Emerging markets in Asia such as India and China could hold the greatest potential for digital wallet use, that’s according to a recent social media study conducted by financial services firm MasterCard on several developing markets.
Analyzing over 10,000 posts from popular social media channels such as Facebook and Twitter, MasterCard discovered that most people in emerging markets were excited about the introduction of digital wallets in their country despite having no history of using digital wallet schemes before.
India and Indonesia saw the most activity around new payment methods representing 70% of reported social media discussions.
"The findings from MasterCard’s latest social listening research demonstrates the incredible appetite for innovation in emerging markets. In terms of payments technology, people everywhere are looking for newer and more convenient ways to pay provided it is secure and easy to use," stated Matthew Driver, group executive, global products & solutions, Asia Pacific at MasterCard.
"In markets such as India, China and Nigeria, the speed of mobile penetration has had a massive impact on financial access and inclusion, with people moving from not having a bank account to straightaway being able to make payments via SMS whether it is for bills or digital content," Driver says.
Noticing this growth potential YES Bank, India's fifth largest private sector bank recently agreed to support FreeCharge, a digital wallet platform used for recharging credit for mobile phones in India. Chinese company Alibaba has been heavily promoting its Alipay digital wallet service and current boosts a user base of 300 million people.
Aimed at simplifying the use debit cards and credit cards, digital wallets have already been around in developed markets such as the United States for several years starting with the launch of Google’s digital wallet in 2011 that incorporated NFC (near field communication) technology for authorizing payments.
Yet despite the highlighted convenience of these schemes, digital wallets have yet to become a mainstream form of payment. This could be due to the lack of vendors accepting digital wallet payments.
According to PwC most consumers were willing to use digital wallets if 75% of retailers, hospital and other relevant entities allowed digital payments. Currently major American retailers such as Walmart and 7- Eleven don’t allow NFC readers at their counters.
Another issue could be security, MasterCard’s survey indicated that emerging markets were concerned about security issues around new payment technologies. Similar to when online banking first emerged several years ago, financial technology firms need to be proactive to ensure the data protection of their users.
MasterCard recently announced that they were looking into facial recognition software that would let people use a selfie to authorize a transaction. It’s a comparable situation with digital savvy banks.
“What banks are talking about now is biometrics as an assurance that you are the proper user,” explains Håkan Nordfjell, senior vice president, eBanking & eCommerce at payments security company Gemalto. “Banks are looking to test these security features with these players to see if they are successful or not. They are starting to think like software editors where you keep on experimenting.”
