Pay rise:

trends shaping
the payment
evolution for
consumers
Contents

The evolution of payments ....................... 03

COVID-19 ................................................ 04

Drivers of change:.................................... 07

1. Internet of me...................................... 08

2. Economy of we .................................... 10

3. Power of now ....................................... 12

How EY teams can help ............................ 15

The evolution of payments
In many ways, the evolution of how we pay for goods and services
has been the rudder that propelled human history forward.

Every small increment, such as the shift from the barter The way we pay
system to the use of fiat money and printed checks,
was one of the large-scale exercises of mutual trust
that amplified economic activity and paved the way for Beyond Cashless economy
the creation of the modern financial system. This, in
turn, enabled investment opportunities, allowed for the
organization of labor, and facilitated the industrialized
2021 Biometric cards
production of all the needs and wants of a society.

Fast forward to today, the advent of the internet and

smartphones has supercharged the pace of evolution.
2011 Smartphone wallets
Online payments now form the bedrock of global economic
stability because of the convenience, speed and security
it offers. Technologies, such as near-field communication
(NFC)-enabled payments, mobile wallets, quick response 2010 Cryptocurrency
(QR) codes and others, have almost eliminated the need
for physical banknotes and other negotiable instruments.
With the increasing popularity of cryptocurrencies and
1997 Mobile payments
blockchain, banks, as we know them today, are poised
to radically change in the near future. For example, the
Monetary Authority of Singapore (MAS) built a blockchain-
based multicurrency payments platform in 2019. MAS 1994 Online payments
is also attempting to establish a payments network that
connects with other blockchain networks.

1950 Credit cards

1717 Printed checks

618 CE Paper money

650 BCE Minted coins

Sources:
“Origin of coins,” Britannica, accessed 21 September 2021;
“Top 10 Things You Didn’t Know About Money,” Time Magazine, accessed
21 September 2021; “A Brief History of Payments,” Polymath consulting,
accessed 21 September 2021. Prehistory Barter system

3
Pay rise: trends shaping the payment evolution for consumers

COVID-19
Consumers all around the world have been moving toward
digital payments for a while now, and COVID-19 accelerated the
shift toward more safer modes of payment. This trend is most
evident in Asia-Pacific (APAC).

With a growth rate of nearly 2014 82.9

Noncash transactions
(in US$b)
25%, APAC led the global 2015 105.7
noncash transactions space,
2016 126.5
with recorded volumes of

US$243.6b
2017 153.5

2018 195.4
in 2019.
2019 243.6

2020F 277.5

2021F 318.9

2022F 390.8
Source:
World Payments Report, accessed 21 September 2021.
2023F 493.2

South Korea
Most transactions
per capita in APAC

conducts more real-time

85
transactions using mobile
phones per citizen than any
other region in APAC. 38

Korea
Thailand

14
Source:
Singapore
FIS Global, accessed 21 September 2021. Number of transactions per year per citizen

4
The APAC contactless 2019 390.7
APAC contactless
payments market (in US$b)
payments market was valued 2020 496.4
at US$390.7b in 2019
2021 611.2
and is projected to reach

US$2,002.5b 2022

2023
743.3

904.3
by 2027.
2024 1,101.3

2025 1,343.0

2026 1,639.3
Source:
Allied Market Research.
2027 2,002.5

Wearables are expected to 2019 39.98

Global wearable payment
revenue (in US$m),
enable transactions worth 2019–25
2020 48.86

US$134m 2021 59.72

in 2025. 2022 73.03

2023 89.34

2024 109.4
Source:
Wearable Payments Market, 2020–27,
Allied Market Research.
2025 134.12

Central bank digital currencies

(CBDC), such as the e-yuan in
China, have surpassed a total of

US$5.34b
in transactions value.

Source:
Ledger Insights, accessed 21 September 2021.

5
Pay rise: trends shaping the payment evolution for consumers

In APAC, APAC POS payment methods (2020)

40.2% of Digital or mobile wallet 40.20%

consumers use digital Cash 19.20%
and mobile wallets at
Credit card 19.10%
point of sale (POS)
in terms of value, as Debit card 14.50%
of 2020. Pre-paid card 3.50%

POS financing 3.00%

Sources: Charge card 0.50%

FIS Global, accessed 21 September 2021.

