Asia Pacific is set to surpass North America for the most number of cashless transactions in 2020 with the region expected to conduct almost 283 billion transactions in 2020 alone. The growth is set to be driven by rapidly maturing Asian markets. Key factors such as deepening smartphone penetration, increased popularity of e-commerce, innovation in mobile payments and favorable regulations are set to increase the growth.
Cashless payments also have a profound effect on customer experience where a clunky payment interface, incompatibility with different payment methods or even the mere availability of cashless payment options could be the difference in securing a customer’s unwavering loyalty or turning them off completely.
Payment solutions provider Adyen knows this all too well and has made strides to contribute to the overall customer experience by ensuring that their customers payment processes are seamless, secure, and speedy.
With customers which includes the likes of Asian titans such as Grab, Agoda, and Singapore Airlines, Adyen know all about the discerning Asian consumer and are working together with these companies to optimize their platforms and ensure painless transactions for end users.
Their recent H2 2019 Earning Report, indicates the robust health of Adyen’s operations in APAC, poising the firm to continue their upward trajectory in the region.
Some of the highlights from the report indicates:
- 51% Year over Year growth from 2018 in processed volume
- 42% Year over Year growth from 2018 in net revenue.
- Strong growth in APAC – offices in Mumbai and Tokyo.
- APAC revenue grew by 28%
Adyen processed €135 billion in the second half of 2019, up 52% year on year. This growth came largely on the back of increased volume from enterprise merchants on board in previous periods with the like of McDonald’s and Subway reporting tangible success.
In the second half of 2019, Adyen started investing more robustly in their global reach, especially in the APAC region. The investment included primarily in hiring and opening of new offices in Tokyo and Mumbai. Adyen investment in these markets come on the back of high merchant demand. The APAC region houses over half of the world’s population and is expected to contribute more to global GDP than the rest of the world combined in 2022. Moreover, the ubiquity of mobile technology in APAC is striking as entire generations are skipping the desktop stage of internet usage.
A development tangentially related to the APAC region is the unwavering advance of shopping holidays like Black Friday and Single’s Day. These days are critical to Adyen’s merchants success and serve as a solid test for their platform and its capacity to handle peak volumes. Exposure to peak traffic on these days has given Adyen the opportunity to validate the robustness of their platform as they continue to scale their technology.
CXP Asia caught up with Adyen’s APAC President, Mr. Warren Hayashi, to discuss how cashless payments have the potential to dominate the APAC region and Adyen’s strategy in enhancing customer experience while maintaining a robust system.
We asked Mr. Warren Hayashi on how cashless payments can enhance customer experience in which he said:
We are seeing that engagement is the main way in which cashless payments enhance the customer experience. Payment with cash is purely transactional – the customer parts with money and the business pockets it, with no guarantee that that customer will be back again in the future. The tried and trusted attempts at building customer loyalty, like membership cards or coupons can only go so far – there will come a point when the customer stops caring altogether.
If retailers wish to enhance their customer experience and build their customer loyalty, a starting point would be to make the entire process digital and go cashless. By consolidating the entire process – payment and loyalty – and making it more than just a mere transaction between customer and seller, there is a chance to build a deeper level of engagement and drive ‘stickiness
Take the example of one of our customers, fashion label Love, Bonito. Adyen works with them to provide a unified commerce solution that truly brings about a seamless and highly personalised payment experience. Shoppers are looking for unique, omni-channel experiences and Adyen provides them with just that – a fast and secure checkout online, and seamless payments in-store with point-of-sale (POS) terminals that accepting card payment, Apple Pay and Google Pay. A unified commerce environment that links the payments data from online and offline purchases gives retailers a true glimpse of what the consumer looks like – their purchase preferences and preferred modes of payment. These insights allow retailers to wholly understand their customers and better create for them the personalised experiences they desire – both in-store and offline.Mr. Warren Hayashi, Adyen’s APAC President.
How about the factors in Apac that are fueling the manic adoption of cashless payments?
