2C2P-IDC-InfoBrief_AP241383IB.pdf

How Southeast Asia
Buys and Pays 2022
New
Opportunities,
Connectivity
and Risks
IDC InfoBrief
October 2022
IDC Doc. #AP241383IB
Sponsored by

IDC InfoBrief How Southeast Asia Buys and Pays: Driving New Business Value for Merchants IDC Doc. #AP241383IB Sponsored by 2C2P and MRC 2
Recovery and complexity: navigating through digital commerce in SEA
2021
2026
254.0
443.7 +75%
2021
2026
1079.5
4276.1 +296%
2021
2026
199.2
426.3 +114%
227 million
more users
USD 3,196
billion more
transactions
189.7 million
new users
After a turbulent 2 years, the Southeast Asia (SEA) region has fully
reopened for business in 2022 and is set on the path to recovery.
The drivers that have accelerated the growth of digital payments
from 2020 to 2022 continue to exert their influence into 2023. The
widespread adoption of all things digital in SEA has altered the way
business is conducted, as well as how consumers choose to transact
and purchase. Online activities settled through digital payments
have become ubiquitous across SEA, and there is now a growing
From 2021 to 2026, it is estimated that 189.7 million new
users will begin using ecommerce
Close to 300% new domestic payments transactions
fueled by markets such as Indonesia coming online in 2021
Mobile wallets users in SEA to grow a further 114% from
2021 to 2026
While the region’s recovery is well underway, businesses find themselves in a more complex environment in 2022. New fraud, geo-political, and economic threats have cast a shadow on
the economic revival. Businesses will need to stay nimble and flexible in adopting new payments to stay on top of market shifts, and pay close attention to new fraud risks, while continuing
to explore opportunities to strengthen the customer experience for continued business success and growth.
What this means
for merchants
Sources: IDC Digital Economy Model – Asia/Pacific 2022; central bank data
SEA ecommerce
users 2021-2026E
Million users
SEA domestic
payments values
2021-2026E
Transactions
USD Billions
SEA mobile
wallets users
2021-2026E
Million users
SEA internet
users who
have been the
victim of at
least one type
of fraudulent
activity in
2021
23%
Survey respondents
n=500 across six
markets in SEA
“E” denotes estimate.
demand to extend the use of these new payment methods to cross-
border activities both online and offline.
This surge in digital activity comes with new challenges. With
the massive growth of new users, and online and cashless
transactions, the region has become a target for sophisticated
fraudulent activities which threaten to damage consumer and
business confidence. Confounding this threat are inflationary and
recessionary pressures which add to the complexity in handling
digital payments.
This IDC InfoBrief explores these developments and the need
for businesses to adapt to rapidly changing customer demands
in payments. For this report, SEA covers Indonesia, Malaysia, the
Philippines, Singapore, Thailand, and Vietnam. Their economies
make up 90% of geographic SEA’s total GDP.

SEA’s digital economy continues to expand rapidly
The digital economy of SEA continues to grow and will reach US$314 billion by 2026 from US$143 billion in 2021. Sustained growth in ecommerce and
sharing economy services, and a resurgence of online travel, among other digital services, continue to fuel growth for the 700 million people who call SEA
home. From 2021 to 2026, the growth rate of the SEA digital economy will be faster than many other major regions including China, Europe and the US.
Digital economy* growth rate, SEA vs other regions
2021-2026E
SEA’s digital economy
will see impressive
growth rates from 2021
to 2026E, outpacing
many other regions
including China, Europe
and the US.
Sources: IDC Digital Economy Model – Asia/Pacific 2022; IMF data
*Digital economy defined as total GMV of ride hailing, sharing economy services, ecommerce, online travel, online video and media and gaming.
Spending on digital services per capita (total population)
will be at $455 in 2026, a rise of 109% from 2021.
2026
2021
$218
$455 +109%
SEA total digital economy spend per capita
Digital economy GMV is predicted to make up 14% of SEA
consumer payments by 2026, a jump of 133% from 2021.
SEA total digital economy GMV
(% of total consumer payments)
2021
6%
2026
14%
+133%
SEA digital economy GMV by payment method
($ Billion)
Europe China SEA
7.2%
10.2%
12.7%
17.1%
US
Cards Domestic payments (Real Time Payments and Local Payments) Mobile wallets BNPL Other Alternative Payment Methods (eg. Cash)
Digital economy spending will
rise by 121% by 2026, and
digital payments will grow to
92% of total digital economy
payments by 2026, up from
80% in 2020.
2026E
2021
314.3
25.6
17.0
88.3
28.3
31.5
38.7
42.7
1.2
89.5
93.9
142.5
+121%
Digital Payments: 92%
Digital Payments: 80%

