Digital Wallets across Asia have room to grow in 2024 | Eureka AI Moment Asia

Michael Hawkins

Friday October 20 2023

Did you know that the first digital payments system was likely created not by a bank, but by Coca-Cola! Created a solution to pay for your vending machine Coke can via text message was launched back in 1997. 26 years later, and the world is a very different place! The recent ASEAN Announcement of a unifying system for cross border payments means that we can now seamlessly travel across borders using our local eWallet to buy the same Coca-Cola.

Meanwhile regional giants such as Ant Financial have created their own network of services (SCMP article here ) to fight with global solutions such as Paypal.

This week we take an in-depth look at all four of our Asian countries to see who is winning the race to digitise consumer payments.

According to 2022 Google research (Google SEA Economy ) usage of eWallets in South East Asia sat at an average of 22%, with Indonesia (27%) leading the way ahead of Thailand (19%) and Singapore (16%) trialing behind.? So how has usage progressed in 2023 based on our own Eureka data?

Digital Wallet Mobile User Penetration by Country

While the general trends hold with Indonesia leading the pack in terms of eWallet reach, perhaps the biggest contrast is between Hong Kong (55% category penetration of Mobiles) and Singapore (28% penetration).

While we know that Indonesia’s eWallet growth was mainly thanks to the rapid growth on online services and a lack of both Credit Cards and bank accounts in the population, this is clearly not the case in affluent Hong Kong.

It perhaps highlights the power of convenience, innovation and herd mentality that WeChat Pay brought to Hong Kong. Maybe these numbers are a strong indicator of potential for Grab’s new digital bank?

Having an app is one thing, but regularly using it is where the money is made. So are consumers using their eWallets regularly?

Digital Wallet Average Days of Monthly Usage by Country

Looking at the average number of days of usage for any eWallet in each country we can see how deeply ingrained the use of eWallets is in Hong Kong with an average of 11 days vs a more modest 3 days in Thailand.

So which brands are driving the category in each country?

eWallet User share and frequency – Indonesia

With the advent in Indonesia of the government backed QRIS system in 2019, we saw both opportunities and threats to the growth of eWallets. (as noted here QRIS vs eWallets ). However, with 35% of all Indonesians using eWallets in 2023, the data seems to show that they are definitely here to stay.

Looking at the percentage of all eWallet users who have accessed each app at least once in August this year, Dana comes out on top with 70% of users

Dana (partly owned by Ant Group and linked to Lazada) with GoTo Groups GoPay in clear second position from Shopee Pay, then OVO. Paypal lags behind in a distant 5th position as a niche player.

The category follows the Double Jeopardy law closely with Usage following the same pattern as customer reach. However it is worth noting that OVO commands a higher usage frequency than would be expected, likely due to the use of the app for parking payments.

eWallet User share and Frequency – Thailand

Thailand overall has a lower penetration of eWallets than Indonesia, however the brand performance follows a similar pattern. True Money (Another partner of Ant Financial) leads the way with Shopee Pay and local Paotang (Krung Thai Bank) in third and Paypal in forth.

The issue for Thai eWallets is really frequency of usage, with none of the brands averaging more than 3 days of usage in a month.

eWallet User share and Frequency – Hong Kong

The category in Hong Kong is already twice the size of Singapore and along with that, competition is fierce. Three brands sit at the top of the pile with 65+% penetration of category users! Four more brands reach more than 14% of users as well, explaining why the overall penetration and frequency of usage is so high.

Category usage frequency is high at 11 times a month, but those usage occasions are well spread across the top brands.

eWallet User share and Frequency – Singapore

When looking at Singapore, the obvious difference vs Hong Kong is the lack of competition. Only three brands reach more than 15% of users vs six in Hong Kong and while AliPay is the leader, there are no established local players.

This is almost certainly due to very high level of traditional banking penetration in the city state. This means apps like DBS Paylah can take the place of an independent eWallet seamlessly.

To fully understand the dynamics in this category we need to understand Who is using these apps and Why.

Who is using eWallets – Age Profiles

Looking at the age profiles in broad buckets for Thailand, Indonesia and Hong Kong we see very different profiles! Using a rather simplistic GenZ, Millennials and Gen X+Boomers segmentation we see radically different contribution from the three groups in each country!? Hong Kong, an aging city,? sees a significant contribution from the over 40s which is the opposite of young Indonesia.

While population trends undoubtedly drive this, it is interesting to understand why older consumers in Hong Kong have adopted digital payment systems. Are certain government systems such as transport, benefits, pensions etc paid for using eWallets?

Looking behind the usage patterns and it is likely that it is the Government Consumption vouchers that have been driving this usage by older consumers.

Ant Financial vs PayPal – Regional vs Global

Another fascinating analysis is of the performance of regional vs global players in the eWallet category.

Alibaba backed Ant Financial have created a very strong regional platform of financial services in all four of our countries, with Hong Kong being the weakest of the four. They generate above 66% share in all three South East Asian countries.

So What?

Over the last 26 years, payments on your phone have grown from a simple interaction at a vending machine into one of the most penetrated categories in our live today.

As seen in Singapore, in contrast to Hong Kong and Indonesia, the growth of this category is directly related to the consumer need for payment innovation vs the existing solutions.

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Message me at [email protected] if you are interested in how your competitors are performing in Hong Kong, Singapore, Malaysia, Indonesia or Thailand.

You can also connect with me on linkedin here Michael Hawkins

More insights here:?https://eureka.ai/2023/09/