Some of the factors driving the cashless payment craze in APAC include the high ownership rates of mobile phones and levels of access to the internet. To put it into context, according to a report by digital consultancy We Are Social, there are an estimated 4.43 billion mobile phone connections and 2.4 billion internet users in APAC. Among the top 10 countries in the world where internet users use mobile payments, 7 hail from our region. This propensity towards mobile use and familiarity with digital or mobile payments in turn has given rise to other regional trends such as digital banks and proliferation of digital wallets. These technologies make financial instruments like digital payments, micro-insurance credit facilities accessible to the underbanked and unbanked populations, which account for 7 out of every 10 people in Southeast Asia according to consulting firm Bain.Mr. Warren Hayashi, Adyen’s APAC President.
When asked about the trends in retail, e-commerce and payments for the year ahead, Mr, Warren had this to say:
- A seamless Retail Experience online and offline
Retailers need to pay attention to how their online platforms work seamlessly with their physical stores along the retail journey – they have to be where their customers are to give them the best shopping experience. Online retailers should look beyond their websites and look at launching pop-up stores or put roots down in a physical space to translate their online brand experience to their customers. Likewise, a physical store should not just be place to buy goods but where consumers can interact with and experience the brand. Payments can play a role in these experiences by allowing for mobile point-of-sales or contactless payment options.
- Increasingly popular shopping events
All online shoppers are aware of the mega sales – Black Friday, Cyber Monday, Singles’ Day, where billions of dollars are spent on a wide variety of products. Singles’ Day 2019 drew in $38 billion on its own. Website (and physical store) traffic surges on these events, and crashes (of the website and store windows) are not uncommon. To cope with the volume of payments, it is up to payments providers to deliver on performance, speed and reliability to ensure smooth experiences and customer satisfaction.
- The next big wallet
In the retailers’ and eCommerce platforms’ races to enable seamless digital payments and win customer loyalty, digital wallets have proven to be a useful tool. In the APAC region where mobile penetration is high, the use of mobile wallets is a recent phenomenon. Wallets also work well in markets with large unbanked or underbanked populations, such as Indonesia and Vietnam. Wallets help provide secure transactions in place of cash, and bridge online and offline payments. Retailers will look to payment platforms that offer multi-wallet functionalities.
- More ways to shop and pay
Many online retailers now offer try-before-you-buy schemes, where customers order a few items, keep the ones they want and return the rest, mirroring the changing room experience in physical stores. Buy-now-pay-later schemes also give shoppers today greater flexibility with payments, and are especially helpful when it comes to big-ticket items. With the rise of contextual commerce, customers can also pay via chatbots, programmatic ads or even make purchases through their smart speakers.Mr. Warren Hayashi, Adyen’s APAC President.
On how can Adyen integrate cashless payments into new trends like staff-less shops and on-demand shopping?
The key would be for online and offline payment experiences to mirror one another and as an end-to-end payments provider, Adyen is capable of doing just that. For customers to adapt seamlessly to these new trends, it will be important to ensure that their payments experience is simple to use and intuitive. One way that Adyen does this is by integrating various payment methods – QR codes, credit cards, digital wallets – into one terminal.Mr. Warren Hayashi, Adyen’s APAC President.
Could you provide us with some key indications from Adyen’s H2 2019 financial performance?
In total, Adyen processed €239.6 billion in global transactions for 2019. This represents an increase of 51% compared to the previous year and can be attributed mainly to the growth of existing merchants.
Our net revenue for 2019 net revenue was €496.7 million, an increase of 42% compared to 2018. Asia Pacific contributed approximately 9% to our worldwide revenue, at €25.8 million. This is a 28% increase in revenue compared to the previous year.
Adyen will continue to invest in Asia, as we see the region as a node of growth in the years to come. We’ve opened new offices in the twin metropolises of Tokyo and Mumbai to support customers in North and South Asia as we continue our trajectory.Mr. Warren Hayashi, Adyen’s APAC President.
With cashless payments set to boom over the upcoming years, Adyen has positioned itself well into the growing APAC region in providing a more seamless and robust platform for its customers.