SEA re-opens for business
Source: IDC consumer payments survey Asia/Pacific 2021
Digital payments online and offline
have exploded – cash usage continues
to decline
Ongoing push to interconnect SEA’s
fragmented payments infrastructure
There is a concerted effort by SEA governments to interconnect
their domestic real-time payments (RTP) rails for cross-border use.
Singapore, Thailand, and Indonesia have already started their
integrations which by the end of 2022 will be brought online.
Further connections will be laid out across SEA, linking all major
markets and creating a future-proof modern infrastructure that
allows for regional interoperability across a wide range of payment
modes for the present and the future.
Mobile wallets have
also been particularly
active here. AliPay
has launched a
cross-border solution
connecting major
popular wallet providers
in the region through
its international
infrastructure.
Intra-SEA cross-border commerce:
the next growth opportunity
Now is the time for businesses operating in SEA to think about how they can maximize their reach and potential in neighboring SEA markets, and how a comprehensive payments
strategy can help them achieve their goals.
Business
takeaway:
From 2020 to 2022,
physical barriers and social
distancing in SEA have
led to a surge in digital
payments, which has been
closely tied to the growth of
the digital economy in each
market.
This surge has led to a reduction in the use of cash in markets like
Malaysia, where cash will no longer be accepted in government
hospitals from the end of 2022, and in Singapore, where several
government offices no longer accept cash payments for some
services. Further policy measures to reduce cash are being rolled
out regularly across the region.
Support for digital payments has now become an important
consideration for SEA businesses to thrive, and even micro-
vendors in the region are supporting digital payments due to the
no or low charges practices being pushed by many governments.
Intra-SEA trade
is the most
significant
compared
to trade with
partners outside
the region. Yet,
for ecommerce,
only 9% of goods
sold in SEA are
sent to other SEA
markets.
A lack of card acceptance among merchants in the region is one
factor, but this can be resolved by new cross-border options such
as real-time payments and mobile wallets.
eCommerce platforms are now offering businesses the
opportunity to sell their goods with greater ease to neighboring
markets, and businesses are well advised to explore these.
In Asia/Pacific, SEA has been the first sub-region in Asia to reopen its borders for both business and leisure. As once-isolated neighbors resume travel
and trade with each other, every SEA market has seen a huge jump in the use of digital payments and fintech services.

Payment methods continue to evolve
Source: IDC consumer payments survey Asia/Pacific 2021, modeled data
Digital payments trends driven by the pandemic will accelerate further
Within a short span of 24 months, SEA has seen major shifts in
how consumers make payments, propelled by the surge in digital
commerce, physical distancing, and government incentives/
adoption initiatives. As the region emerges from the shadow of the
pandemic, these shifts will become more pronounced as newly-
ingrained digital lifestyles continue to influence payment behavior.
Major gainers across the region include domestic payments, mobile
wallets, and BNPL, all of which offer cardless options for online
payments, providing convenience and security, and which are
seeing increased adoption by businesses. Our data and insights
here show the growth of different payment methods from 2021 to
2026.
A G U I D E T O
PAYMENT
METHODS
Cards
Credit and debit cards
Domestic payments
Includes real-time payment
(RTP) schemes, local
payments, and online
banking transfers through
a variety of platforms
Mobile wallets
Stored value payment wallet
mobile applications
BNPL
Buy now pay later
short-term consumer loans
Other payment
methods
Cash on delivery, counter
payments, ATM payments
etc.
I N D O N E S I A
eCommerce payments breakdown by markets, 2021-2026E
(% gross transaction value or GTV)
US$39B US$89B
US$25B
The largest economy in
SEA continues to see
rapid growth in digital
services, making this the
most important market
for digital commerce in
the region.
BI-FAST, Indonesia’s
new real-time domestic
payments system
launched in late 2021,
will likely see significant
adoption in the coming
years.
Mobile wallets and BNPL
will also see substantial
growth while card usage
remains stagnant.
Major gainers:
mobile wallets, BNPL,
domestic payments
14%
30%
25%
30%
1%
9%
31%
28%
29%
3%
4%
32%
30%
28%
6%
% change in
market share
2021 to 2026E
-2%
+2%
+5%
+5%
-10%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
M A L A Y S I A
US$8B US$15B
US$4B
Malaysia’s mature
payment mix sees a
wide variety of digital
payments being used.
Online banking was the
most used payment
method in 2021, but
will see its adoption
challenged by newer
payment methods such
as mobile wallets and
BNPL as well as post-
pandemic restoration of
card usage.
Conventional methods
like cash on delivery
will continue to decline
and make up only 1% of
payments by 2026.
Major gainers: mobile
wallets, BNPL, cards
12%
42%
13%
32%
1%
7%
38%
19%
33%
3%
1%
36%
23%
34%
6%
% change in
market share
2021 to 2026E
+2%
-6%
+10%
+5%
-11%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
2021 2023E 2026E
2021 2023E 2026E

