Cash remains king in Asia, as digital payments grow

A new report has revealed that digital payment options are gaining in Asia, but cash still remains the most popular choice for transactions.

The Asia-Pacific (APAC) market is one that offers great promise for the financial services industry right now. With the world’s second and seventh largest economies in the form of China and India respectively, a host of fast-growing emerging nations and over 4.5 billion potential customers in the regions as a whole, the potential for the most innovative and forward-thinking banks is limitless.

Indeed, the region has been a hotbed of payments innovative for several years now, particularly in countries such as China, where services such as WeChat Pay and AliPay have gained huge traction in recent years. However, in other parts of the region, there is much more uncertainty over digital options, with the result that cash still remains king for APAC as a whole – at least for now.

Insights from Retail Banking Research in its Global ATM Market and Forecasts to 2021 report also highlight the importance of the ATM and cash to this market. Over 1.5 million of the world’s 3.1 million ATMs are located here. China has over 700,000 ATMs, India over 210,000 ATMs and South Korea over 120,000 ATMs. Despite the emergence of digital payments, it would seem the ATM will still exist alongside alternative payment and self-service channels.

Cash clings on as most popular option

A recent survey of consumers throughout Asia-Pacific conducted on behalf of PayPal highlights some of the key trends facing these markets. The research, which polled citizens in China, India, Thailand, Hong Kong, Singapore, Indonesia and the Philippines, found that 88 percent of people overall use cash as a method of payment, with this being the most common means of transaction for nearly six out of ten consumers (57 percent).

PayPal noted that this is in stark contrast to some countries in Europe, such as Sweden, where just two percent of all payment by value were made in cash in 2015. This indicates that Asia – where the first recorded use of paper money was seen in China in the 7th century – is a long way from letting go of the payments types it invented.

However, one notable finding of PayPal’s survey was the significant difference in attitudes to payments in the region’s two biggest economies. While China has embraced digital payments more than any other nation surveyed, India remains a firmly cash-centered economy, despite the efforts of its government in the past 12 months.

Indian consumers were found to be the most common users of cash, along with the Philippines, with three-quarters (75 percent) of respondents in these nations using cash as their most common form of payment. By contrast, the figure for China was just 25 percent, while 48 percent of citizens here used e- or mobile wallets as their most common payment method.

Why the differences between nations?

One reason for this may be the differing levels of access to technology such as mobile payments. While the majority of citizens in every country studied has access to the internet and smartphones, adoption in India was significantly lower than other countries. Just 68 percent of people in the country had internet access, and 67 percent owned smartphones, compared with an average of 92 percent internet connectivity and 88 percent smartphone ownership for APAC as a whole. For China, the figures were 99 percent and 97 percent respectively.

This indicates that a strong digital infrastructure is essential of alternatives to cash are to really take off – and while India is making great strides in this regard, it still lags behind many of its regional neighbors.

Another factor may be that consumers in China were much more likely than average to express dissatisfaction with traditional options. Fewer than a third of Chinese respondents (31 percent) said they were happy with their current payment methods, compared with the overall average of 54 percent. PayPal suggested this may indicate a lack of awareness about emerging payment options. For instance, it observed than in India, as well as Indonesia and Thailand, “less than half of those who are aware of contactless payments via mobile phones and in-app payment systems are actually using them”.

The report therefore suggested that in the coming years, advocates of digital payments will have to improve how they showcase their solutions in order to boost consumer knowledge of the options. But for the meantime, it seems cash isn’t going away in Asia-Pacific.


Written by Colin Gordon

Colin Gordon

Colin Gordon is a Global ATM Marketing Manager based at NCR’s R&D Center in Dundee, Scotland. Colin is responsible for the marketing of NCR’s financial hardware portfolio with a specific focus on activities such as demand generation, sales enablement, market analysis and customer engagements for the ATM business.

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