What are some of the key challenges for e-commerce and e-payments in Southeast Asia currently?
While this naturally varies across the region there are some standout challenges common across all countries.
Firstly, the multitude of payment methods can cause complications for any e-commerce business looking to trade across multiple countries. In markets like Indonesia and Thailand many shoppers are still using cash, and even those who do have cards can be wary about sharing details due to fears around security. Thanks to the high mobile penetration, mobile payment methods are growing in popularity, but each country still has an average of 3-5 additional payment methods which are popular along with the traditional Visa and MasterCard.
Secondly, regulations differ hugely from market to market. In Indonesia for example, as of our most recent knowledge the government requires a payments business to be 51% controlled (voting shares) by local Indonesian partners. Meanwhile, in Thailand it can typically take some time to get a PSP license, with high associated compliance costs. Payment previously in Singapore has always been considered one of the less-regulated markets, but the government there is now moving to introduce more compliance measures, a positive move to ensure payment providers are delivering a compliant service.
What are the biggest opportunities for e-commerce and e-payments in Southeast Asia looking ahead?
While regulation can cause challenges, it also presents opportunities. New regulations that keep up with evolving technology and the requirements of forward-looking merchants can be positive for the market as a whole, ensuring strong standards are kept and the best players can succeed. We welcome regulations that look to safeguard consumers and businesses, while also fostering strong innovation.
Cryptocurrencies also offer a huge opportunity for e-commerce in SEA. While markets like Singapore might be making it hard to fund crypto, many are finding ways around this. In Thailand it’s estimated that 10% of the population already own some form of cryptocurrency, second only to South Africa in global ownership rates. The opportunities cryptocurrency presents to those who are still unbanked across SEA is huge, removing barriers to e-commerce and opening up the market for many.
Buy now pay later (BNPL) is another area to watch in SEA. With low credit card penetration across the region, BNPL has a huge opportunity to provide access to underbanked (or even unbanked) consumers looking to buy online. Companies like Kredivo and Akulaku have both already had 10m+ installations of their apps on Google Play in Indonesia alone.
Some other great examples include Hoolah, founded and based in Singapore, which grew its transaction volume by 1,500% in 2020. Atome, a subsidiary of Advance.ai and an another local BNPL player, reported in November 2020 that its 1,000+ merchants had seen a 20-30% increase in conversions, and as much as a 30% increase in average order size during the pandemic.
If you could give one piece of advice to emerging e-commerce leaders considering expanding to SEA, what would it be?
Put simply, emerging e-commerce leaders must approach the region with a flexible and open mindset. Southeast Asia is a region of opportunity but it’s also a complicated landscape. From the differing regulations in each country, to the host of ever-changing payment methods, it’s a region that’s constantly evolving. Choosing the right partner is critical – online retailers need a team that knows the local regulations and how best to navigate often daunting looking challenges around compliance.