Payment methods continue to evolve (Cont.)
Source: IDC consumer payments survey Asia/Pacific 2021, modeled data
US$6B US$17B
US$4B
42%
22%
19%
17%
29%
24%
25%
19%
3%
23%
28%
20%
5%
24%
US$6B US$9B
US$3B
Singapore’s mature
payment landscape
is the only one in SEA
which is card dominant.
The online payment
picture has changed
little throughout the
pandemic: Singapore
remains a card-driven
market, although BNPL
has started to make
headway.
Digital payments will
continue to grow in
adoption, backed by
government drives and
policies to reduce cash
use.
Major gainers: BNPL,
cards
The Philippines
historically suffered from
low banking penetration,
which has made digital
payments difficult.
Cash on delivery was still
a major option in 2021
and will continue to be
so in 2026.
The Philippines’ payment
scene will remain
diversified, with mobile
wallets, BNPL, cards
and domestic payments
predicted to post gains.
wallets, BNPL, cards,
domestic payments
USD$13B US$33B
US$6B
A market full of promise,
Vietnam is predicted to
be the second biggest
market for ecommerce
in SEA by 2026.
Burgeoning online and
offline use cases for
digital payments have
seen mobile wallets,
credit cards, BNPL, and
domestic payments all
seeing jumps in usage
from their previous low
bases.
The current reliance
on cash on delivery will
decline as newer digital
payments grow.
wallets, BNPL, cards,
domestic payments
S I N G A P O R E V I E T N A M
P H I L I P P I N E S T H A I L A N D
US$12B US$26B
US$7B
Thailand’s digital
payment growth
has been fueled by
government-driven
projects with local banks
(e.g., PromptPay).
Card usage was low
in 2021 and while still
predicted to grow, other
digital payments such as
mobile wallets, BNPL will
outpace card growth.
Government initiatives
to encourage digital
payments have played a
major role in adoption.
Major gainers:
mobile wallets, BNPL,
domestic payments,
cards
2021 2023E 2026E 2021 2023E 2026E 2021 2023E 2026E 2021 2023E 2026E
eCommerce payments breakdown 2021-2026E
(% GTV)
% change in
market share
2021 to 2026E
+3%
+1%
+9%
+5%
-18%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
% change in
market share
2021 to 2026E
+2%
0%
-1%
+4%
-5%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
% change in
market share
2021 to 2026E
+2%
+2%
+4%
+4%
-12%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
% change in
market share
2021 to 2026E
+5%
+3%
+9%
+4%
-21%
Cards
Domestic
payments
Mobile
wallets
BNPL
Others
28%
30%
30%
4%
8%
29%
25%
21%
25%
18%
27%
26%
27%
2%
30%
21%
24%
24%
1%
20%
23%
29%
25%
3%
18%
23%
28%
26%
5%
8%
9%
12%
69%
2%
5%
9%
12%
70%
4%
3%
9%
11%
71%
6%

Payment methods that will shape the SEA payments landscape
Domestic payments (real-time and local payments)
INDONESIA MALAYSIA PHILIPPINES SINGAPORE THAILAND
1996.9X
increase
8.3X
increase
45.2X
increase
2.9X
increase
2.8X
increase
Domestic payments continue
to grow with Indonesia
introducing RTP
Domestic payments in SEA remain a
unique characteristic of the region, and
each market has its own payment systems.
These payments systems, which are largely
government-driven, are used extensively
in several markets including Thailand,
Malaysia, and Singapore as both online and
offline real-time payments (RTP).
Indonesia is the latest market to add
real-time payments (RTP) to its payment
infrastructure in 2021. With its population
and large digital economy, it is predicted
to be the largest SEA market for RTP
transaction values in 2026, surpassing
Thailand which held the top spot in 2021.
This prediction differs from our 2021
report where Thailand took the top spot.
Mobile banking apps have been the main
platform from which domestic RTPs have
exploded in popularity in SEA, and they are
expected to be the key medium for cross-
border RTPs in the future. Major banking
apps used in the region include:
• Indonesia – Brimo BRI, Livin’ by Mandiri,
and BCA mobile
• Malaysia – MAE by Maybank, CIMB
Clicks, and Go by Bank Islam
• Philippines – UnionBank Online, BPI
Mobile and BDO Digital Banking
• Singapore – DBS Digibank, UOB TMRW,
and OCBC Digital
• Thailand – K Plus by Kasikorn, SCB Easy
and Krungthai Next
• Vietnam – Vietcombank, Vietin Bank
iPay, and Techcombank Mobile.
Intra-SEA operability is the
next golden opportunity
From 2021 to 2026E, RTP transaction
values in SEA will grow 8 times from
$1,428.6 billion to $12,978.7 billion.
SEA RTP transaction values
US$ Billion
1,428.6
12,978.7
3,467.0
2,457.1
832.3
1,627.1
916.8
263.9
210.4
35.2
2.3
4,595.2
By 2026,
RTP transaction
values will expand
by +$11,550.1 billion,
growing 8.1X
from 2021.
2026E
2021
Note: As of October 2022,
Vietnam does not yet have
active RTP networks
Source: Central bank data 2022, Central bank data, IDC analysis
The next stage of growth for RTP will be
connecting the domestic systems to form
an intra-SEA network. Interoperability is
already a reality between Singapore and
Thailand, Thailand and Malaysia, Thailand
and Indonesia, and Thailand and Vietnam.
By 2022, the five largest economies in
SEA are set to ink a deal to have their RTP
systems fully linked, bringing new ways
for consumers to transact and pay.
This network allows smaller businesses
to quickly and easily accept payments
from other SEA countries at lower costs,
representing a significant potential
revenue generator if such payment options
were offered to their customers. Intra-SEA
RTPs give rise to the possibility of further
expanding intra-SEA trade and breaking
traditional trade barriers created by the
lack of payment tools.
Status of
intra-SEA
RTP network
connections 2022
Real-time payments
connection live in 2022
Real-time payments
connection in planning
for launch
Real-time payments
connection not yet
announced

