Why must Retailers in ASIA build their own Digital Wallet?
Photo by Christina Morillo
In my previous article, “COVID-19: The 4 Shifts in ASIA Retail”, I mentioned that consumers are adopting digital as their primary shopping channel. If they must visit the physical stores, they prefer to make it quick and contactless. This behaviour has given rise to the use of digital wallets, which allow consumers to transact online without having to key in their information repeatedly. While in-store the use of NFC or QR codes helps avoid long payment queues.
According to Intelligent Insider eMarketer, by 2022 the adoption of proximity mobile payments will reach almost 1.35 billion people worldwide. The highest adoption rate of proximity mobile payment is in ASIA with 4 out of top 5 countries globally. China is leading the pack with 87.3% of consumers paying for goods and services via mobile payment, followed by South Korea at 45.6%, US at 43.2%, India at 40.1% and Japan at 34.9%. By 2025, eMarketer predicts that proximity mobile payments will have over 1.49 billion users worldwide, translating to 48.2% of smartphone users.
Looking at these numbers, it makes perfect sense for Retailers in ASIA to start investing to build their own proximity mobile payment solutions. While there are many benefits of doing that, let’s look at the top 3 benefits that Retailers in ASIA could get if they properly strategize their payment services for their customers.
1. Improving customer experience:
Retailers in ASIA are sitting on a gold-mine which is their customers data. Many leading Retailers in ASIA offer sophisticated loyalty programs to their members. If they add a digital wallet to their service, they could collect more 1st party data and build a comprehensive view of their customers, understanding in depth their behaviours and interests. Through this data they will be able to provide more accurate next best offers, product recommendations, and personalized experiences across every channel their customers engage with them. This will ultimately increase sales revenue and reduce marketing expenses.
2. Offer frictionless experience:
As consumers flock to transact online, they spend less time in-store. Digital wallet is the solution to frictionless experiences. It helps speed up the checkout process both online and in-store. Customers don’t have to key in their personal information every time they make a purchase online and they don’t have to wait in the line to swipe or insert their credit card to make payment in store. This will in turn reduce abandoned checkout or customers walking out leaving the items behind due to long checkout queues.
3. Potential new revenue stream:
Retailers can extend other financial services to their customers. With the insights drawn from new data, retailers can offer buy now, pay later schemes, on demand lending services with attractive interest rates customized for their customers. Additionally, they can up-sell other financial products such as insurance, and other wealth management services to their customers as well. Large Retailers can extend partnership to smaller retailers and open up their digital payment platform. They can build a data consortium to share amongst affiliates, provide larger goods and services to their common customers, and ultimately increase potential revenue from their customer base.
In summary, a well thought through digital payment strategy can help retailers improve customer experience across all the channels. It can contribute to higher revenue, reduce marketing and processing costs, and increase security while reducing the risk of fraud. Retailers in ASIA must seize this golden opportunity to tap on the next 10x growth potential and remove frictions to improve overall customer experiences.