Chinese companies like Alipay and WeChat are helping emerging economies leapfrog past the United States with electronic payments. Nick Huber reports at the Financial Times:
Although digital wallets are not new, they grew in prominence during the pandemic amid a decline in cash and in-store card payments using point-of-sale terminals — and a rise in consumers’ preference for contactless transactions.
Globally, cash was used for 20.5 per cent of in-store “point-of-sale” transactions in 2020, one-third lower than in 2019, according to research by Worldpay, a payments group.
An increasing number of mobile wallets are multipurpose apps. In south-east Asia, this type of wallet is used to pay for everyday, low-value transactions including groceries and food deliveries, taxis, bills settlement and gaming.
“For many people in emerging markets, mobile wallets are perhaps the first cashless instrument that they have ever used,” says Sampath Sharma Nariyanuri, a fintech analyst at S&P Global Market Intelligence.
Some of the biggest suppliers of such services include China’s Alipay and WeChat, and Singapore’s Grab. “The non-banks are becoming the primary interface for payments [and other services] for consumers,” adds Nariyanuri.
Some apps, including Grab’s, also include a “buy now, pay later” option, allowing customers to pay in interest-free instalments. “Both digital payments and ‘buy now, pay later’ are nascent in south-east Asia, with much headroom for growth,” says Chris Yeo, managing director and head of GrabPay and GrabRewards.
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