Payment methods that will shape the SEA payments landscape
Mobile wallets BNPL
Mobile wallet acceptance is
key to succeeding in SEA
BNPL continues to grow in
importance
426.3 12.6
25.5 0.9
0.9
0.6
44.4 1.4
67.6 1.5
69.8
215.7 7.3
By 2026, SEA will
have 227 million
new users, a 1.1x
increase from 2021.
By 2026,
BNPL spend
will expand by
+$9.8 billion,
a 3.5X increase
from 2021.
2026E 2026E
2021 2021
Source: IDC Digital Economy Model –Asia/Pacific 2022
SEA mobile wallet users
Million users
BNPL spend on ecommerce
US$ Billion
+116.8M
new users
+ 9.9M
new users
+35M
new users
+1.5M
new users
+21.1M
new users
+42.9M
new users
I N D O N E S I A M A L A Y S I A P H I L I P P I N E S S I N G A P O R E T H A I L A N D V I E T N A M
3.3X
increase
3.5X
increase
8.0X
increase
2.0X
increase
2.5X
increase
6.5X
increase
I N D O N E S I A M A L A Y S I A P H I L I P P I N E S S I N G A P O R E T H A I L A N D V I E T N A M
By 2026, there will be an estimated
426 million users of mobile wallets
in SEA, representing 62% of the total
population, with 227 million new users
added from 2021 to 2026. Indonesia,
Malaysia, and Vietnam will see the
highest penetration by 2026 of 76%,
74% and 66% respectively.
Mobile wallets are key payment tools
both online and offline due to the
lack of card and other legacy payment
tools, and it is essential for businesses
to accept these payments in key
SEA markets such as Indonesia and
Malaysia.
While most wallets are accepted only
in one market, there are now efforts
to allow for intra-SEA and regional
operability. Platforms such as Alipay+
aim to provide a one-wallet solution
for travelers globally, and cross-border
fintech-driven foreign exchange wallets
such as BigPay, YouTrip, Wise and
Revolut are also used for international
payments.
199.2
23.3
24.7
15.6
1.8
3.3
34.8
98.9
2.8
0.4
0.2
0.2
0.2
0.1
1.7
A payment method which is fairly new
to SEA but which is growing rapidly,
BNPL shares many of the advantages
of mobile wallets in that it offers a
genuine alternative to cards for online
payments in markets where card
penetration has been historically low.
BNPL will increase more than three
times from 2021 to 2026E, from
$2.8 billion in 2021 to $12.6 billion in
2026E. In 2026, BNPL is predicted to
make up to 6% of online spending in
several key SEA markets.
Its rapid growth has been
accompanied by new regulatory
guidelines across SEA to ensure that
customers are aware of the possible
dangers of these financial tools. These
regulations ensure a healthier and
more sustainable environment for
transactions to grow in the long-term.

