How the rise of mobile payments affects collection channels

Mobile payments market could hit US$3.39 trillion by 2020

THE proliferation of payment providers in different jurisdictions is creating challenges for treasurers who have to manage a growing number of collection channels.

While a few providers dominate in some regions – such as WeChat Pay and Alipay in China – in some markets, such as Taiwan and India, there are more than 20 actively used mobile wallets in operation.

Further, the use of mobile payments is set to see continuous robust growth. According to Allied Market Research, by 2022 the mobile payments market could hit US$3.39 trillion, representing a CAGR (compound annual growth rate) of 33.4% from 2016-2022.

Along with the rapid emergence of mobile wallets around the world, governments are also pushing for cashless transactions either through industry-led initiatives such as PayNow in Singapore or curbing measures such as sudden banknote demonetization in India.

In an attempt to streamline the collection problem for treasurers, popular India-based mobile wallet provider Paytm wallet is currently helping insurance firms HDFC Ergo, Religare Health Insurance and ICICI Prudential with their digital collections. As part of normalizing the use of wallets in the Indian market, the Reserve Bank of India set a deadline of this February for Indian mobile wallet companies to carry due diligence on their users and obtain an identity number from the government.

In China, last year’s Singles’ Day (an online shopping festival held on November 11) saw more than US$25 billion in transactions with 90% coming from phones and tablets, according to Standard Chartered data. Adhering to the popularity of mobile transactions in China, Standard Chartered, along with Tenpay and China UnionPay Merchant Services, established a mobile wallet collection service in early 2017 to help treasurers with their electronic collections.

According to Standard Chartered, over the last six months the service has helped facilitate 26,000 payment transactions in China worth US$2.5 million. “Small clients or individual customers are used to paying in cash, bringing risk of fraud and theft, as well as inconvenient accounts reconciliation,” shares Xi Jianping, treasury and tax director of Schindler China.

Despite the excitement around the efficiencies in mobile payments, sentiment towards the solution has still some distance to go. A survey conducted by research agency Kantar TNS found that people in Bulgaria (71%), Greece (68%) and Hungary (65%) preferred not to transact via the mobile phone. In contrast participants in China (64%) and Mongolia (63%) saw the highest favorability to mobile transactions.

Date

12 Jan 2018

Channel

Treasury

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