In terms of bitcoin Number of top 50 exchanges by transaction volume

by region, year to date (YTD) 2019
transactions, 40% of the
top 50 exchanges are in
Latin

APAC. America
8%
6% Global

US 12% 40% APAC

Others 16%

Sources: 18% Europe

APAC cryptocurrency report,
accessed 21 September 2021.

6
Drivers of change
COVID-19 and the emergence of new
and innovative technology are just
half the story of the global payment
evolution. The industry is undergoing a
paradigm shift as a result of changing
customer demands. The sources
of these developments that we’ve
observed are due to three phenomena.

1 Internet of me
2 Economy of we
3 Power of now

7
Pay rise: trends shaping the payment evolution for consumers
1 Internet of me
Millennials, who make up around 24% of the population
in APAC,1 are the single-largest generational cohort
that has the most spending power by virtue of their age.
After millennials, it is Gen Z who will make up a quarter
of APAC’s population by 2025.2 Beyond these two is
Generation Alpha (born between 2010 and 2025), who
will start entering the job market in the next decade.
Taken together, these generations are unique in the fact
that they grew up with the internet and smartphones.
Naturally, they are the most common users of digital
payment technologies. Because of their relatively higher
comfort levels with internet-enabled services, they are
also more open to sharing personal information if it
means getting better services.
Financial well-being
The 2021 EY Global Wealth Research Report survey found
that, in APAC, younger generations are more willing to
share financial data for the sake of their financial well-
being. This means that when they share data, they expect
round-the-clock payment services and personalized
products. The survey found that 91%3 of millennials are
willing to pay more for a service that offers to protect
them from risks and empower them to make good
financial decisions through actionable insights.
1. “Millennials, Demographic change and the impact of a generation,” MSCI, accessed 21 September 2021.
2. “What makes Asia−Pacific’s Generation Z different?,” McKinsey, accessed 21 September 2021.
3. “Where will wealth take clients next?,” EY, accessed 21 September 2021.
8
Personalization
Users also look for a higher degree of personalization
from payment enablers. Big data, machine learning
(ML), artificial intelligence (AI), biometrics and
other technologies have initiated the era of hyper
personalization in e-commerce, content streaming
platforms, social media feeds and other internet-
enabled services. Consequently, users have come to
expect the same from payment intermediaries. They
look for platforms that give them customized rewards
and algorithm-driven loyalty programs on the basis of
their habits and patterns. The more a particular service
gets personalization right, the better the overall user
experience is for the consumer.
For example, buy now, pay later (BNPL) options are
a personalized, third-party service that is growing in
popularity across the globe. It allows shoppers to split
payments, and pay for goods and services over a short
period of time. Gen Z and millennial shoppers are driving
much of the uptake across APAC as an alternative to
credit cards, and usage will likely increase as the oldest
millennials enter their prime earning years and Gen Z
continues to join the workforce.
Digital identity Number of active “buy now, pay later” accounts in
Australia
As software “eats” more and more of our daily lives, and
the internet becomes ingrained for essential needs, digital
identity and access management need to take on top 2016 4,87,221
priority. Increasing customer awareness and the growing
volumes of personally identifiable information that we 2017 13,74,527
are more or less required to share for various financial
services are driving the need for concrete cybersecurity 2018 27,09,280
infrastructure.
2019 37,48,737
Because privacy is vital to achieving and maintaining
clients’ trust, it is incumbent upon the regulators,
payment providers and consumers to settle on some Source:
form of a digital identification standard that will enable ASIC, accessed 21 September 2021.

comprehensive security, faster authentication and

universal acceptance for the digital payment evolution
to reach its full potential. Payment providers must
see privacy and secure digital access management as
opportunities and unique selling points rather than a
compliance requirement.

This willingness to share data and expectations of

personalization, provided there is adequate security,
are creating an untapped market for payment service
providers. As their purchasing power grows with time,
this demographic has the potential to turn the markets,
business and operational models on its head with their
expectations. Therefore, it is prudent for payment
enablers to see ahead of the curve and create solutions
that customers will need.