Payment methods that will shape the SEA payment landscape
Central Bank Digital Currencies (CBDCs) Cryptocurrencies
The future of currencies globally? Innovative and exciting new technologies which will
shape the formation of future digital economies
CBDCs are digital currencies issued and managed by central
banks. While offering a similar user experience to payments such
as RTPs, they differ in their usage of distributed ledger technology
(DLT) to overcome existing financial infrastructure restrictions.
CBDCs offer greater reliability than traditional currency since they
are issued and supported by central banks. This also allows for
better management of the flow and destinations of the currency,
and with the removal of intermediaries, improved accessibility to
funds, and lower costs.
CBDCs also have significant advantages over existing payments in
the area of security, with their consensus mechanism (an inherent
part of DLT implementations) for transactions offering far greater
security levels than can be offered with existing technology
infrastructure.
There is also the upside of real-time 24/7 cross-border payments
with much lower fees, greater accessibility and better rates.
Singapore and Malaysia are already working on Project Dunbar
with Australia and South Africa which aims to make CBDC-based
cross-border payments a reality in these markets.
Regulators in SEA, such the Monetary Authority of Singapore
(MAS), have been observed to show greater interest in wholesale
CBDCs used mostly for more efficient inter-bank and cross-border
payments. Retail CBDCs for consumer payments remain at an
exploratory stage with current payment rails and infrastructure
deeply entrenched. Thailand will be piloting its retail CBDC trials in
2023 and other markets in SEA are still exploring its potential.
In SEA, no market has outright banned the holding of
cryptocurrencies. However, they have been subject to
regulatory scrutiny which continues to evolve with the
increasing volume of crypto activities and presence in the
region.
In Singapore, a major bank offers crypto trading to accredited
investor customers. While the MAS has spoken openly of the
transformative potential of the digital asset ecosystem, retail
trading in cryptocurrencies is not encouraged, and MAS, along
with other regulators such as those in Thailand, are looking
closely to see if this area should be regulated further.
While regulators have been scrutinizing cryptocurrencies
focused on payments, other types of cryptocurrency such
as stablecoins pegged to assets such as the USD have also
generated concern and attention. The Bank of Thailand has
expressed interest in further exploring such use cases, while
MAS is looking at tightening regulations on stablecoin reserves.
Several high-profile cryptocurrency-related collapses in the
region have led to regulatory tightening and further restrictions
being imposed on domestic platforms, but do not extend
to assets traded on overseas platforms. For businesses in
SEA, crypto payments can be an option for differentiation in
crowded markets, but volatility will continue to be a barrier for
mass adoption until stablecoin-type payments grow in usage.
Current State of
CBDC Development
INDONESIA
Plans to release
conceptual designs
for the wholesale digital
Rupiah in 2022
MALAYSIA
Assessing both
wholesale and retail
CBDCs as of 2022
PHILIPPINES
Plans to pilot
wholesale CBDCs in
May 2022
SINGAPORE
Has concluded no
pressing need for retail
CBDC, other use cases
in wholesale CBDC still
being developed in
2022
THAILAND
Conducted wholesale
CBDC tests starting in
2018, will launch retail
CBDC pilot in 2022
VIETNAM
Undertaking studies
for CBDCs with partner
as of 2022
Legality –
Trading
and Holding
Legality –
Payment
Instruments
INDONESIA
Legal Not legal
MALAYSIA
Legal Legal
PHILIPPINES
Legal Legal
SINGAPORE
Legal Legal
THAILAND
Legal Not legal
VIETNAM
Pending Not legal
Source: Compiled from regulatory data and resources

The SEA region is diverse and consists of markets which have
developed in unique ways, with payments environments to
match. Singapore is the only card-dominant market in SEA while
other markets have varied preferences, many of which are
options designed to suit local needs.
The SEA payments landscape is diverse and still highly localized
Source: SEA central banks, regulators, payment network data, IDC data 2022
Players highlighted in bold indicate new payment methods in the market or fast risers.
¹ Credit cards used as data point
2
For domestic payments statistics, figures used are for RTP retail interfaces such as BI-FAST/Duitnow/PayNow/Promptpay type implementations
3
Average time it has taken to add one (1) million new users
4
Indonesia, Malaysia and Thailand have domestic card processing arrangements in place which handle domestic card payments locally for lower fees rather than going through international card networks
I N D O N E S I A
M A L A Y S I A
P H I L I P P I N E S
S I N G A P O R E
T H A I L A N D
V I E T N A M
Years
in
market
Users in
2021
(Mil.)
Months
to add 1M
users 3
Years
in
market
Users in
2021
(Mil.)
Months
to add 1M
users 3
Years
in
market
Users in
2021
(Mil.)
Months
to add 1M
users 3
Years
in
market
Users in
2021
(Mil.)
Months
to add 1M
users 3
Years
in
market
Users in
2021
(Mil.)
Months
to add 1M
users 3
Visa, Mastercard
20+ 12.2 19.7
Yes
5 54 1.1
OVO, ShopeePay, Dana, GoPay
6 91.4 0.8 3 11.3 3.2
Cash on delivery, Counter payments
11 62.8 2.1
Visa, Mastercard
20+ 10.8 22.2
Yes
Duitnow, FPX
3 9.2 3.9
TouchnGo, GrabPay, ShopeePay
4 15.9 3
Atome, PayLater, SPayLater
3 4 9
11 5.4 24.3
Visa, Mastercard
20+ 9.7 24.7
No
Pesonet, Instapay
5 11.4 5.3
Gcash, PayMaya
4 33.2 1.4
Billease, TendoPay
3 5.1 7
11 34.5 3.8
Visa, Mastercard
20+ 4.3 55.5
No
NETS, FAST, PayNow
8 4.8 20.1
GrabPay, DBS PayLah, Singtel Dash
5 1.7 35.7
Atome, GrabPayLater, Hoolah
4 1.5 31.3
Cash on delivery
11 1.2 113.6
Visa, Mastercard
20+ 7.6 31.7
Yes
PromptPay
5 64.6 0.9
TrueMoney, LinePay, AirPay
8 22.1 4.3
Atome, Traveloka, SPayLater
3 2.4 15
11 23.8 5.6
Visa, Mastercard
10+ 4.8 25.0
Coming
soon
NAPAS
5 15 4 5 23.4 2.6
WowMelo, PayLater by Lotte
3 5 7.1
11 26.1 5.1
MoMo, Zalopay, ViettelPay
Akulaku, Kredivo, Indodana PayLater
Domestic Low
Fee Processing
available? 4
Cards¹ Domestic payments2
In SEA, the rise of domestic payments, especially RTP, has
been a constant theme, partly due to governmental push to
reduce cash use. Even cards now have a domestic element,
with Indonesia, Malaysia, and Thailand mandating that domestic
card transactions be processed on local networks with lower
merchant fees. This reduces costs for merchants offering this
mode of payment.
Mobile wallets and BNPL have also seen rapid expansion in
user numbers. In all the SEA markets save Singapore, mobile
wallet users outnumbered card users by the end of 2021, with
Indonesia emerging as the regional leader. While BNPL usage
was still relatively low in 2021, its growth is undeniable and it is
attracting new users at a rapid pace.
BI-FAST (New in 2021),
GPN, ATM Bersama, Prima
Note: Brands featured are representative only and not meant to be comprehensive.

