Asia’s digital economies are continuing to post impressive gains, with cross-border initiatives and tools offering businesses new avenues to unlock unprecedented growth despite economic difficulties, according to a new report.
Titled “How Asia Buys and Pays 2023: Tapping into Asia’s Regional Commerce Opportunities”, the report by market intelligence firm International Data Corporation (IDC) was commissioned by global payments platform 2C2P and Ant Group. It provides insights on the digital payment landscape in Southeast Asia, South Korea, and Japan (SEAKJ).
The report outlines how projected increases in cross-border eCommerce revenue, offline tourism spending, and public and private infrastructure drive regional connectivity and trade in Asia. It also provides insights on how cross-border initiatives such as digital payments and logistics can help businesses to reach new audiences and create new revenue streams through cross-border eCommerce.
Based on the report, Southeast Asia leads in digital economy growth at 15.8% for the next five years, outpacing the United States and the European Union. South Korea and Japan closely follow, at 12.7% and 10.2% respectively. These figures highlight significant commerce opportunities for SEAKJ.
The SEAKJ regions also anticipate explosive growth in the digital economy, with projected growth at US$914.9 billion in 2027E. This would mark an 82% leap in just five years, from US$501.7 billion in 2022.
At the same time, accelerated digital payments growth is also expected to result in a 100% expansion in the Southeast Asian eCommerce market. This growth is attributed to various payment models, such as Buy Now Pay Later (38%), mobile wallet (18.9%), domestic payment (16.9%) and credit cards (14.4%).
In view of this trend, governments and businesses are making efforts to create a more unified payments environment across Asia to spur increased online and offline commerce. These efforts include real-time network-driven integration in the public sector and leveraging mobile wallet networks for enhanced connectivity in the private sector.
The private and public sectors are also poised to inject US$232.4 billion in fresh cross-border revenue into the SEAKJ economies from 2022 to 2027E, driven by eCommerce and tourism. Additionally, cross-border eCommerce revenue is expected to grow by 70% to US$148.1 billion by 2027E, outstripping growth on the domestic front.
Offline tourism is also expected to contribute US$171.4 billion to SEAKJ’s economy, growing by 334% by 2027E.
Given the increasing cross-border transactions, the report also outlines several challenges that businesses can anticipate. Combating fraud, low card penetration in emerging SEA markets, as well as fluctuating transaction costs are some of the challenges that will have to be considered.
“Digitalisation will have a significant positive impact across Asia, shaping the future of businesses and lifestyles,” said Douglas Feagin, senior vice-president of Ant Group and head of Alipay+ Cross-Border Mobile Payment Services.
“The rapid rise in the number and diversity of digital payment options does, however present a challenge, especially for small to mid-sized merchants,” he added.
He further explained the importance of catering to consumers' digital habits, across large and small businesses. “By working with our partners to enable them to easily accept many different payment options through one easy to use interface, we have seen very encouraging results. This has been particularly important with the ongoing increase in online consumption and resumption of cross-border travel.”
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