How Asia Pacific is Serving Consumers without Credit Cards


Low credit card penetration has been a longstanding feature of developing markets in Asia Pacific. To counter this, countries like China, the Philippines and Indonesia are starting to provide various payment alternatives that allow eCommerce to grow despite the lack of cardholders in the region.

Asia Pacific is one of the fastest rising eCommerce markets in the world. According to a 2014 yStats eCommerce report, the region is expected to grow by 20% annually until 2018, surpassing North America in terms of online B2C sales.1 But while developing markets like China and Indonesia have led eCommerce expansion in 2013 with growth rates of 71% and 65% respectively,2 low credit card penetration in the Asia Pacific region has made it challenging for online retailers to make conventional in-roads towards developing markets.

However, credit card numbers are growing. In 2013, Euromonitor International estimated that credit card numbers will eventually grow to 77 million by 2018 across Singapore, Thailand, Indonesia, Malaysia, Vietnam and the Philippines. Both Mastercard and Visa also reported growth in the region. Visa revealed that Asia Pacific consumers accounted for 33.3% of all its total cards in 2014, while Mastercard reported that the region generated 25% of total transactions in 2013.

But while credit card numbers are on the rise, there is still significant room for growth with highly differing usage rates across different markets. According to a 2014 UBS report, developing markets like Indonesia and Thailand have credit card penetrations of 6% and 5% respectively. But according to Cartes-Asia and Luxury Daily, more developed markets like Singapore and South Korea have revealed credit card ownership to be as high as 3.3 and 5 cards per person, respectively.

These statistics reveal a highly fragmented eCommerce market when it comes to card-based payments, with developing markets relying instead on offline payment methods like cash-on-delivery (CoD) and bank transfers. For a fast-growing eCommerce market like Asia Pacific, a continued reliance on credit card payments alone could prove detrimental to sustained growth in the region’s eCommerce sector.

The Shift to Locally-Oriented Payment Methods

Given this fragmented nature of the Asia Pacific market, it becomes difficult to crack the region’s payment problem with a blanket solution. In India, more than 60% of all transactions are still cash based.7 In Indonesia, more than 80% of online shopping payments are still done by bank transfer.8 In Vietnam, offline payments still account for 81% for all online orders,9 while in Thailand, 70% of online shoppers still prefer CoD.10

As eCommerce expands across the Asia Pacific region, eCommerce businesses are realizing that payment solutions should be based on factors like local consumer preferences and market infrastructure. According to the Cross-border eCommerce Community (CBEC), 61% of online shoppers in Asia Pacific have greater confidence in websites that offer secure and domestic payment solutions.13This localized mindset towards payment solutions demands that brands take a local instead of regional approach when it comes to offering payment methods. By addressing consumers’ needs on a local level, eCommerce businesses are able to introduce solutions that act as a viable alternative to credit cards. Instead of shying away from CoD and bank transfer systems popularized by local buy-and-sell websites and online C2C transactions, businesses like online fashion retailer Zalora have been quick to embrace it. In 2012, Zalora was one of the first major B2C online retailers to offer cash-on-delivery services, paving the way for the fashion-centric business to become the largest eCommerce retailer in Southeast Asia.12 Since then, other online retailers like Lazada and Groupon have followed suit, offering CoD and bank transfer services in addition to credit card payments. However, the lack of credit cards in Asia Pacific may simply be a sign of changing trends in eCommerce payment solutions. A report released in 2013 by payment processing company WorldPay predicts that alternative payment methods will eventually take over credit cards as their usage climbs to 59% and credit card usage falls to 41%.6

The entrenched popularity of offline payments doesn’t mean that Asia Pacific consumers are averse to supporting new, electronic payment methods. China is a prime example of a how an emerging market, given the proper time, infrastructure and incentive, is willing to transition from a cash-based payment system to an electronic-based payment system.

In 2009, 70% of all eCommerce transactions in China were done via CoD. But by 2014, that ratio had flipped, with 70% of all online payments conducted electronically.14 China-based payment platform AliPay led the e-payment charge with over 300 million users in 2014, an impressive jump from 150 million users in 2009.15 By acting as an escrow service between buyer and seller, AliPay is able to give buyers the opportunity to inspect and approve physical products before turning over payment to the sellers, thus building trust among Chinese consumers within the eCommerce sector.

SingPost is also introducing a new payment feature at their parcel locker station, called POPStation, which allows customers to pay for their online purchase upon collection of the item using their ATM, debit, credit or metro cards.

Mobile is Leading the Way for Electronic Payments

Early in 2014, PayPal, launched its mobile e-store service, Targeted at Asian consumers and small eCommerce merchants by integrating mobile-friendly shopping and check out services into local shopping sites, PayPal offered for free to partner merchants to encourage adoption of the new payment system. 16 This move towards mobile payments is also occurring on a smaller, more targeted scale. In the Philippines, where mobile subscription penetration exceeded the 100% mark in 2014 and smartphone penetration is expected to jump to 50% of total population in 2015,17 local mobile payment services like Smart Money and GCash are transforming consumers’ mobile devices into eWallets.

The same trend can be seen in other developing markets with high mobile penetration like Indonesia, where mobile penetration hit 122% in early 2014.18 Indonesian telco company Indosat, aiming to serve the 80% of Indonesians without bank accounts, released an ATM card in late 2014 that integrated with Dompetku, its current mobile eWallet service. This allows users to make transactions both offline and through their mobile devices.19

The Next Stage of ePayments

When it comes to payments in Asia Pacific, localization is key, especially since the region is a fragmented market with varying consumer concerns and infrastructural considerations. While CoD and bank transfers will continue to be a staple payment solution and credit cards become more popular, eCommerce businesses need to familiarize themselves with the solutions which are preferred locally. Credit cards may not be popular but eCommerce businesses are already making significant headway in introducing alternative payment solutions to the region.

How SingPost eCommerce Can Help

SingPost eCommerce is a full service eCommerce enabler that provides global brands with Asia Pacific’s first end-to-end managed eCommerce solution. As a regional service provider, we have insights into the different markets and consumer behaviors which allow us to provide educated recommendations for your eCommerce set up and implement these through cutting edge technology. For more details contact our team and read here.


About the Author

Timothy Lee, VP Strategy of SingPost eCommerce

Tim has over 17 years of eCommerce experience. He headed up the Global E-commerce division at Visa, growing revenues 350% to US$300 million. He has led digital strategy consulting at PwC, numerous Silicon Valley start-ups, a successful IPO, and enterprise-wide eCommerce at American Express. He holds 7 eCommerce related patents. You can find Timothy on LinkedIn Linked



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