How borderless payments can smoothen the ecommerce experience in Asia

I took part in a recent interview with Kamran Hedjri, CEO of payment services firm PXP Financial (formerly Kalixa Group). The interview was about the seismic shift and developments in the digital payments industry and how ecommerce is driving change in Asia. This includes the universal move towards cross-border payments and a shift in consumer sentiment that demands “frictionless” payments.

Here are some highlights of our conversation.

Commerce has completely changed over the last three to five years, revamping the ways customers engage with retailers. How has this changed the mix of payment channels that we’re seeing? 

Gavin: Ecommerce has been the main catalyst for change. Consumers today are more comfortable buying products and services through e-channels. As the customer experience becomes simpler and personalized, it’s inevitable that people use ecommerce more and more in their daily lives.

Convenience is a key differentiator for online merchants to attract and retain customers. In my mind, this has completely reshaped the way payment channels are set up and delivered.

Kamran: The main change is that customers today expect the same experience across different channels – the Uber experience, which allows you to “book and go” in one seamless step.

There are still variations across regions. The new channels being created tend to be local, which means the payment methods – new cards, wallets, and apps – have to play a bigger role to provide that unified experience. The expectation is increasingly for payments to be instant, which means that there needs to be a more progressive shift from cash to digital and more alternative payment options that the customer is comfortable with.

What have been some of the more interesting developments in payments recently?

G: For me, cross-border payments have been creating a seismic shift in the industry. There’s now a greater demand for merchants to provide services away from their home market. Asian merchants want to access European customers and vice versa, with the ability to move money across borders rapidly and at the lowest possible cost.

Payment companies are creating high-quality, scalable infrastructure to tackle this, which in turn spurs high levels of investment and new market entrants.

K:  I see two major trends emerging. First, the explosion of “wallet solutions” that enable payments at the point of sale. There are numerous examples in Europe, and we saw more of these coming into the fold in Asia. One example is the launch of YouTrip in Singapore in August, a collaboration between EZ-Link, You Technologies Group, and Mastercard.

Secondly, I expect to see more alternative payment methods that work across multiple industry segments, such as digital wallets, vouchers, or prepaid options. We are also seeing a lot of interest in blockchain technology – it’s still in the nascent stages, but it’s certainly a new development we’re monitoring. Its application to payments could be significant.

What can a relatively fragmented market like Asia learn from the likes of Europe, which have adopted seamless cross-border payments?

G: Establishing borderless payments in Europe brought oxygen into the whole payment ecosystem. Standardization removed significant barriers for cross-border ecommerce and created a great deal of value. In Asia, many of these barriers still exist, so there’s still work to be done.

Ravi Menon, Monetary Authority of Singapore’s managing director, hit the nail on the head at the 2018 Singapore FinTech Festival in November when he noted that cross-border payments continue to be a pain point for banks, businesses, and individuals, given the multiple currencies involved.