Their comments came as a slew of digital payment solutions are emerging around the world, particularly in Asia Pacific.
Unfortunately, 75% of consumers and merchants see no difference between these Asia Pacific providers and tend to choose a service based solely on familiarity or preference. In addition, only a quarter can accurately identify individual differences without conducting additional research.
Lack of differentiation rather than a lack of opportunity
According to LinkedIn's most recent survey, the digital payment solution landscape has evolved dramatically in the last couple of years. Part of the success can be attributed to the Covid-19 pandemic, which forced widespread adoption of digital payments.
Today, the payment service sector is in excellent health, particularly in Asia Pacific, which accounts for more than half of global payments revenue and is growing at a faster rate than the rest of the world.
Indeed, McKinsey forecasts that the growth rate for Asia’s payment services will be roughly around 8% per year, with market traffic reaching US$1.5 trillion dollars by 2026.
Pooja Krishna Dhanothia, LinkedIn director and head of Asia Marketing Solutions, who conducted the survey, said that the continued substitution of digital payments for cash in some developing nations, particularly India and Southeast Asia, is expected to grow at a rate of 35% annually over the next five years, contributing to the industry's expansion.
"Right now, there are lots of opportunities for each and every one of us. Demand creation is not the problem facing the Asia-Pacific payment sectors. It's not a lack of chances. Your merchants don't need to be persuaded that more needs to be done. The most pressing issues are the lack of differentiation and the increased level of market saturation in recent years. “
The number of businesses that have registered as payment solutions in the Asia Pacific region has tripled over the previous 10 years, she noted.
"The [payment services] market is collapsing, as you can see. Naturally, a business needs to expand into new markets and adopt new tactics. It will provide you with a competitive edge over some of your competitors in the market, so it needs to be closely matched to your business plan. How do you find distinctive selling points for hard-on branding?" she asked.
The answer is simple: increase brand recognition to ensure that all of the efforts are worthwhile.
The survey revealed that almost half of the those questioned acknowledged that their choice of payment options was influenced by their level of brand familiarity.
In the meantime, customers and retailers select brands based on personal preference; therefore, cutting-edge innovations or technologies do not hold as much weight in their eyes as the methods used by suppliers to produce striking visuals.
"There is only one method to persuade users about your brand and proposition: consistently concentrating your branding efforts throughout the year on the same aspect. In APAC, this is especially significant. Therefore, before you go into the specifics of what the products are, it's crucial if you're operating in the Asia Pacific region that people know and like your brand," she said.
Security and trust still essential
In addition to strategically positioning the brand to become the preferred choice of customers, Dhanothia pointed out that when selecting payment solutions, users continue to prioritise security and trust.
"You need to be dependable. You need to be secure. That forms the foundation of all brands that we work with today. In order for us to remain relevant in the markets in which we currently operate, we also need to comply with local legal requirements," she added, noting that a significant portion of respondents from the Asia-Pacific region desired AI to be fully integrated into their solutions to bolster payment security.
However, AI integration requires caution because it has two drawbacks.
Chief Legal Officer Tony Petrov of Sumsub, an identity verification platform offering a comprehensive technical and legal toolkit to meet Know Your Customer (KYC) and Anti Money Laundering (AML) requirements, agreed.
"I would say that it is evident that financial fraud exists today, as it always has. Artificial intelligence (AI) fraud is becoming more and more prevalent in the day-to-day operations of financial institutions. Deep fakes are a part of this. I believe our report states that the use of deep fakes has increased by 1500% in the Asia Pacific region in recent years, and by 500% in Thailand specifically," he said.
He made note of the numerous issues raised by the emergence of AI deepfakes.
Thankfully, new tools and cutting-edge AI technologies can capture them.
"In particular, the human eye is not very good at comparing faces when you have an AI-driven system that is built and trained to determine if two people are identical. I wouldn't say that deep fakes pose a serious threat at this time because there are numerous real-world methods for identifying criminals. There are tools that can stop them at various stages and with various levels of security," he noted.
As every nation has different legal requirements, costs, and other relevant circumstances to take into account, he said that developing or implementing a security system requires a precise approach based on requirements rather than the broad risk-based approach that is employed in many nations.
