Decoding payments in Asia-Pacific for 2024

OVER the past decade, the payments landscape in Asia-Pacific (Apac) has witnessed significant transformation with the arrival of new technologies that have reshaped traditional, cash-centric systems.

Visa, a global leader in digital payments, has identified emerging trends within the payments ecosystem that will shape the Apac payments landscape in 2024, driven by rapidly growing consumer demand for faster, seamless and secure payments.

It is not just about how to pay, but when

With digital payments, it is no longer only about offering the right solutions; it is about delivering them at the right moment in the customer journey. This is where segments like embedded finance come in, integrating financial services into non-financial platforms to offer customers seamless payment experiences within their daily digital activities. For example, e-commerce platforms now provide insurance at checkout, while Buy-Now-Pay-Later (BNPL) services enable split payments without leaving the app.

The trend also extends to B2B payments. Visa found that embedded finance is projected to unlock more than US$242 billion (RM1.16 trillion) in market opportunities for financial providers in Apac by 2025, particularly benefitting small and medium businesses (SMB).

The consumerisation of B2B payments

It is estimated that Gen Zs and Millennials could make up more than 70% of the workforce in Malaysia by 2025. As they enter the workforce and take on decision-making roles, generational shifts, led by tech-savvy Gen Z and Millennial leaders who have grown up with easy, intuitive payments, will drive the “consumerisation” of B2B payments. In other words, B2B payments will become more user-friendly to suit these digital natives’ familiarity with seamless, technology-driven experiences.

Visa has identified two important factors for this shift, beginning with interoperability, meaning how much different systems can work together seamlessly. This requires multiple players including developers, businesses, and governments, to collaborate and deploy open application programming interfaces (API) to enable different payment options in one platform. For instance, organisations in Asia-Pacific can soon make payments seamlessly on SAP platforms with Visa corporate cards, without navigating a maze of payment options or leaving the ecosystem.

The second factor is the accelerating demand for “all-in-one”, multi-capability B2B payment solutions that will aggregate services such as payment, lending, and invoice management, helping businesses complete essential tasks through a single interface, thus improving productivity and operational efficiency.

Heightened, less conspicuous risks

As the digital payments landscape continues to evolve, the potential for cyber threats also grows. In the first half of 2023, Malaysia observed a significant surge in cyber threats, primarily involving data breaches across different sectors. Cybercriminals are using generative AI to create fraudulent emails and phishing texts, making it harder for consumers to identify the real from the fake. Other security concerns include synthetic identity fraud, account takeovers, and more.

To combat these potential advances, we must look beyond traditional methods of detection and prevention. New technologies are increasingly catching up, offering enhanced protection for consumers. Machine learning and artificial intelligence-powered solutions, such as Visa’s Advanced Authorisation (VAA), which helps identify good and bad transactions. In 2021, VAA prevented US$26 billion in fraud.

Helping SMB navigate change

The small business sector in Malaysia will continue to experience substantial changes in 2024. SMB in Malaysia are confident about their growth prospects this year. While digitalisation has empowered them, SMB still face challenges such as rising costs that require smarter, cost-efficient adoption of new technologies, leading to SMB taking a more selective approach to adopting payment solutions.

SMB will likely prioritise practical solutions that increase their reach to more customers, potentially turning to agile, flexible sources of capital, such as cards that specifically fit the needs of small businesses, as well as flexible access to micro sources of credit.

As the payments landscape continues to innovate and evolve with speed, convenience, and security taking centre stage, it is important to stay ahead of the curve. Visa looks forward to collaborating across the payments ecosystem to create innovative solutions, advancing the payment landscape across Apac.

This article is contributed by Visa, a global leader in digital payments.