Asia-Pacific has grown into the world's largest market for cashless transactions. Find out what are the top APMs here.
APMs bridge a vital gap between businesses and their local customers by facilitating the smooth flow of payments.
Did you know that a 2020 study found that 49% of urban consumers in Southeast Asia have switched over to e-wallets or some other alternative payment method?
And this figure is projected to reach 84% by the time 2025 rolls around, which is attributed mainly to the COVID-19 pandemic and continued mandatory social distancing measures.
There's no denying that alternative payment methods are highly convenient, which has undoubtedly boosted its popularity amongst users.
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So, how can small business owners and organizations leverage these new trends and use them to grow your business?
Good question - but first, we need to know -
What Are Alternative Payment Methods (APMs)?
Simply put, alternative payment methods allow customers to pay for goods and services without using either cash or credit/debit cards. Instead, they can opt for e-wallets or direct bank transfers to pay for their purchases.
And given the rise in popularity of decentralized finance (DeFi), customers also can pay with cryptocurrencies.
Because of the flexibility they bring to the table, alternative payment methods allow businesses to tap into new and exciting markets - both domestic and foreign. They also present customers with a broader array of payment options, thus making them a popular choice in most countries.
As a rule of thumb, Alternative Payment Methods (APMs) can be broken down into 4 distinct groups which are:
Direct bank transfers
Real-time payment systems or FAST payments
Who Can Make Use of Alternative Payment Methods?
APMs are available to just about everyone.
From inventors in Singapore looking to monetize their creations to Vietnamese exporters looking to share their goods with the world, APMs help businesses of all types reach out to broader markets.
Asia-Pacific: A Huge Market To Explore
Known for its dynamic economy and decent tech-literate population, the Asia-Pacific region or APAC holds plenty of promise for businesses.
And here's why:
First of all, Southeast Asia has a significant unbanked and underbanked population, meaning that many residents lack access to financial services.
Traditionally, this would have been a significant barrier for new businesses entering the market.
But this is no longer the case thanks to the advent of electronic wallets, which have made digital payments possible.
By accepting digital payments, companies provide consumers with alternative payment channels - allowing them to expand their reach into previously untapped markets.
A 2020 study conducted by BCG predicts that the usage of e-wallets amongst the region's unbanked is set to reach 58% in 2025.
Indonesia is an excellent example of how alternative payment methods have allowed
businesses to grow exponentially.
For example, in the wake of the 2020 COVID pandemic, Indonesia's e-commerce sector experienced growth in the double digits - with most transactions facilitated by Indonesian tech giant Gojek's digital wallet known as GoPay.
With GoPay, users can purchase various goods and services - from online shopping on Tokopedia to rides on Gojek.
Even countries like India, where cash is usually the primary medium of exchange, have seen a remarkable drop in ATM usage - signifying a steady shift towards cashless payment.
While the COVID pandemic is a powerful motivator, there's no denying that rising mobile internet penetration and increased trust in mobile devices have contributed to this.
The Rest of The World
Although APAC may be leading the adoption of APMs, this doesn't mean everyone else has been left behind.
While most of these cashless payments were attributed to credit/debit card usage, e-wallets are slowly but steadily gaining traction across Europe.
Even though cash continues to be the dominant form of payment across Africa, the e-commerce segment has expanded rapidly in recent years.
Plus, thanks to rising internet penetration, we can expect the population of online shoppers on the continent to rise accordingly. And given the country's vast nature and large unbanked population, the situation is ripe for disruption by using e-wallets.
But to benefit from this brave new world, we must first understand why alternative payments have taken off in a big way:
The 5 Benefits Of Alternative Payment Methods
Alternative payment platforms give customers a quick and easy way to process their transactions with minimal fuss.
They just have to scan a QR code or flash their app to the cashier, and they're good to go.
There is no need to fumble with credit/debit cards and no awkward pauses - simplicity at its best.
2. Zero Contact Payment Solutions
If one good thing ever came about as a result of COVID, then it would be how it's made us realize how dirty paper money is - which is a good thing.
As a result, most people began paying closer attention to personal hygiene.
And this, along with concerns that the COVID virus could be transmitted via touch, was the push that made many go cashless.
Even though the worst has passed (we hope), mandatory social distancing measures and a heightened sense of hygiene awareness mean most customers will continue to expect cashless payment facilities.
While integrating a credit card POS system is one way of doing so, processing fees incurred by merchants can be cost-prohibitive. However, alternative payment platforms such as XanPay do not charge such fees.
Instead, they eliminate the need for credit cards and allow a merchant's customers to make payments through direct bank transfers or via e-wallets.
3. Alternative Payment Methods Are Safer
Another reason why APMs have become increasingly popular could be the increased privacy they provide users.
That’s because credit/debit cards can get lost or stolen and used for any number of nefarious purposes. And besides that, sensitive personal information such as credit card numbers and TAC codes can be intercepted and stolen by cybercriminals.
With an APM, however, customers can transfer funds directly into a merchant's bank account without using a credit or debit card - thus eliminating a potential point of risk.
Sometimes, not all customers have access to credit cards, which can be due to a lack of access to financial services or simply a lack of income.
It's also a situation young adults in emerging economies often find themselves in, which is why alternative payment methods have taken off across the APAC region.
By providing these customers with access to financial services, APMs bring a degree of democratization to these unserved segments and allows them to move beyond cash-based transactions.
5. APMs Enable International Purchases
Because APMs like XanPay have been integrated with various local payment systems across Asia, they allow entrepreneurs to target and reach out to previously unreachable markets.
Take Singapore's top-up game platform - Elitedias, for example. Before their partnership with XanPay, Elitedias found itself confined to the Singaporean market.
However, after partnering with XanPay, Elitedias quickly realized that its customer base grew exponentially.
All of this was because the platform previously lacked the means to accept payments from customers in other countries. But with XanPay, gamers in the Philippines, Indonesia, and Malaysia could start purchasing Elitedias's offerings - hence organically opening up several new markets for the company.
While credit and debit cards allow international purchases, customers may sometimes have their own reasons to avoid them. And for those situations, an alternative payment method may be just what the doctor ordered.
APIs bridge a vital gap between businesses and their customers by facilitating the smooth flow of payments.
And with XanPay, you have the ideal platform to support your customers via alternative payment channels - thus paving the way for your business's expansion into new markets.
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