Global fintech companies are rolling out new payment systems in Asia to bridge the booming online and in-person payments business as shoppers return to brick-and-mortar stores with the easing of the COVID-19 pandemic.
US payments specialist Stripe, one of the world’s most valuable startups, recently launched a new point-of-sales (POS) system in Singapore, its first foray in Southeast Asia. With Stripe’s hand-held terminals, businesses can process in-store credit card and e-money payments. Merchants can track sales data of both in-store and e-commerce payments on Stripe’s dashboard.
Stripe is installing its terminals as digital payments take off in Southeast Asia with the growth of e-commerce. The region’s e-commerce spending is expected to rise by 162%, reaching close to USD 180 billion by 2025, with digital payments accounting for over 90% of transactions by value, according to US market researcher IDC.
Founded in 2010, Stripe has grown into the world’s most valuable fintech unicorn, as unlisted companies valued at USD 1 billion or more are called. It has a customer base of millions of small businesses and tech companies, including big players like Amazon, Canada-based Shopify and Singapore’s super app Grab. As their e-commerce business grows, companies can handle payments by adding a few lines of code to their sites. One of Stripe’s revenue is the transaction fees from successful payments.
The payment processor’s focus has recently been on Southeast Asia’s booming e-commerce market. Stripe entered Singapore in 2016, followed by Malaysia three years later. “We have expansion plans around Southeast Asia over the next six to 12 months,” said Sarita Singh, Stripe’s regional head.
Its expansion is taking place against a backdrop of booming digital payments in the region. Currently, Singapore leads in the adoption of cashless payment at 97%, followed by Malaysia at 96%, and Indonesia and Vietnam at 95% each, according to Visa.
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Other Asian companies are fighting for a slice of this business as consumer and retail trends change. In April, China’s Ant Group, Alibaba’s financial services arm, acquired Singapore-based payments service 2C2P to access its large enterprise clients in the region. Singapore’s Grab and tech company Sea are scheduled to open digital banks in the city-state this year.
But as the regional economy gradually reopens, businesses are also “going through a new reality,” stressed Stripe’s Singh, adding that the company is seeing “more customers seeking both online and offline payments to be frictionless.”
In-store and online payments have traditionally been handled by different POS and payment systems, resulting in sales and customer data being split across different systems. As consumers return to stores, merchants that moved online during the pandemic are looking for ways to capture offline sales.
Retailers in Southeast Asia hope to build resilience after the pandemic, according to a survey of 250 business leaders across the five largest ASEAN economies by TMX, a financial services consultancy. More than 45% of respondents said their priorities in the next five years include adopting an omnichannel approach.
The pandemic has accelerated digitization with many merchants shifting to e-commerce and adopting services like Stripe to process digital payments. But as in-store purchases gradually return, disconnected payment processes can lead to higher costs and inefficiencies.
Omnichannel payment is expanding elsewhere in Asia—in Japan, for example, which has traditionally lagged behind other developed economies in embracing digital payments.
Japan’s Sumitomo Mitsui Card, Visa, and GMO Payment Gateway have developed a new payment system called Stera that uses an all-in-one terminal to handle a range of payments from credit cards, to e-payments, to QR codes.
Launched in July 2020, Japan’s largest credit card operator set a target of installing 300,000 terminals in five years. It is off to a good start, rolling out 100,000 after about a year and a half despite the pandemic, according to Yukihiko Onishi, Sumitomo Mitsui Card’s president. “We expect to reach our target ahead of the original schedule,” he told Nikkei Asia in a recent interview in Tokyo.
“Merchants [previously] had to handle several terminals, depending on each mode of payment, and make numerous modifications to their POS systems,” Onishi added. “Our aim was to simplify a complex process.”
The payment company’s platform collects transaction data across e-commerce and in-store payments. Through a separate analytical tool, merchants can analyze sales at each outlet, the number of customers, and sales trends.
With the new platform contributing to retailers’ adoption of digital payments, and with the economy reopening, Sumitomo Mitsui Card expects this fiscal year’s transaction value to “reach JPY 30 trillion (USD 222 billion),” Onishi added, a record.
“Rather than simply providing payment services,” said Onishi, “financial companies must provide new solutions like marketing and solutions to make operations more efficient.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.