Resilience In The APAC Payments Market Will Be Found

Storms are brewing, and the payments market in 2023 will either sink or swim. Global economic headwinds will also slow the growth of the APAC payments market. Almost everyone in the payments value chain needs to rethink their playbooks. Payment fintechs will change leadership and focus on the bottom line. Consumers will have bigger targets on their backs for fraudsters. Forrester expects:

  • One in four payment fintechs will return because they didn’t follow the 2008 playbook. With VC money drying up across the globe and a likely decline in transaction volume, payment firms will focus on cutting overhead and improving go-to-market efficiencies. Those who do not have a moat are at risk of takeover by big banks and payment giants who want to increase the amount; those with unique IP will have to protect their talent, causing wage inflation to worsen as the squeeze out of IPO paydays makes the stock options very attractive.
  • Pressure-based payment fraud will see double-digit growth in 2023. Fraudsters will shift more focus to the weakest link: consumers. As more consumers engage in pressure-based payments (ie, consumer-initiated payments), fraudsters will have more opportunities to target them with social engineering scams. Online scams in Singapore increased by 163% after COVID-19. China’s recently issued Anti-Telecom and Online Fraud Law aims to prevent scam-related losses. Many payment firms are underprepared for push-based payment fraud because they do not have an advanced authentication approach and have not educated customers on self-protection.
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On the flip side, even under pressure from the economic downturn, we will still find the strong resilience in the APAC payments market supported by the more practical innovation focus of payment players and the region’s modern alternative payment networks that increase efficiency for commerce cross border.

  • Payment innovation teams will clash, and the “boring” will beat the “bedazzled”. Ninety percent of innovation investment in payments will need to offer a clear return to spend. Money intended for envelope-pushing payments experiences, like the metaverse or other blockchain projects, will be restored to baseline payments infrastructure and modernization projects. The highly competitive world of consumer payments will attract less investment and less innovation and the modernization of B2B payments will be low-hanging fruit.
  • Regional payment networks will boost cross-border commerce. A large number of modern cross-border payment networks originating in APAC are poised to replace the 50-year-old SWIFT system that is still in use as the region’s payment infrastructure. These include the QR code-based system and multi-CBDC pilots across Southeast Asia, the CIPS system in China, and the UPI system in India. These networks use modern technology (including blockchain) and APIs to ensure interoperability. Banks and payment firms need to increase investments to develop modular and API-based solutions that can be seamlessly integrated with the new regional payment networks.
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Explore the Propose 2023 predictions to see where strategies are changing – and where there are opportunities for heavy movement there.

This post was written by Senior Analyst Meng Liu and appeared first here.

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