He explained that, in terms of security, there is no one-size-fits-all approach. A nation can combine a national platform for its residents with an open-ended strategy for those outside the national system.
However, to expand internationally and serve clients who are not located in the nation but still desire to use the services, businesses must have access to a wider range of verification options, such as various forms of remote verification.
He also underlined the important role of the regulator, which is to ensure that everything is generally in order, that industry participants adhere to certain protocols, and that they routinely monitor and re-monitor the efficacy of what they currently have, without delving into circulars and particular prescriptions.
"Furthermore, I would strongly advise Thailand against taking an overly restrictive stance, as I believe that discretionary freedom is crucial in the financial sector—particularly in innovative industries, where innovation always outpaces regulation. Furthermore, because the innovation isn't working well enough to warrant new regulations, the regulator cannot simply pull it back," he said.
The Internet Economy era
Sarita Singh, the managing director of Stripe for Southeast Asia, Greater China, and India, noted that the internet economy's projected growth, which is expected to surpass that of the global economy, supports the potential expansion of digital payment solutions.
"At Stripe, we follow amazing tales of innovation and digital transformation, with Southeast Asia emerging as one of the global internet markets with the quickest rate of growth. The rise of the platform economy, intrapreneurship in this region, and cross-border commerce are three major trends driving future growth within the next 10 years, she said.
In a recent report on global digital trade, Stripe found that 84% of businesses surveyed offer goods and services in more than one market, with 16% operating in more than 21 markets. In addition, 66% of companies are preparing to expand into new nations in the next two years.
In other words, cross-border trade will become borderless, with businesses able to sell their goods and services to customers anywhere in the world without regard to geographical restrictions. Keeping up with the trend means that to gain the trust and loyalty of customers, online payments must be improved.
Although the idea of the "platform economy" is not new, she pointed out that recent findings indicate that platforms and marketplaces are playing a bigger role in the economy as a whole.
According to industry research, by 2030, digital platforms are expected to facilitate over 30% of global economic activity, or about $60 trillion.
Singh proceeded to mention Stripe's partnership with tiket. com to introduce a multi-currency function that provides clients with a customised encounter. When they make travel, hotel, and attraction reservations, the co-working project helps them save money on exchange rates.
Another interesting trend that Stripe has observed throughout Southeast Asia is that, in comparison to other parts of the world, multinational corporations are more willing to experiment, work on innovation projects, and test out new digital services here.
"Many businesses recognise the need to reinvent and are fostering a culture of innovation inside their organisations, leading to the rise of the enterprise intrapreneurs across Asia," she stated.
James Wenhui Yang, deputy managing director, Business Development at TenPay Global, the top provider of payment solutions and remittance services in China, expressed his optimism for continued Asia's growth in the payment solution sector, citing the need for new opportunities brought about by technological advancements.
"People are more likely to use mobile apps for daily purchases and payments, whether they are made domestically or internationally across the Asia-Pacific region. People are starting to use mobile devices and QR codes as form factors more frequently than in the past. Furthermore, we begin to notice that interconnectivity gains prominence, becomes a hot topic, and attracts a lot of attention. We start to see the regulators as well as the industry participants are paying a lot of that," he said, adding that the action is a phenomenon throughout the entire region.
“A few years ago, there was discussion about how to implement comparable payment technologies in this area. However, as we can see, this is now the norm for most nations' commerce, significantly increasing the uptake of digital payments. Digital payments will begin to spread quickly throughout all of the nations in this region. The next issue is how people make cross-border payments after they are accustomed to paying for goods and services domestically. Various technologies and business models have been tested, and there are currently discussions and pilots underway," he pointed out.
Though it's not yet concluded, he thought interoperability would exist if we discussed certainty among all those uncertain situations. What technology and business model would be needed to make this happen in a more sustainable way still becomes uncertain.
"So the industry provides a definitive response? Most likely not yet, I would say. Will the sector soon come up with a long-term solution? Personally, I still think positively," he remarked.
Looking ahead that cross-border will flourish, LinkedIn director and head of Asia Marketing Solutions Dhanothia concluded that trust and innovation are not going away.
"They're here to stay. You need to ensure that you are dependable and you continue to maintain that security and trust from a brand standpoint," she said.