January PayTech Roundup

In this article today, we are going to discuss some news we noticed this month that we wanted talk about! But first, we wanted to give you some of our own news. Last week we showcased our first Brand Story Video! For now, it's just in Korean, but if you don't speak Korean we have subtitles for you to check out!

See the video here~

Ok, so now onto other news... we will discuss big payment news going on outside of eromnet!

1. How will the APAC Payments Ecosystem change this year?

There are a few areas that are said to showcase major growth into 2022. The first being a major BNPL boom. The BNPL market is said to top $1trillion worldwide by 2030.

Big companies such as Experian is taking consumer checks on Singapore's BNPL Working group to check market increases and are monitoring growth because its so rapid. But does this effect your business? Maybe, it depends on what country your in. Although BNPL has historically been popular to complete ‘big ticket’ items, the data of UnaCash appears to confirm that BNPL users in the Philippines opt to use the service when buying items of lower value. So this means that for now, only focus on BNPL if you are in a higher priced niche, unless your in the Philippines; though expect this to change over time and BNPL will become prominent in all sectors soon. This agenda is supported by figures that see the region’s BNPL industry growing by 45.3 per cent on an annual basis. At the turn of the new year, the industry alone held a current value of $201.9billion. So basically, prepare for the upcoming BNPL industry in SEA.

The second area of growth is cross-border payments and trade! Which I'm sure you are not surprised about given the growth of cross-border commerce increasing rapidly. This year, growth will take place within partnerships offering more opportunity for cross-border trade and payments. Partnerships will be especially common between banks, card networks, and fintech companies. An example partnership from the end of last year is: Thunes‘ partnership with Tencent Financial Technology, which introduced the network to Weixin‘s 1.3 billion users in China.

In essence this trend showcases also showcases how important having a wide variety of global payment methods will become over time! (Which is why at eromnet we have so many of course).

The third area of growth is continuous expansion in contactless payments. By cashless transaction volume, APAC records the world’s fastest-growing statistics, being projected to grow by 109 per cent until 2025 and then by 76 per cent from 2025 to 2030. This area of growth is being pushed by mobile and wearable technology. Then geographically, once cash-based nations such as Japan are set to have the highest growth for contactless payments. Then finally, here is a great chart below showcasing exactly how payments are set to change in the growing years which goes along with the set trends for this year.

2. African Fintech Industry in 2022: Trends, Insights and thoughts for 2023

Africa is one of the newest industries within the payments space, so naturally, they are seeing massive growth. Specifically, South Africa, Kenya, and Nigeria are the three countries pushing forward the fintech industry in Africa. According to a recent report by the African Development Bank, the fintech industry in Africa is set to surpass $3 billion by 2022, with an annual growth rate of over 20%. But how are they growing so fast? Well, it's mostly in the mobile space. Domestic major players such as M-Pesa and Tigo Pesa have become a part of day-to-day life in Africa for mobile payments; with over 75% of adults using these platforms to send and receive money.

While also, foreign players are beginning to jump into the African market to grow the space. Specifically, China is the most aggressive with their growth bringing in UnionPay, WeChat Pay, and AliPay into the continent. Though UnionPay is not a mobile wallet, all three Chinese payment methods are showcasing high growth. In the picture below we can see UnionPay is already well embedded into the market.

Outside of PayTech, digital banking and lending is showing the highest growth. Neobanks are popping up all throughout the continent and is said to help provide major growth in fintech overall. As a result, its estimated that over 15 million adults in Nigeria will be using digital banking platforms, and over 10 million will be using mobile money services. So in essence; African fintech is growing in all aspects; however not everything is going perfectly. Regulatory issues are also affecting and stunting fintech growth. So another trend set to take place this year is an increase in regulations to help prevent a lack of growth in the region.

Is there any other trends in Africa you heard about that we missed? Comment below!

3. Apple Card responsible for more than $1 billion in losses for Goldman Sachs

Ouch, we know that title is rough. But the situation could be even worse than the title states. The collection of consumer offerings from Goldman is on track for a loss of $4 billion since 2020 with Apple Card making up more than $1 billion of that. The figure is not exactly determined yet, but we can determine how much it could be based upon other losses Goldman had.

Apple Card was launched in the US back in August 2019, but their first 6 months didnt record a loss. We know that of the $4 billion dollar loss, $2 billion in losses came from Goldman lending platform called GreenSky. Which means that theoretically up to $2 billion could come from Apple Card. The main cause of the losses is said to be from loan-loss provisions (when a bank sets aside money as an expense for future loans it expects won’t be repaid).

Though I think the provisions is not the only reason, this particular card is also not very high performing despite its great connective capabilities with Apple because the other incentives on the card are very weak.

Apple offers 3% back on Apple purchases and at a few select retailers and 2% back with Apple Pay purchases, but most purchases earn just 1%. That’s tough when other cards offer 5% back at popular retailers that consumers shop at regularly among a range of other benefits. Which could correlate to lack of profits because people who will pay back the card aren't seeing the benefit to use the card. While users more likely to default are not as concerned with the benefits and will just use the card.

As a result, Surely this is not going to spread into other countries and Apple Card could be shut down all together. Creating a network effect that potentially hurts the ewallet as well. (But eromnet merchants don't need to worry about this since we do not support Apple pay or the card).

In Conclusion

So what do you think? Do you like this sort-of news recap style newsletters? If you want more monthly news reports like this please comment or message us asking for more!