Asia’s payments sector is moving fast. The Asia-Pacific payments market is projected to reach USD 15.79 trillion in 2025 and expand to nearly USD 29.5 trillion by 2030. Much of this growth is fuelled by the rise of digital wallets and instant payment systems such as India’s UPI. China alone now processes around USD 7.6 trillion in transactions, with 82% of e-commerce and 66% of in-store purchases made using digital cards.
Each Asian market has distinct financial, data, and settlement regulations. Understanding what to ask your merchant processor about compliance could mean the difference between smooth payment operations and unexpected disruption.
Why payment compliance in Asia is different
Unlike in Europe or North America, Asia’s regulatory frameworks are highly localised. Singapore’s Monetary Authority of Singapore (MAS), Indonesia’s Bank Indonesia (BI), and China’s People’s Bank of China (PBOC) each enforce separate licensing, data, and settlement rules. Even within Southeast Asia, requirements differ from one jurisdiction to the next.
Complexity arises from:
- Data localisation: Some countries require payment and customer data to be stored domestically.
- KYC/AML standards: Know-Your-Customer and Anti-Money Laundering checks differ widely by country.
- Foreign exchange and settlement restrictions: Many markets control currency conversions and repatriation.
Failing to comply can lead to frozen funds, delayed settlements, or even loss of processing rights. This is why it’s not enough to rely on a payment processor claiming global coverage. Merchants must confirm that each country operation meets local compliance standards.
Key questions to ask your merchant processor
Regulatory licensing and coverage
Are you licensed or registered with financial regulators in each Asian country where you operate?
Look for references to regulators such as MAS (Singapore), BSP (Philippines), RBI (India), or BI (Indonesia). A locally licensed payment processor can offer greater settlement assurance and legal protection.
Do you process payments directly or through local partners?
Many processors rely on third-party acquirers, which can affect compliance risk and control. Direct processing often means fewer intermediaries and better oversight.
Can you provide documentation or proof of local regulatory approval?
Request official certificates or regulatory listings to verify claims. This is critical when evaluating merchant services across multiple jurisdictions.
Know-Your-Customer (KYC) and Anti-Money Laundering (AML) standards
What KYC/AML frameworks do you follow for onboarding merchants and customers in Asia?
This helps assess whether your payment processor adheres to international and local regulations.
Are your checks aligned with FATF guidelines and local enhancements?
The Financial Action Task Force (FATF) sets global standards, but each country adds its own requirements. Understanding this alignment reduces exposure to AML breaches.
How do you manage ongoing monitoring and sanctions screening?
Strong ongoing monitoring is vital for merchants dealing with cross-border payments. A credible payment gateway should flag suspicious transactions and report them promptly.
Data privacy, storage, and localisation
Where is payment and customer data stored?
Ask if data is stored in-country, regionally, or offshore. China’s PIPL, India’s DPDP, and Singapore’s PDPA all restrict cross-border transfers of personal data.
Do you comply with local data privacy laws?
Compliance with each nation’s privacy framework helps protect against penalties and operational disruption.
Do you offer tokenisation or encryption that meets regional cybersecurity standards?
A strong data protection policy ensures security for credit card and customer information during every stage of the payment process.
Cross-border settlement and currency management
How do you handle FX conversion and settlement: locally or offshore?
Understanding how your funds move is essential. Offshore settlements might breach local regulations in markets with currency control rules.
Are you compliant with each market’s currency control and remittance laws?
Countries such as China and South Korea have strict repatriation procedures that can affect fund flow and settlement timing.
Do you support multi-currency settlement in local Asian currencies?
Merchants dealing with regional customers benefit from processors offering multi-currency settlement. Look for support in currencies such as RMB, KRW, INR, and PHP.
Tax, invoicing, and withholding requirements
Do you assist with VAT/GST or withholding tax compliance in Asian markets?
Foreign merchants often face unique tax reporting obligations. Indonesia and India, for example, mandate GST registration for cross-border service providers.
How are invoices issued, and do they meet local documentation standards?
Proper invoicing practices prevent compliance issues during audits.
Are transaction fees inclusive of local taxes?
Transparent billing ensures you can accurately assess your payment processor’s total cost structure.
Fraud prevention, chargebacks, and dispute management
How do you detect and prevent fraud in markets with high card-not-present transactions?
Asian e-commerce markets have high CNP volumes, making fraud prevention essential.
Do you offer region-specific risk rules such as 3DS2 for Japan or India’s RBI mandates?
Your payment processor should adapt to regional security requirements and card network rules.
What’s your chargeback and dispute management procedure?
Timely dispute resolution can save small businesses from significant financial loss.
Partnership transparency and local network integration
Do you work directly with local acquirers, banks, and payment schemes?
Ask whether your payment processor has direct connections to networks such as GCash, Alipay, or GrabPay.
Which parts of the transaction flow are handled by third parties?
Transparency about third-party involvement helps you assess who controls compliance obligations.
How do you ensure local partners follow anti-fraud and consumer protection laws?
Your processor should conduct due diligence on every local partner to safeguard the payment process.
Consumer protection, refunds, and local compliance responsibilities
Who manages refunds or compliance complaints locally?
Clarify whether responsibility lies with the merchant or the payment processor.
Do you follow local consumer protection laws for refunds and disclosures?
Different countries set distinct refund windows and reporting standards. Aligning with these expectations improves customer experience.
Do you provide customer support in local languages?
Multilingual support indicates strong regional presence and compliance with consumer service standards.
Risks and consequences of non-compliance
- Financial penalties and account freezes: Regulators in Asia impose steep fines on companies that fail to meet local licensing, AML, or data privacy obligations. Non-compliance may result in suspended merchant accounts or blocked access to local acquiring channels, interrupting cash flow and settlements.
- Delayed or withheld settlements: Payment processors operating without proper licences risk having their local settlement capabilities revoked. Funds can become trapped in-country or delayed indefinitely until documentation is provided or approval reinstated.
- Data breach exposure: If customer or transaction data is stored or transferred outside permitted jurisdictions, penalties can extend beyond fines. Under China’s PIPL or India’s DPDP, violations can lead to severe restrictions on operations or bans on data exports.
- Reputational damage: Beyond financial impact, regulatory breaches erode trust. Merchants relying on non-compliant processing services may lose consumer confidence, impacting conversion rates and future partnerships.
- Loss of processing rights: Payment processors found in breach may lose the right to process credit card or e-wallet transactions in affected markets. This can leave merchants suddenly unable to collect payments, especially where alternative processors are limited.
Best practices and solutions
Merchants can strengthen compliance by:
- Partnering with licensed payment processors that maintain local regulatory presence.
- Conducting regular compliance audits of processing services.
- Choosing merchant processors that offer flexible settlement options and transparent reporting.
- Ensuring payment gateways support encryption, tokenisation, and 3DS2 security standards.
- Working with providers offering custom solutions to match business models and regional rules.
Conclusion
Asia’s payment systems are growing faster than anywhere else, but so are the rules that govern them. Asking the right questions upfront protects your operations, builds customer trust, and keeps your business compliant. Whether you’re processing credit card payments, managing e-wallets, or running subscription-based merchant services, due diligence on your merchant processor remains your strongest safeguard against risk.
