Emerging Opportunities for Digital Wallets in Developing Asia Pacific (APAC) Markets

The electronic payment revolution in Asia is opening new opportunities for digital wallet expansion in emerging markets throughout APAC (emerging markets include China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam).

Personal electronic payments within emerging markets from 2019 to 2024 saw a CAGR of  43% – some of the market leaders in growth over this period being India (67%), Indonesia (48%) and the Philippines (44%)

^{Source: Euromonitor International, from Passport}

One of the key drivers of growth for electronic payments has been the rapid adoption of digital wallets in emerging APAC markets. This technology makes it easier to service customers who are underbanked or underserved in terms of financial services. Digital wallets are creating ecosystems for consumers where they can use super-apps that fulfil a variety of services, including payments, access to marketplaces and messaging. Having a product like this which keeps consumers on a single platform is key to growing a customer base and making the most of the opportunities presented by digital wallet adoption.

What is driving the growth of digital wallets in emerging APAC markets?

It is vital to understand why there has been mass adoption of electronic payments in emerging APAC markets. It can be broken down into two key driving factors, the first of which is the increase in access to the internet and mobile devices in the region.

The penetration rate of mobile internet in the APAC region increased from 75% in 2019 to 89% in 2024, with this number forecast to reach almost 100% by 2029

^{Source: Euromonitor International}

With mobile internet being so widespread among the APAC population, it has become easier than ever to access digital wallet smartphone apps and online marketplaces. Secondly, 38% of consumers in emerging APAC markets are either unbanked or underserved, and digital wallets have lower requirements for opening accounts when compared to bank accounts and other financial products like credit cards, so they are easier to access for all consumers. Through digital wallets, consumers can also easily make payments and transfer money, such as via mobile number or simply by scanning a QR code and funds are taken automatically from money tied to the account.

How are digital wallets leveraging their strengths in the APAC market?

Given that digital wallets help to fill a gap in emerging APAC markets, giving many consumers access to electronic payments, the landscape is highly competitive, with products innovating with features to keep consumers engaged with the platform. For example, Malaysian digital wallet provider Touch ‘n Go introduced a loyalty programme to bring more value to its customers. Users of the wallet can earn points for every purchase made, with the ability to earn additional points when using Touch n’ Go to make purchases from affiliated brands. 

Paytm, one of the leading digital wallet providers in India, has the UPI Lite feature, a digital account aimed at making smaller payments more efficient. Users can make a limited number of transactions from this account without the need to use a PIN code, increasing the convenience of the platform. With a limit of INR2,000 per day, UPI Lite is ideal for the small transactions consumers may make throughout the day, such as buying food or paying for public transport. With no need for a PIN to make the payment, it becomes more convenient than cash.

What are the key features and challenges of digital wallets for APAC consumers?

Euromonitor’s Voice of the Consumer: Digital Consumer Survey, fielded March to April 2024, highlights some of the key features that resonate with APAC consumers.

The most important feature as selected by 39% of APAC consumers is enhanced security, followed by convenience over other payment methods (36%) and rewards points (33%)

^{Source: Euromonitor’s Voice of the Consumer: Digital Consumer Survey, fielded March to April 2024}

These are features which most providers already implement to some extent, so the focus for providers should be on some of the less demanded but still important features, such as wider merchant acceptance (27%), spend tracking (26%) and enhanced shopping experience (24%).

The survey also reveals what APAC consumers perceive to be barriers to using a digital wallet, so these are also relevant for producers when developing their apps. 30% of APAC consumers have said they simply lack interest in digital wallets, but there are more specific concerns for providers to focus their efforts on, including lack of trust in information security (27%) and lack of benefits over traditional payment methods (22%). Even if these problems are addressed, it will be important to get that message across to consumers to show that digital wallets are constantly evolving alongside consumer needs and worth investing into.

In conclusion, the digital wallet landscape has shown strong growth in the last five years, especially in the emerging APAC markets where access to mobile internet has changed how consumers prefer to make payments. This revolution in payments has made it easier for consumers in emerging APAC markets to transfer money electronically, giving them a new-found level of financial freedom with low rates of banking in these markets. By continuing to resolve consumer pain points, such as guaranteeing information security and benefits for usage over other payment methods, providers can ensure consumers remain engaged with digital wallet platforms.

Read our article, Three Key Strategies for BNPL in Emerging Markets in Southeast Asia, for analysis on how BNPL providers can explore opportunities in Southeast Asia.