What are e-wallets and why are they key to higher sales in Asia Pacific?

With 13 countries and 4.3 billion people, the Asia-Pacific (APAC) region presents a huge opportunity for merchants to scale their business. But for businesses outside APAC, it can be challenging to understand the various factors that lead to successful expansion into the region's markets.

That's because APAC is home to a well-developed digital economy that looks very different from the Western one. For instance, China, Japan, South Korea, India and Indonesia are among the world's largest e-commerce markets, generating a combined US$1.3 trillion in e-commerce revenue in 2023. And for these markets, the preferred method for digital payments are e-wallets. Each country has its own mix of e-wallets, along with its own currency and financial regulations.

This diversity means expanding into APAC without accounting for their payment preferences is like trying to navigate a foreign city without a map. You might make some progress, but you're bound to miss out on the most efficient routes along the way — and probably end up finding yourself quite lost.

Let's look at why e-wallets are so popular in the region and how you can integrate this into your payment mix as part of your strategy to grow your business in APAC.

How do e-wallets work?

E-wallets — also known as digital or mobile wallets — are electronic versions of physical wallets. US-based merchants might be familiar with e-wallets such as Apple Pay, Google Wallet, PayPal and Venmo. In APAC, Alipay, Paytm and Go-Pay are just some of the widely used e-wallets.

E-wallets allow users to securely store digital payment methods on a smartphone app so they can make payments both online or in a physical store, without having to memorize individual PIN codes and passwords. These methods can include credit or debit cards, gift cards, coupons and more. You can use your e-wallet to buy goods online and at physical stores, earn and transfer rewards points, and even send money to other users.

Above:How e-commerce shoppers can easily pay online with their Alipay mobile wallet.

E-wallets use mobile apps, cameras, near-field communication (NFC) and security measures such as tokenization and biometrics to create a safe, frictionless and convenient payment experience. You'd typically fund your e-wallet by entering your credit or debit card information, linking it to your bank account, or loading it with cash deposited into kiosks at convenience stores. This information is then encrypted and available once you authorize the wallet. You can then use the e-wallet to pay for your purchases.

There are three types of e-wallets:

1. Open wallets
2. Semi-closed wallets
3. Closed wallets

And below, we've outlined some of the key differences between the three types of wallets:

Why shoppers in Asia Pacific prefer e-wallets

The rise of e-wallets as the preferred payment method is unsurprising for APAC, which was one of the earliest regions to adopt a mobile-first lifestyle. Around 2.6 billion people — more than half the region's population — use smartphones.

So why have e-wallets become so popular in APAC? The answer is because they were necessary.

1. The demand for cashless payments during the COVID-19 pandemic drove e-wallets to become the preferred payment across many Asian countries. Even in China where digital payments were already mature, e-wallet usage surged to become adopted by 84% of consumers. And because of the high cost and processing fees of point-of-sale terminals, merchants and consumers opted not to accept cards and instead leapfrog over them to go from accepting cash to offering contactless mobile payments through e-wallets.
2. In Southeast Asia, as many as six out of 10 people don't have bank accounts. Yet, the region is also home to a young, internet-savvy population. This has caused digital payments to boom, fueled by payments made through e-wallets, which are predicted to exceed USD 114 billion by 2025.
3. Super apps are beginning to dominate daily life in many Asian countries. From China's Alipay to Singapore's Grab, these apps tend to offer their own e-wallets while also letting users link their accounts to other e-wallets. Users can order food, pay their bills, book a cab and even buy groceries through a single app, helping to make e-wallet payments an entrenched consumer habit.
4. Even people without accounts at either traditional or digital banks can use e-wallets through physical kiosks, which are typically found at convenience stores. They can deposit into or withdraw from their e-wallets through these kiosks, or by paying at cash registers in convenience stores. Even some convenience stores and pawn shops help process deposits and withdrawals in exchange for cash.

Local payment methods are key to higher revenue in Asia Pacific

By allowing your APAC customers to pay with their local e-wallets, you'll be on your way to expanding your consumer base in APAC and helping them to complete purchases more easily.

While online retail sales in APAC are expected to reach USD 2.8 trillion in 2025, the region also has the world's highest cart abandonment rate at nearly 80%. Eight out of 10 APAC shoppers fail to complete their online purchases for many reasons, such as preferring to shop on their mobile phones instead of their computers, abandoning the checkout when processes get too complicated, and even varying internet speeds.

One way of helping customers to complete their purchase is by offering localized payments. This means offering the preferred payment method in each market. For example, you could offer Alipay in China, Paypay in Japan, or Kakao Pay in South Korea. This way, customers can complete their purchase on their preferred device, enjoy simplified transactions, and complete the checkout process faster.

Payments localization is especially critical considering that 44% of consumers abandon a purchaseif their preferred payment method is not offered. The reverse is also true — when merchants offered local payment methods in APAC, their cart abandonment risk decreased by as much as 32%.

Despite that, merchants entering the APAC market tend to ignore the advantages of local payment methods. Data shows that while e-wallets accounted for 69% of all e-commerce transactions in the region, 29% of non-APAC merchants selling to the market still believe that local shoppers prefer global debit card schemes.

At the same time, only 13% of non-APAC merchants accepted domestic mobile wallets as payment methods. These statistics show how important it is that you meet consumers where they are. It's the key to increasing sales, lowering cart abandonment rates and engaging more shoppers.

3 takeaways for businesses that want to expand into Asia Pacific

1. APAC is a region with diverse markets. Take the time to understand the consumer behaviors and trends in different countries rather than viewing APAC as a single, homogeneous market.
2. Offering local payment methods like e-wallets can lower cart abandonment rates among your Asian shoppers.
3. The e-wallet ecosystem in APAC is vast and varied. No single e-wallet dominates the region for now, so it's important for global merchants to accept payments from several e-wallet providers.

Understanding a complex market

We've covered the importance of offering e-wallets as a payment method to APAC shoppers. But there are other factors to consider as part of your strategy to win in this region.

The APAC landscape encompasses many different currencies, financial regulations, and languages. Then there's integrating multiple payment methods, waiting times for fund settlement, chargebacks, declined payments, and needing to enter into separate contracts with multiple payment providers. With all these to consider, it's understandable if you find the APAC region daunting.

To overcome this complexity, you can work with a payments service provider that already has an established network of partners in the region.

Antom can help you improve your payment success rates in Asia Pacific. We offer the widest range of APAC's most widely-used payment methods, including the most prevalent e-wallets preferred in each specific market. This lets you offer the local payment methods most used by shoppers and accept payments from all over the region — which is your key to boosting conversion, lowering cart abandonment and unlocking revenue growth. A single integration with Antom can give you access to 1.5 billion consumers.

Interested in expanding to Asia Pacific, overcoming market complexity and generating sales from this dynamic region? Contact us today.