Source: IDC 2022
Growing payments complexity in SEA creates challenges for merchants
Rise of new payment
methods – domestic goes
international
Payment methods continue to evolve
rapidly: New use cases and applications for
existing payments, as well as new payment
methods, are entering the scene. The key
trend in 2022 has been that of domestic
real-time payments and mobile wallets
now being used cross-border, including for
traveling.
T H E O P P O R T U N I T Y
For businesses with pan-SEA operations, or
those considering expanding or entering
new SEA markets, providing support
for domestic payments from other SEA
markets provides a huge opportunity to tap
into a large segment of regional customers
by offering greater accessibility and lower
fees when compared to more traditional
payment methods. For businesses in SEA
eager to explore the opportunities from
their neighboring markets, being able
to offer SEA customers their preferred
payment options could generate significant
new revenue streams.
New currencies, new
assets, new considerations
In 2022, the range of new options for
payments has grown further: new mobile
wallets (ApplePay expanded across
SEA), new digital currencies, new asset
classes (NFTs), and the emergence of
new concepts such as the metaverse.
Merchants need to be on top of these
changes in order to remain relevant to
their customer bases.
Businesses will need to assess how
these new developments can affect their
business and if there is the potential for
them to capitalize on new opportunities.
Particularly for businesses which have
young client bases, the option to use new,
emerging currencies may be a key swing
factor in purchasing decisions, and they will
need to ensure they can provide for such
arrangements if there is market demand.
New regulations guiding
new payment usage
Regulation continues to be a driving force
in the uptake and usage of new payments,
and is constantly evolving. In Indonesia, for
example, all cashless payments must be
channeled through the national payment
gateway (NPG) which requires all payments
to be connected to this network. Malaysia
has recently introduced new guidelines
for BNPL which may affect payments
operations for businesses which offer
it. Singapore’s regulatory body is also
closely monitoring BNPL adoption and has
introduced a code of conduct for BNPL
providers.
Businesses which can skillfully navigate the
regulation roadmaps across SEA and avoid
falling into possible legal black areas will
be able to expand at a more rapid rate. A
partner familiar with the intricacies of the
region’s regulatory regimes will prove to be
an invaluable asset.
In 2022, there have been further evolutions in the payments
options available to SEA consumers. The need for businesses
to support new payment methods continues to create
complexity in payments management and operations. With
each market’s unique characteristics in how payments are
used, any business operating in the region will require a high
degree of localization and understanding in order to offer the
right payments propositions to their customers. Domestic
payments are now going cross-border in SEA, new currencies
and assets are coming into play, and new regulations to
guide the sustained growth of digital transactions are also
emerging. This complexity means that businesses operating
in SEA, more than ever, need assistance in navigating the
region’s payments landscape.

