This item was originally published on finews.asia.
This item has been updated with more information on Singapore transactions from WorldPay by FIS.
Credit cards may be one of Singapore’s aspirational five Cs, but plastic payments appear to be losing their allure around the region.
Singapore’s other four Cs are cash, car, condominium and country club, with unlocking all five achievements considered a sign of wealth.
The latest Global Payments Report 2022 from Worldpay by FIS projected credit cards would lose wallet share of consumers’ payment options in Asia by 2025, particularly for e-commerce.
Driven by superapps
“APAC is at the forefront of the transition towards alternative payment methods [APMs]. The overwhelming popularity of superapps, including Singapore’s Grab, is helping to drive the use of digital wallets amongst other APMs. There’s tremendous potential for payments innovation in the region, especially as e-commerce continues to demonstrate robust growth,” Phil Pomford, general manager for global e-commerce in Asia Pacific at Worldpay from FIS, said in a press release.
In Singapore, credit/charge cards remained the leading online payment method last year, accounting for 42 percent of e-commerce transaction value, followed by digital wallets at 29 percent and bank transfers at 12 percent, the report said.
But the report projected by 2025, digital wallets and bank transfers would grow to become 31 percent and 11 percent, respectively, of e-commerce transaction value in Singapore. Credit and charge card’s market share of e-commerce transaction value in Singapore is expected to fall to 38 percent by 2025, WorldPay by FIS told finews.asia. That’s as the local e-commerce market is projected to grow at a 16 percent compound annual growth rate through 2025 to US$10.7 billion, the report said.
Singaporeans to eschew cash
To be sure, in Singapore, credit cards are expected to continue to dominate point-of-sale (POS) transactions in-store, reaching 37 percent by value by 2025 from 34 percent in 2021, Worldpay by FIS said. But mobile wallets’ share is expected to grow to 23 percent of POS value by 2025 from 13 percent in 2021, as cash use is expected to fall to 13 percent in 2025 from 22 percent last year, the report said.
Within Asia, digital wallets are expected to expand their domination of e-commerce payments, with a projected rise to more than 72 percent, or more than US$3.1 trillion, from around 68.5 percent of transaction value in 2021, the report said.
“APAC was where digital wallets first took hold as the dominant e-com payment method; that dominance shows no signs of abating,” the report said, citing the “overwhelming popularity” of Alipay and WeChat Pay.
Asia shifts away from cards
That’s as credit/charge cards in Asia are expected to see their share of transaction value in Asia fall to 11 percent of e-commerce transactions by 2025 from 12.8 percent in 2021, the report said.
For Asia POS payments, credit/charge cards’ market share is expected to fall to 17 percent by 2025 from 19 percent in 2021, the report said.
The report noted credit card usage globally is increasingly shifting to pass-through mobile wallets.
The Global Payments Report 2022 from Worldpay by FIS uses a variety of sources for its data, including payment operators, central banks, Euromonitor, McKinsey and others.
The data track the transaction at checkout, but doesn’t cover underlying funding methods, such as whether a credit card was used to fund an e-wallet, WorldPay by FIS told finews.asia.
FIS provides technology services for merchants, banks and capital markets firms. In 2019, FIS acquired Worldpay, a global e-commerce and payment technology player.