Digital Payments and the Way Forward for Merchants

Southeast Asia is a historically underbanked region. Consider this: Bain reports that banking penetration remains at about 50% on average, compared to 95% in the US and the UK. More than 7 in 10 adults remain underbanked. Even in Singapore, that figure still stands at 4 in 10. Despite this, Asia and emerging markets have been at the forefront of payments transformation as the opportunity in the region is massive. With the GDP of the six-largest economies slated to hit $4.7 trillion within five years, the value of digital payments is estimated to surpass $1 trillion in the same period. 

The COVID-19 pandemic has further precipitated a dynamic shift toward digital payments. In the wake of enforced movement restrictions and reduced physical contact, cash has become the least preferred mode of exchange. China, South Korea, and the US have resorted to disinfecting banknotes to help curb the spread of the virus. Meanwhile, multiple countries—including the UK, Australia, and many European nations—have eased the limits on contactless payments in light of the pandemic. Constraints on mobility and social distancing norms have fuelled transaction volumes in online payments for supplies, demand for integrated bill payment solutions, and P2P payments.

Added to that is the emergence of new payment methods in the last decade, which has fuelled digital payment adoption and made it possible for consumers as well as merchants to choose what works better for them. The convenience of non-cash methods such as e-money, mobile wallets, bank-linked payment apps, increase in acceptance terminals, and availability of secure payment aggregators have slowly but surely been ruling out cash as the preferred method of payment in various consumer segments.

Payment Platforms: Growing in importance & expectations

The relentless interest in digital payments has meant that merchants have had little choice but to expand the scope of products and services they provide to their customers across online & offline channels and mainstream & alternate payment methods. Payment processors help merchants resolve the complexity of these functional, business, and operational requirements. The approach also helps merchants scale faster in newer businesses and geographies, significantly reducing costs in the process. 

However, as the demand for payment platforms increases, so has the competition in the space and the corresponding expectations that merchants and their customers have of these players. Merchants expect end-to-end coverage across the payments value chain that can address the following:

  • Versatility in choice of payment methods and the agility to support new methods
  • Availability to provide industry-verticalized solutions
  • Trust and pedigree in delivery and service
  • Highly secure and adaptive to emerging security paradigms 
  • High availability and scalability to support sudden spurt in seasonal or permanent volumes 
  • Native connections and integrations with all parts of the ecosystem making it easier and faster to go to market 
  • User-friendliness and cost-effectiveness

The payment service provider landscape comprises a diverse set of players in terms of maturity, global reach, and breadth & depth of services. Some are pure-play payment gateways, and some focus on issuance & processing while some provide segment-specific solutions to make payments and collections convenient. Some of the established providers can support all of these, thereby providing a seamless solution across the entire value chain.

What does the immediate future look like?

Looking at current trends in the market, one can anticipate the following developments in the payments landscape in the immediate future.

  • Increased preference for less-contact or contactless payments: P2P/P2M payments based on identifiers such as mobile number, QR codes, NFC, contactless biometric payments, payment links, and online transactions, in general, are bound to increase in volumes.
  • Growth in adoption of alternate payment methods: Even as online payments surge, volumes in regional and country-specific alternate payment methods such as wallets, ATM & POS-based payments and net-banking based payments are expected to increase.
  • Real-time payment methods based on open APIs: The emergence of open banking methods enable real-time payments, bypassing traditional intermediaries such as card networks. Clear benefits include the reduced cost of payments and faster turnaround of receivables in merchant accounts. E.g., India’s UPI processes over 1.3 billion bank-to-bank transactions every month through various UPI apps. As more banks adopt open APIs, similar growth is observed in Singapore, Thailand, and Hong Kong.
  • New models in cross-border digital transfers: Growth of partnerships between cross-border payment service providers and mobile wallet payment apps, such as Samsung Pay or Alipay, is an indication that cross-border payment is removing the need for physical presence to deposit and collect payments. We expect such partnerships to grow in number and big players to participate in such deals.
  • Increased adoption of business payments over messaging platforms: WeChat and WhatsApp for Business are the best examples. As messaging platforms become more open and businesses gain a presence on them, merchant payments over these platforms will gain more traction.
  • Growth in business payment cards: As more suppliers and other vendors turn towards digital payments, we are likely to see increased adoption of business payment cards as a cheaper alternative to wire transfers. Modern card issuance and processing platforms also offer configuration capabilities to innovate on card programs. 

The solutions that can meet merchants’ requirements on choice of payment methods, availability of services where necessary while delivering excellent performance and cost benefits do exist in the market. Global payments platform “2C2P” is one such.

2C2P: A case in point

2C2P is a best-in-class payment service provider that offers enterprise merchants the ability to accept payments from anywhere in the world. In addition, the company also offers card issuance, bill payments, and remittance solutions. Their payments platform allows merchants to accept both local and international payments through cards and e-wallets. 

In many Southeast Asian markets such as Thailand and Myanmar—where a large proportion of transactions are likely to remain in cash, 2C2P enables cash acceptance via its network of alternate payment methods such as ATMs, OTC, and kiosks. This means merchants can accept payments from both cash and non-cash payment methods. 

The company also offers a variety of other products, such as virtual cards and digital wallets, to help its corporate clients and government-related entities. Notably, this March, 2C2P launched the Mandalay Smart Pay (MSP) wallet, working together with the Mandalay City Development Council and Yadanabon Bank. With MSP, Mandalay citizens can now easily pay for property & land taxes, water charges, electricity charges, and more via their mobile phone.


Merchants have had the liberty of time to adapt to the market in the past. However, the current global situation and emerging business models have forced merchants to rapidly adopt digital payments and find new ways to generate revenue. To ride out the current challenges and thrive in future market conditions, they need to act now and actively seek out and engage with payment solution providers continuously improving their platforms to increase efficiency in the payments value chain. With the right payments partner, every merchant can go digital, accept payments on any device, retain existing customers, and scale up to find new market opportunities—their future is in their hands.