Rapidly emerging threats targeting digital payments
Percentage of internet users in SEA
who were victims of fraud 2021
Percentage of eCommerce revenue lost
to payment fraud in Asia/Pacific
Percentage of international
eCommerce orders that turned out to
be fraudulent in Asia/Pacific
Top fraudulent attacks on businesses
in Asia/Pacific by attack type
In Indonesia, Malaysia and Vietnam, incidences where internet users
have suffered from fraud attacks are higher than the SEA average
of 23%. All markets in the region have seen rapid growth in digital
activities. In markets such as Indonesia where there may be many
new users of digital services, the success rate for fraudulent attacks
can be much higher due to consumers’ unfamiliarity with transaction
and security protocols and processes.
Businesses in Asia/Pacific lost more revenue to payment fraud
in 2022, and also experienced more fraudulent orders from
international ecommerce as compared to the previous year.
Attackers are becoming more sophisticated in their orchestration,
and in selecting markets and businesses for their assault.
Asia/Pacific is particularly susceptible to phishing/pharming/
whaling attacks, and the incidences have become so severe that
the Singapore government has directed banks to take major
preventative measures to quickly limit the damage caused to victims
of phishing.
In developing markets where regulation may be more lax and there
may be a general lack of digital awareness, fraud attacks such as
phishing and identity theft can potentially be much more damaging.
Businesses will also need to be aware of ‘fraud migration’ where
fraudsters shift their activities from one region to another depending
on the regulatory and security environment. The Asia/Pacific region
is likely where global bad actors are now highly active in areas such
as phishing.
With the increased use of digital payments and digital economy services, the SEA region has become a focal point for fraudulent activities. The move to
digital lifestyles and the shift of daily transactions from the physical world to the digital realm means that there is now a greatly expanded spectrum of
vulnerabilities for fraudsters to specifically target.
Source: IDC 2021
Survey respondents n=500 across six markets in SEA Source: MRC Global Payments and Fraud Report 2022 Source: MRC Global Payments and Fraud Report 2022
SEA Average 23%
Unit: %
I N D O N E S I A
M A L A Y S I A
P H I L I P P I N E S
S I N G A P O R E T H A I L A N D V I E T N A M
19%
23% 23% 24% 24%
26%
Unit: %
Unit: %
4.3%
3.7%
2022
2022
+0.3%
from 2021
+0.6%
from 2021
1 2 3 4 5
Phishing/
Pharming/
Whaling
Identity
Theft
Card
Testing
Loyalty
Fraud
Coupon
Discount/
Refund
Abuse

How different markets are being targeted for fraud
As SEA markets are so diverse, and with their varying levels of risk, bad actors have fine-tuned their activities to exploit the weaknesses.
Evolving regulations
targeting fraud
Regulation across the region has
been enacted to try to curb the
increasing fraud problem, for newer
payments such as Buy-Now-Pay-
Later, tighter regulation on BNPL
being used will lead to less avenues
for fraudsters to be able to use
illegitimately controlled accounts.
Further work, however, needs to be
implemented for emerging currencies
and asset classes such as cryptos
and NFTs, which often fall beyond the
purview of financial regulators.
Some payments
inherently more
secure
Domestic payments including
real-time payments and bank
payment gateways, as well as BNPL,
often leverage modern verification
methods such as biometrics for
authentication. Such methods
make transactions more secure,
simplify payment flows, and reduce
incidences of cart abandonment and
friction. They offer an opportunity
to keep businesses growing while
protecting revenue.
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES VIETNAM is particularly
vulnerable as anti-fraud
measures have not kept
pace with the rate of digital
acceleration. With domestic
bank payments being
prevalent, most attacks
focus on stealing data
and IDs which are then
used to make fraudulent
transactions.
1 Domestic
Payments 1
Phishing/
Pharming/
Whaling
2 Mobile
Wallets 2 Identity
Theft
3 Cards 3 Card
Testing
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES THE PHILIPPINES’
underdeveloped fraud
measures have left it open
to phishing and identity
theft where fraudsters aim
to access OTPs to validate
online transactions. Lack
of telco regulations on SIM
cards have allowed these
activities to expand.
1 Domestic
Payments 1
Phishing/
Pharming/
Whaling
2 Mobile
Wallets 2 Identity
Theft
3 Cards 3 Card
Testing
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES INDONESIA is the market
with the most incidences
of fraud according to an
IDC survey, and online
fraud is the second largest
category of police reports.
Slow development in ID
verification has led to
fraudsters honing in on
domestic payments users
with phishing attacks and
identity theft.
1 Domestic
Payments 1
Phishing/
Pharming/
Whaling
2 Cards 2 Identity
Theft
3 Mobile
Wallets 3 Card
Testing
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES THAILAND’s use of
mobile wallets and
domestic payments
puts users at particular
risk for phishing and
identity theft attacks
where passwords and
login details are stolen
and used to make fake
purchases online.
1 Mobile
Wallets 1
Phishing/
Pharming/
Whaling
2 Domestic
Payments 2 Identity
Theft
3 Cards 3 Card
Testing
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES
MALAYSIA’s
predominant use of
domestic-bank- driven
payments online makes
it prone to identity
theft attacks where
users’ personal data is
stolen and fraudulent
transactions are
made. Card testing
and phishing are also
frequently encountered.
1 Domestic
Payments 1 Identity
Theft
2 Cards 2 Card
Testing
3 Mobile
Wallets 3
Phishing/
Pharming/
Whaling
WIDELY USED
PAYMENTS
FRAUD
VULNERABILITIES SINGAPORE is the
only market in SEA
where cards are
predominantly used for
online payments. This
puts it the most at risk
from card testing fraud
as well as refund abuse
through card buying
facilities.
1 Cards 1 Card
Testing
2 Mobile
Wallets 2
Coupon
Discount/
Refund Abuse
3 Domestic
Payments 3
Phishing/
Pharming/
Whaling
Source: IDC 2022