9
Pay rise: trends shaping the payment evolution for consumers
2
Economy of we
Social media and smartphones have democratized entire
industries and business models. More and more services,
such as transportation and hospitality, that were once
institutions are now peer-to-peer. This “economy of we” is
also a result of changing consumption patterns and value
systems. Younger generations seek more flexibility in
how, where and who they work for, and how they choose
to spend their money. Many are also concerned about
sustainability. In China, 60%4 of Gen Z and millennials say
they are trying to change their eating habits to be more
environmentally friendly. In Japan, 54%5 of the same
demographic say they prefer clothes produced sustainably.
This is just a glimpse of the changing attitudes of younger
generations and it is only likely to accelerate to all forms of
consumption. These cohorts are just not brand-conscious,
they are environmentally conscious as well. These shifts
and trends have given rise to new value chains, such as
autonomous commerce (subscriptions), and opened a new
market for payment enablers.
Industry convergence
Ubiquitous, safe and user-friendly payment solutions are
not an option; they are an absolute necessity in the new
economy. If the past decade was about every company
trying to become a technology company, the next decade
increasingly looks like the era of invisible finance. Spurred
by the rapid advancement of new technology alongside
changes in consumer preferences and behavior, many
companies are engaging in intermediary payment services
to enhance their product and services. This trend has
4, 5. “What makes Asia−Pacific’s Generation Z different?,” McKinsey, accessed 21 September 2021.
10
Embedded finance market
is estimated to reach a
global market cap of
US$7.2t
by 2030.
Source:
Business Insider, Forbes, EY analysis.
erased the boundaries among previously disconnected
industry sectors, e.g., banking, transportation, ticketing and
commerce. By unbundling financial services to their already
established customer base, many organizations have been
able to diversify offerings and find new revenue sources.
Gig economy
The proliferation of the gig economy around the world
has also necessitated faster, cost-effective, safer and
cross-border real-time payments. The economic upheaval
caused by the pandemic has forced more and more
people to take up gig work, which are often essential jobs.
Because of the unpredictable nature of the work and fluid
compensation needs, gig workers are in need of payment
systems that work for them.
When it comes to remuneration, gig economy
marketplaces that expect workers to have access to
traditional financial channels will fail the goal of financial
inclusion. Very few banks cater to the needs of the gig
workers because most still see them as a nascent bracket
sitting just below the lucrative mass affluent segment.
Traditional financial institutions need to emulate the
business models of fintech upstarts, who found and
addressed the needs of gig workers. The latter provided
gig workers, many of whom lacked access to mainstream
institutions, with mobile- and digital-first, easy-to-use
payment solutions that do not attract fees or other
charges, and allowed them to continue participating in the
evolving sharing economy.
 In APAC, the size of Global transit fees and fair
gig-economy transactions collection market size are on the
is projected to be path to growth between 2020

US$455b and 2025, from US$8.9b to

by 2023. US$13.5b.
Source:
“The Asia Pacific Gig Economy 2020,” Source:
accessed on 21 September 2021. Global transit ticketing and fare collection report 2020; MEDICI.

Environmental, social and governance (ESG)
COVID-19 and climate change have rallied the public
consciousness around sustainability and ESG commitments
of organizations. Consumers are keen to align themselves
with brands that keep the health of the planet as their
top priority. The 2021 EY Global Wealth Research Report
found that consumers in APAC are increasingly interested
in environmental issues, especially climate change,
deforestation and pollution. This is another opportunity
for payment intermediaries to step in and help their users
identify brands, products and services that are committed
to sustainability.
Industry convergence, the gig economy and ESG priorities
are all bellwether indicators for payment enablers.
Because of these trends, the industry has a clear direction
to pivot and align themselves with the cultural and market
shift. They must become social entrepreneurs to gain
competitive advantage. This requires firms to have diverse
and inclusive workforce who can augment technological
prowess and identify the right path forward to align,
execute and adapt faster than the competition.

