By Miki Lai, Associate Strategy Director, Asia Pacific
From Cash to the Cloud
In 2022, we saw continued adoption of digital wallets like Alipay and Apple Pay in many parts of Asia, and expansion of Central Bank Digital Currencies (CBDCs) such as the e-CNY showcased at the Beijing Winter Olympics, and the pilot launch of the e-Rupee in India. These events suggest physical cash may soon be a currency of the past in many markets around the world, especially with younger consumers.
What to Expect
Two-thirds of adults worldwide now make or receive a digital payment, and predictions suggest that by 2024 half of the world population will be using digital wallets. While digital wallet adoption around the world varies, many regions are following in the footsteps of China, investing more in digital transformation in payment and currency. Expect more consumers who have clung to cash and taken a wait-and-see approach to digital payments to take their first steps towards a cash-free future this year.
How Brands Can Win
- Payment gamification with Gen Z and Millennials. In most parts of the world, Gen Z and Millennials are leading the adoption of digital payments and are more likely to explore new possibilities of digital wallets, especially when transactions are coming led with experiences. By capitalizing on the “scan” function of digital wallets, much like the “AR Red Envelope” Alipay launched in 2017, brands can engage consumers and even drive them to physical locations, simply by placing QR code vouchers. Imagine Pokémon Go but with money. Alipay, one of the world’s most popular online payment platforms, used digital wallets to encourage environmentally friendly behavioral changes with Ant Forest, permitting users to “collect” energy from green activities like biking to work to support climate change causes. Digital wallets present fresh opportunities to drive engagement, online and off.
- Tapping digital wallets for CRM. A digital wallet is now more than a payment tool. Sophisticated consumers use digital wallets to organize transactions whether it is purchasing a new membership, loyalty point redemption, redeeming vouchers, or sending virtual gift vouchers to friends. It is a channel to convert, upsell and reach new audiences at the point of transaction. Most QSR brands in China including Starbucks have “mini-apps” within payment platforms such as Alipay to engage consumers directly at the point of transactions, collecting useful data that can be utilized for other marketing initiatives.
- Engaging hard-to-reach communities. Digital wallets are also showing promise to help brands engage segments of the population that are often challenging to reach, including those with limited education, limited financial means, and other underprivileged communities. For example, digital payment technology is now playing a pivotal role in financial gender equity, providing women with more privacy, security and control over their money around the world.
Why it Matters
Digital wallet adoption is growing, and we expect saturation to increase exponentially this year. While already commonplace in many parts of the world for basic tasks like boarding passes, loyalty cards and quick payment, applications for digital wallets are diversifying and brands which move first can drive engagement, spark action and spur sales in unexpected new ways.