shoppers, mcommerce is key.

Inside tip

Thailand has fewer regulatory restrictions than some Southeast Asian countries, which makes it easier to go domestic or enable cross-border payments.

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