Digital payments are poised to surpass cash transactions in the Asia Pacific region by 2028, according to a report by Euromonitor International.

In 2023, Asia Pacific led global digital payment transactions with a value of US$ 29,063 billion, constituting 52% of the worldwide total.

Credit and debit cards are expected to drive most new sales in the region between 2023 and 2028, with credit cards forecasted to have a slightly stronger compound annual growth rate (CAGR) than electronic direct transactions.

By 2028, personal electronic direct payments are projected to outstrip personal cash transactions.

Card Payments Surge Across APAC

Debit cards remain the dominant payment method in China, supported by a government initiative to promote bank account access in rural areas.

In India, credit card transactions saw the highest growth in the region, attributed to the adoption of the Unified Payments Interface (UPI), which offers faster, more convenient, and secure transactions compared to wallets.

Cash transactions are expected to continue declining, with credit cards likely to surpass debit cards in transaction value by 2028, despite debit cards being more widely circulated.

In East Asia, Japan experienced significant growth in personal card payment transactions, driven by the ‘Cashless Vision’ initiative. Debit card payments saw a CAGR increase of 19% from 2018 to 2023.

Paper transactions have declined rapidly in Japan and South Korea due to the digital shift to electronic and card payments. South Korea saw the highest percentage decline in paper transactions at -39% from 2018 to 2023, while mobile proximity payments grew by 29%.

Digital Wallets Gain Popularity

Digital wallets continue to gain traction in the region, particularly in emerging markets like Thailand, Indonesia, China, and India.

In China, nearly 70% of consumers use WeChat Pay daily, while over half of Indian consumers use PhonePe daily.

Fastest-Growing Markets

Indonesia emerges as the fastest-growing market for personal payment transactions, driven by smartphone adoption, increased usage of digital wallets, mobile banking, and the Quick Response Code Indonesia Standard (QRIS) for cashless payments.

In developed markets like Singapore and Hong Kong, there is still potential for growth, with mobile proximity payments exhibiting robust CAGR figures during the 2018-2023 period.

David Zhang, Insights Manager for Payments and Lending at Euromonitor International, highlighted the role of embedded finance partnerships between incumbent financial organizations and fintechs in driving digital transformation. Additionally, government initiatives such as payment standardizations and subsidies have contributed to greater financial inclusion, payment diversification, and the growth of cashless payments across the region.

Source: fintechnews.sg

Sydney-based fintech Data Zoo has secured $35 million (US$22.7 million) in external funding for the first time. The investment was led by Ashok Jacob’s investment firm, Ellerston Capital, through its JAADE fund, known for its backing of startups such as Mable, Camms, and Phocas. This funding round has propelled Data Zoo’s valuation to over $100 million.

Data Zoo specializes in providing know your customer (KYC) identity verification solutions for major financial institutions, payment providers, and fintech startups. Their software, developed by founder Tony Fitzgibbon and chief information officer Memoona Anwar, utilizes patented technology to enhance KYC compliance and prevent fraud. Notably, it minimizes costs and risks for businesses while prioritizing customer privacy by eliminating the need for identity data storage.

After serving as CEO for a decade, Fitzgibbon stepped down in February this year, with former London Stock Exchange executive Charlie Minutella assuming the CEO role from New York. Despite being bootstrapped since its inception in 2011, Data Zoo has expanded to over 80 employees globally and operates across 10 offices worldwide, including in Australia, New Zealand, Singapore, the US, and Europe.

The fresh capital injection will be directed towards driving adoption and innovation in Data Zoo’s ID verification software, which accesses identity data from over 170 countries. Among its notable clientele are a Big Four Australian bank, a global social media brand, and three of the top global payment providers.

Fitzgibbon highlighted the growing threat of fraud and identity theft, stressing Data Zoo’s role in providing efficient and secure identity verification solutions. He expressed pride in the company’s innovation, user experience optimization, and growth in a competitive market.

Ellerston JAADE investment director David Leslie commended Data Zoo’s impressive international expansion and its establishment as a trusted identity provider. He expressed confidence in supporting Data Zoo’s continued growth in the identity verification industry, acknowledging its remarkable achievements without prior external funding.

Source: startupdaily.net

Klarna, a leading Swedish financial technology firm, announced on Tuesday that nearly 90% of its extensive workforce, totaling 5,000 employees, now actively incorporates generative artificial intelligence tools into their daily tasks.

The company, renowned for its innovative installment payment solutions, disclosed that over 87% of its staff utilize generative AI tools, including OpenAI’s ChatGPT and Klarna’s proprietary AI assistant, in various capacities. Notably, non-technical departments such as communications (92.6%), marketing (87.9%), and legal (86.4%) exhibit the highest adoption rates, demonstrating the broad utilization of generative AI within Klarna.

Surpassing broader corporate trends, Klarna’s adoption of generative AI significantly outpaces the industry norm. A Deloitte survey revealed that only 61% of computer users employ generative AI programs in their daily workflows, sometimes without managerial oversight.

Klarna’s internally developed AI assistant, dubbed Kiki, has also seen widespread adoption, with 85% of employees actively engaging with the chatbot. Notably, Kiki handles an average of 2,000 queries per day, showcasing its integral role in streamlining internal processes.

Generative AI tools, such as OpenAI’s ChatGPT, play pivotal roles across various departments within Klarna. For instance, the communications team utilizes ChatGPT to assess the sentiment of press articles concerning the company. Similarly, Klarna’s legal department leverages ChatGPT Enterprise to expedite contract drafting processes, significantly reducing the time required to produce contracts.

Selma Bogren, senior managing legal counsel at Klarna, emphasized the efficiency gains enabled by AI tools, noting that contract drafting, which previously consumed an hour, can now be completed in just ten minutes with AI assistance.

Klarna has strategically positioned AI as a cornerstone of its operational efficiency drive, particularly amidst efforts to enhance profitability following significant layoffs in 2022. Despite a decrease in valuation, Klarna credits AI adoption for contributing to its first quarterly profit in four years. The firm’s AI chatbot alone reportedly saved $40 million by effectively handling the workload equivalent to 700 full-time customer service jobs.

However, Klarna’s success with AI has raised concerns among investors, as evidenced by a nearly 20% decline in shares of French outsourcing giant Teleperformance. Investors fear that AI advancements may disrupt traditional call center operations, impacting profitability in the future.

Source: cnbc.com