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Contactless Payments: Powered by Asia

As the Connected era sets in, and connected devices start gaining more trust, new fintech innovations are emerging that disrupt the way financial transactions are undertaken. Cashless payments are on the rise in Asia, owing to the large smartphone base, the friendly and tech savvy demographics, the push to cover unbanked population, and a good regulatory framework that favours home-grown companies and restricts foreign entrants.

Contactless payments are emerging as the new normal, and achieved through various technologies:


Near Field Communication (NFC) enables payments to be done by tapping or waving the card at a PoS terminal, eliminating need for a card to be inserted or swiped. NFC enables device communication within a distance of 4 cm. These transactions can be done using cards, tags or even stickers.


Host Card Emulation (HCE) is the on-device technology that permits a phone to perform card emulation on a Near Field Communication (NFC)-enabled device without relying on access to a secure element. By using an HCE-compliant app, a physical card can be converted into a virtual one enabling contactless payments at any NFC-enabled terminal.


Magnetic Secure Transmission (MST) technology works by emitting a magnetic signal from a mobile device that mimics the magnetic strip on a traditional payment card. MST sends a magnetic signal from the mobile device to the payment terminal's card reader. MST does not require any new hardware investments, enabling existing PoS terminals to be contactless compliant.

Contactless payment offers benefits to consumers, merchants and issuers.

For consumers, contactless payments offers speed, security and convenience. Contactless does away with the need to sign or enter a PIN, enabling consumers to simply tap and go, using their smartphones.

On the other hand, merchants benefit through the immense opportunities that are generated through swifter transaction times leading to reduced queuing, increased sales volumes. For consumers, this translates into an awesome in-store payment experience. This also leads to increased consumer spend. Brands benefit from new loyalty opportunities

Issuers benefit from significantly higher levels of customer satisfaction, and competitive brand differentiation leading to increased customer loyalty and retention for contactless. Contactless also enables new branding and co-branding opportunities for many new stakeholders.

The patent landscape is skewed towards traditional Fintech companies, with Visa, Mastercard and PayPal ruling the roost in mobile payments. It is interesting to note that non-traditional entrants, including Apple, Google and Samsung have entered the fray with their contactless offerings, and growing on the back of a string of startup acquisitions, and patent filings. The technology trends focus on contactless techniques and in ensuring enhanced security. Majority of the Fintech patents revolve around mobile payment systems. As such, banks and technology companies are collaborating together and acting as fierce rivals in securing new patents, and pushing new payment technologies.

Asia, and in particular, China and India, are home to 90% of the youth under 30 today. It is this age segment that is technology savvy, and increasingly opts for cashless transactions. It is therefore no surprise that Asia is leading the world in mobile payments with a majority of connected consumers opting for mobile payments, with China, and India leading the way. In the absence of legacy banking infrastructure, mobile-first economies have leapfrogged and embraced new technological innovations in payments, including contactless.


Government initiatives in India look at leveraging technology for greater and faster financial inclusion, and banking the unbanked. Through new technological innovations, India has bypassed the economic and geographic burdens of opening new bank branches or ATMs in the hinterland. Instead, cashless transactions are enabling and powering the rural population. India has leveraged the biometric ID under Aadhaar for achieving tremendous growth in cashless payments.


Cashless payments have risen > 200%, with a majority of Chinese consumers experimenting with new payment modes. Chinese consumers are concerned about privacy and security issues. As such, biometric and facial recognition technologies will rise in demand.

South Korea

South Korea is aiming to go cashless by 2020. It is therefore no surprise that <20% of all transactions in South Korea are cash-based, one of the lowest in the world.


Despite being one of the earliest nations to witness the debut of cashless payments, cash still is King in Japan. Despite the presence of Apple Pay and Android Pay, cash is still preferred over cashless.


Singapore has not been able to capitalize on its technology prowess, and its futuristic payment infrastructure to promote cashless. Compared to its neighbors, Singapore lacks behind in cashless payments.


Cashless is still a long way to go in Philippines. Only 1% of transactions every month out of 2.5Bn bank payments are cashless, and are for small amounts.


Indonesia is capitalizing on its smartphone user base, and introducing mobile payments. It helps that consumers in Indonesia are at ease with new smartphone and ecommerce apps.

As new technological innovations disrupt the payments landscape in the next decade, we will witness accelerated growth in the mobile payments. In turn, these changes will lead to accelerated adoption of new technologies, including Contactless and Blockchain, resulting in reduced transaction times, and increased customer convenience.

The convergence of customer expectations, convenience and non-traditional payment solutions will lead to newer innovations and value propositions to emerge.

In Conclusion

Before embarking on a market entry into this large, lucrative market, it is essential to have a local advisor. At Hammerkopf, our team is well-placed to support you with strategies to support your entry and scale-up in Asia.

Specifically, our capabilities include:

  • large ecosystem studies that capture the market characteristics;

  • analyzing, identifying and enabling new partner linkages in the new market;

  • developing the positioning and market entry strategy;

  • rolling out new market outreach initiatives, including key stakeholder meetings.


Want the Full Report? Download the report to understand what Asian AI startups are upto.

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