Asia: Tapping into contactless payments

Asia: Tapping into contactless payments

Tap-and-go contactless payment technology is taking off in the Asia-Pacific region – even in emerging markets where, traditionally, cash is king. 

Making life easier for the consumer is usually a smart move or business – particularly when it involves enabling them to spend money. The take up of contactless payments – waving your credit or debit card over a reader – is accelerating rapidly in the Asia-Pacific region. MasterCard recently reported that the use of contactless payments had risen by 49 per cent year on year from 2013 to 2014 and that this trend will continue to gather pace. Australia is leading the way, with nearly two thirds of in-store MasterCard transactions being contactless, while in Singapore contactless users doubled year on year. 

Elsewhere in the region this trend from cash to cashless contactless payment is being repeated. A recent survey by financial services consultant RFi Group suggests Asian consumers are leading the way in penetration rates – with Singapore (45 per cent), Taiwan (41 per cent) and Hong Kong (32 per cent) enthusiastic adopters of contactless payment methods. These markets are characterised by a highly connected population, with growing smartphone penetration, an emerging middle class and a younger demographic.

Raj Dhamodharan, group head of emerging payments, Asia Pacific, at MasterCard, explains: “Markets that are more advanced when it comes to internet and smartphone penetration typically have better connectivity. Increased connectivity has the ability to create more efficient, easier ways to receive, hold, access and activate money. As a result, we are also able to bring into the financial mainstream those who have been previously excluded, especially in emerging markets.

“We are also seeing the immense potential of near-field communication or NFC. It is predicted that one in three mobile phones will be NFC enabled by 2017 and that the number of contactless transactions via mobile handsets will exceed 9.9bn globally by 2018, up from 3bn in 2014.” NFC enables contactless payment functionality to be embedded directly into mobile devices. 


The convenience and speed of transactions using contactless card technology – such as Visa payWave or MasterCard – are a major attraction for consumers globally. But getting people to experience that in the first place – changing credit card-using habits, or even raising awareness that customers already possess contactless-enabled bank cards they can use – can be a challenge. Local campaigns, such as the recently-launched ‘Mister Sim’ multi-platform campaign for Visa payWave in Singapore can be an effective way to address specific local market issues.

Although penetration rates are currently lower than in Singapore and Taiwan, the RFi survey suggests emerging markets such as China, Indonesia and Vietnam have greater potential for the adoption of cashless payment technologies.

“Emerging markets have an advantage because there’s no strong legacy of traditional payment methods, so consumers seem more enthusiastic at the introduction of digital or mobile payments,” says Gerald Ferguson, general manager of RFi Group.

Of course, consumers are only one side of the equation. Getting the infrastructure in place to support it and achieve a critical mass, enabling the contactless payment ecosystem to flourish, is crucial. Consumers can often perceive retailer take-up of the contactless to be lower than it actually is, according to RFi, so it’s important that retailers are advocates and promote support of contactless payments, particularly in countries where cash is still king. 

Smart solutions

Nonetheless, the explosion in connectivity is a key driver in the evolving payments environment, says Dhamodharan of MasterCard: “We are in the midst of a dramatic, global transformation in consumer behaviour. From PCs to smartphones, tablets, TVs and game systems, wearables – and even appliances like refrigerators – are now connected. Connected devices have moved us into a connected digital environment, where not only everything, but everyone, will be connected.

“The fundamental changes in how consumers interact and use these smart, connected devices – for research, or communication or consuming media – will also transform how they transact. To address this shift to digital, shopping and payment experiences need to evolve as connected devices provide more opportunity for engagement – and commerce – before, during and after a purchase. And we’re helping to transform any connected device a consumer may have into a commerce device to make and receive payments – all the while leveraging the most safe and secure payment technology for digital transactions, both in-app and in-store.”

Thomas Brown CIM Former Director, Strategy and Marketing
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