ESG issues important to have been

considered or integrated into client future Mainland
Australia Hong Kong India Japan Singapore
investment portfolios China

Climate change and carbon emissions (E) 47% 53% 48% 45% 43% 48%

Air and water pollution (E) 24% 47% 33% 36% 33% 40%

Better worker welfare and human rights (S) 29% 23% 31% 39% 22% 17%

Data protection and privacy (S) 12% 34% 24% 24% 23% 28%

Deforestation (E) 18% 23% 13% 20% 16% 24%

Supporting diversity and inclusion (S) 5% 27% 13% 20% 9% 25%

Stronger community relations (S) 9% 14% 16% 28% 16% 23%

Biodiversity (E) 11% 26% 8% 21% 12% 15%

Governance issues (G) 13% 9% 20% 13% 9% 15%

Note: Environmental issues (E); social issues (S); ESG issues vary across geographies.
governance issues (G)

Source:
“Where will wealth take clients next?,” EY, accessed 21 September 2021.

11
Pay rise: trends shaping the payment evolution for consumers

3 Power of now

Until recently, even digital banking did not allow for Importance of ability to send money to friends and
instantaneous payments because of limitations in family instantly from any device
authentication, settlement processing, security and more.
Only with the adoption and standardization of payment Total 49% 35% 16%
infrastructure, instantaneous commerce became a reality.
Now, consumers, retailers and businesses expect to pay or Philippines 69% 19% 12%
transfer any amount of money without delay and without
any significant fee. The “power of now” is the third driving Indonesia 63% 28% 9%
force that is transforming the payments industry.
Vietnam 58% 29% 13%
Real-time payments
Consumers in APAC have embraced the ease of payments Thailand 57% 30% 13%
through proprietary QR codes, and many Asian markets
are now creating standardized QR codes for domestic Malaysia 49% 34% 18%
markets. The speed and convenience it offers the payer
and payee is unparalleled. According to a report by Australia 46% 39% 15%
IDC,6 APAC banks are rapidly digitalizing their processes Taiwan
and rethinking their businesses amid the continuously 42% 35% 23%
jurisdiction
changing banking landscape. The report stated that 70%
of banks in APAC will adopt real-time payments by 2022. New Zealand 39% 39% 21%

A survey by The Asian Banker7 found that in every market

Singapore 39% 46% 15%
most of the respondents feel that instant payments are
important to them. Hong Kong
27% 51% 22%
jurisdiction

Extremely important
Somewhat important
Least important

Source:
“Advancing new experiences in digital banking through enhanced features,
a secure transaction environment and deep personalization,” Fico,
accessed 21 September 2021.

6. “How banking has changed for good,” Finastra, accessed 21 September 2021.
7. “The battle for cross-border payments is set to reshape financial services,” The Asian Banker, accessed 21 September 2021.

12
Many banks in Asia are also looking to launch their own Payment preference by market
central bank digital currencies (CBDCs), which have all of
the same benefits of real-time payments through mobile
New Zealand 76% 5% 12%
while addressing some of its drawbacks. Because of the
underlying blockchain technology, CBDC payments will be
Australia 74% 8% 8%
more secure than current contemporaries, and will enable
faster and cost-effective clearing and settlements. Japan 61% 17% 5% 14%

E-commerce Taiwan
51% 17% 6% 24%
The global cross-border payments and e-commerce jurisdiction
have witnessed robust growth, driven by factors, such Singapore 51% 14% 28% 6%
as the growing middle-class population, rising internet
penetration and widespread smartphone adoption. South Korea 45% 36% 16%

For example, in South Korea, imported goods are often

Malaysia 28% 22% 34% 13%
cheaper than locally available options. Therefore,
around 50%8 of online shoppers make cross-border
India 28% 51% 12% 6%
purchases. According to a survey by the Korean Chamber
of Commerce, 24.3%9 of the respondents indicated Thailand 17% 17% 46% 19%
that they have bought goods from foreign websites or
overseas direct buying agencies. Their primary motive Indonesia 10% 34% 44% 10%
was lower prices. The US accounts for 75%10 of cross-
border spending followed by Japan, Mainland China Cards Cash and in-store
and Germany. Foreign businesses selling in South Korea eWallets and prepaid Others
have an opportunity to capture more sales by providing Bank transfer
localized shopping experiences and offering local payment
methods. As a result, the opportunity for cross-border Sources:
payments remains high in the market. Rapyd;
“The global payments report,” Worldpay Global,
accessed 21 September 2021.

