Countries in the Asia Pacific region have become global leaders in providing instant payments through digital banking solutions. Their experiments and innovations on alternative payment rails to make both cross-border payments and domestic immediate payments easier will help strengthen the region’s growing position and leadership across the payments sector.
In recent years, APAC has grown to dominate the digital banking sector, with 20% of the approximately 250 digital banks worldwide based in the APAC region.
Notable regional leaders are: Singapore — ranked in the top 5 of the world’s most competitive financial centers — enacts clear and effective government regulation and support for innovative payment technologies, achieving a 58% increase in immediate payments in 2021 did. Cryptocurrency transactions increased by 71% from 2020 to 2021. This was greatly facilitated by new solutions such as crypto-assisted remittances and digital payment options.
At APAC, immediate payments begin earlier than anywhere else, but success in the region is not guaranteed. Key factors include further adoption of blockchain and global banking platforms, as well as close collaboration between businesses and governments.
Let’s delve into how instant payments (both encrypted and unencrypted versions) have evolved, the barriers to successful implementation, and what to expect next in this evolving region.
What is immediate payment? Why do you need to care?
Instant payments are digital transactions between participating banks that leverage the instant messaging / payment layer to enable instant payments that provide an outstanding end-user experience. Many non-cryptographic instant payment networks require a pre-funded recipient’s account to enable real-time remittances.
Higher levels of transparency, often not available with traditional financial institution transfers, can be achieved through digital payment rails. For example, for some transactions, payment data and payment data can be bundled using end-to-end communication flows and instant confirmation notifications. This type of transaction is a convenient and secure way to exchange information between all involved parties. There are also various overlay services that support the ease and security of linking domestic and cross-border payment systems, such as linking mobile numbers to bank accounts as a way to verify your identity.
Cryptographic transfer instant payments offer many more benefits, including increased speed and efficiency for both senders and receivers. Available 24 hours a day, 7 days a week, you can process transfers at any time, including weekends and holidays. This will dramatically speed up the flow of global capital and give consumers constant access to funds. For transparency, payment service providers (PSPs) can benefit further by using services such as RippleNet’s account lookup API. This allows both senders and recipients to exchange information through flexible API calls to different types of metadata, such as beneficiary validation. Account details before submitting payment.
Certain cryptographic solutions, such as on-demand liquidity, also eliminate the need for prior funding. This frees working capital that ODL customers can reallocate and use more efficiently to drive further growth. The flexibility of cryptocurrencies (such as XRP) that act as a bridge currency between senders and receivers enables real-time and low-cost payments in local currency, regardless of funding source or destination. increase.
Evolution of Asia Pacific Banking and Finance
Throughout the region, changes in consumer habits and the impact of the COVID-19 pandemic shed light on the evolution to more mainstream use of immediate payments.
The pandemic has influenced a major shift in APAC’s overall payment behavior. Some shifts are part of the global trend, such as lower cash usage and accelerated transition from physical stores to e-commerce, but the Republic of Palau is promoting innovative and sustainable payment products. , There are also region-specific shifts. The underlying blockchain technology. Consumer behavior has changed with COVID-19, and consumer expectations have grown with advanced payment solutions.
In addition, the increasing adoption of smartphones within APAC has opened the market for new applications that enable instant payments. Smartphone usage across the region is expected to reach 83% by 2025, and demand for real-time payments will continue to grow as well between consumers and businesses.
(Source: Mobile Economy)
Barriers to success
While the region is generally progressive with new technologies, privacy and security concerns continue to be a central barrier to the adoption of instant payment rails. Studies show that about four in ten consumers across APAC are hesitant to store financial data online and do not trust the security of these platforms. On the other hand, 25% believe that their personal devices are not sufficiently secure. In Singapore, e-commerce-related cybercrime has increased by nearly 75%, and the government has changed its data privacy legislation to counter this trend.
Over the past few years, the region has been battling a lack of understanding of the blockchain technology that underpins crypto digital payments across the APAC business. However, over the past two years, the adoption of APAC cryptography has accelerated, with an estimated 81% CAGR (Compound Annual Growth Rate) of US $ 23.3 billion in the global blockchain market over the next five years by 2023. In the case of blockchain technology, cross-border payments made up the largest individual use case in the world at 15.9% in 2021.
That said, the payment status of APAC as a whole is still very fragmented in terms of national policies and regulations. There are bright spots like the link of Southeast Asian real-time payment systems between PayNow in Singapore and PromptPay in Thailand, but like any other industry, each country works with its own infrastructure and currencies-and Current lack of standard integration Regional cross-border payments often lead to costly workarounds.
So what’s next?
The emergence on the horizon of digital payments across APAC is a crossover to profitability. Only 13 of the 249 digital banks around the world are profitable, 10 of which are based in Asia, demonstrating that APAC’s fintech sector is a testing ground for new financial services. This is due to the continuous rapid expansion of the region’s fintech market, which is expected to grow at 72.5% annually until 2025 and is now moving at an unprecedented rate in Western Europe, demonstrating dynamic adaptation. It also means that you can expect it.
As the use of cryptography in payments continues to grow and evolve in APAC, to harness the power of that momentum, close cooperation between government and private companies to achieve maximum impact and reduce costs. depends on. Greater guidance from regional regulators is expected with strong government support for new financial services from countries such as Singapore and the Philippines. APAC-wide government is expected to uncover new blockchains and cryptographic technologies that are ready to solve payment challenges and open new business opportunities across fragmented but evolving regions. I can do it.