8, 9, 10. “Asia Pacific eCommerce and Payments Guide 2020,” Hubspot, accessed 21 September 2021.

13
Pay rise: trends shaping the payment evolution for consumers

Invisible open finance Remote work

The best user experience that a financial services
platform can offer is to be invisible yet safe and secure.
Its future lies in the seamless integration into day-to-day
customer activities and improving their overall quality
of life, and not just financial well-being. It should enable
users to make optimum financial decisions without having
to pay conscious attention to them and yet be mutually
beneficial. With shifting customer expectations toward
these features, payment providers must be ready with the
technology, talent and process they need to enable these
functionalities.
For white-collar jobs, the global experiment of working
from anywhere has been a resounding success.
Organizations are hiring talent from any place in the
world and allowing them to choose where they work.
This new trend has brought with it some challenges that
the payments industry needs to address. The payment
transfers must be on time, compliant with laws and
regulations at both ends, tax deducted at source, cost-
effective and so much more. Payments enablers have a
unique opportunity to step into this space and become
enablers of a new era of work.

The rise of low-cost real-time payment technologies,

cross-border e-commerce, remote work and invisible open
finance are more opportunities for payment enablers to
meet the demands of a decentralized yet globalized world.
End-to-end service providers who operate across borders
stand to benefit if they have the right people, process and
technology that enable financial freedom. They will be
challenged by upstarts to collaborate and develop faster,
more innovative, and transparent payment solutions.

14
How EY teams can help
As disruptive technologies, customer preferences,
regulations and new entrants transform the
payments world, this paradigm shift is both a threat
and an opportunity for existing payment service
providers. Firms need to act now to build a strategy
to survive the disruption in the industry and keep up
with consumer demands.

The EY organization offers a broad set of services to help

payment service providers, industry suppliers, new entrants
and investors to become disruption-proof and reap the
rewards of the future of payments. Significant changes are
expected to continue across the industry with the introduction
of ISO 20022 standards, new payment platforms and an
increasing fintech presence. To meet these challenges, the
global EY network and proven skills can help you manage the
disruption along the entire value chain within cards, payments,
digital commerce and digital convergence.

The EY team across APAC is well positioned to help clients

manage this disruption through:

• P
 ayments strategy and operating model

• Embedded payments, digital wallets and alternative payments

• Open banking and payments data monetization

• Payments infrastructure modernization

• Optimization of payments disputes, risk, fraud and security

• Card issuing and merchant acquiring

15

Contacts
For more information,
please contact:
May Lam
Partner, EY Australia
EY Asia-Pacific Payments
Leader
+61 2 8295 6310
may.lam@au.ey.com
Adam Caines
Director, Consulting
Payments Lead, EY Australia
+61 2 9276 9264
adam.caines@au.ey.com
Vinns Soo
Senior Manager, Consulting
Asia-Pacific Technology
Transformation, EY Australia
+61 2 8295 6639
vinns.soo@au.ey.com
EY | Building a better working world
EY exists to build a better working world, helping
to create long-term value for clients, people and
society and build trust in the capital markets.
Enabled by data and technology, diverse EY
teams in over 150 countries provide trust
through assurance and help clients grow,
transform and operate.
Working across assurance, consulting, law,
strategy, tax and transactions, EY teams ask
better questions to find new answers for the
complex issues facing our world today.
EY refers to the global organization, and may refer to one or more,
of the member firms of Ernst & Young Global Limited, each of which is
a separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. Information
about how EY collects and uses personal data and a description of the
rights individuals have under data protection legislation are available
via ey.com/privacy. EY member firms do not practice law where
prohibited by local laws. For more information about our organization,
please visit ey.com.
© 2021 EYGM Limited.
All Rights Reserved.
BMC Agency
GA 223843896
EYG no. 009204-21Gbl
ED None
This material has been prepared for general informational purposes only and is not
intended to be relied upon as accounting, tax, legal or other professional advice. Please
refer to your advisors for specific advice.
ey.com