The rise in digital payments has seen
a corresponding rise in fraudulent
activities across SEA threatening the
healthy growth of the burgeoning
digital economy. This region is
particularly vulnerable to phishing,
pharming, whaling, identity theft, and
card testing.
Source: IDC 2022
Key considerations for businesses in the fight against fraud
1
2FA and passwords are
circumvented using
phishing and identity theft
techniques
Traditional verification
methods such as passwords
and two-factor authentication
(2FA) using text messaging or key
generation have been the mainstay
of payment identity verification for
years, but have become vulnerable
targets to fraudsters. They gain
access to passwords and one-time
passwords (OTPs) through means
such as phishing, identity theft, and
social engineering. OTP delivery is now
being migrated to in-app notifications
in markets such as Singapore and
Malaysia.
Businesses must understand this
evolving threat matrix and consider
implementing techniques such as
artificial intelligence/machine learning
(AI/ML) and biometric authentication to
provide extra layers of security.
2
Rules-based approaches
to fraud detection are no
longer as effective
Traditional rules-based
approaches to tackling fraud
are limited in effectiveness,
and often too restrictive in the
transactions they allow through. They
are also not as useful when handling
larger datasets which all modern
payments systems are now processing
on a daily basis, and may not be able
to take action immediately if manual
intervention is required to verify the
integrity of a transaction.
Pure rules-based approaches also
do not have the ability to pick up
suspicious behaviors from new
fraudulent techniques which have not
yet been documented. New fraud-
detection methods using AI/ML are
highly productive in analyzing and
automatically acting on a range of
potential fraudulent activities.
3
First party misuse:
a growing concern
Fraudulent activities
conducted by the authorized
user of the account or a
member of the same household (first-
party misuse, previously known as
friendly fraud), such as refund abuse,
are on the rise in SEA.
Such misuse has been exacerbated
by the pandemic, with the slowdown
in economic activities and loss of
income for many, growth in digital
payments, as well as improvements
to mobile banking apps. The disputes
that arise are often protracted and
require multiple parties’ involvement.
Solutions include biometrics and
adhering to the best possible
protocols during checkout with clear
evidence trails. In 2023, Visa will adjust
its chargeback program to make it
easier for merchants to dispute first-
party misuse cases with adequate
evidence, further highlighting the
importance of accurate records
to combat this threat. Other card
schemes are also expected to
implement similar measures.
4
The overseas threat
While the promise of tapping
into overseas markets is
enticing, data from the
Merchant Risk Council (MRC) suggests
the threat of fraud from international
orders is rising. This threat is
closely tied to the anonymity and
discrepancies in regulation across
different markets which embolden
fraudsters sitting in relative safety
across borders to conduct their
malicious activities.
International threats are often more
difficult to safeguard against due to
difficulties in taking action, as well as
the ease of hiding addresses and other
incriminating details. Hence, when
dealing with international transactions,
it is essential to ensure parity with
domestic transactions in process flow
and standards. It is also worthwhile to
seek advice from industry peers and
partners on overseas risks prior to
making decisions.

Five recommendations for selecting a payments partner in 2022
Superior intra-SEA support,
especially for cross-border
payments
Familiar with the intricacies of the
region, and able to update their
payment offerings as changes
occur
Ability to recognize and adapt
new threats and equipped to
counterattack new threat vectors
Offers technology for more
accurate authentication based
on the latest techniques, as well
as a clear roadmap for future
developments
Global insight to stay on top of the
latest threats and best practices
Both physical and digital borders are
open in SEA in 2022 and now is the
time for businesses to look at how
they can optimize their intra-SEA
strategies.
While many partners can offer
support for cards for international
payments, not all will be familiar
with the web of domestic payments
used in each market, as well as the
relevant connections which now link
the markets together. Finding one
which understands how the real-time
payments connections in SEA can
provide value for your business will
be key to unlocking and expanding
operations across borders.
The region’s payment mix and
behaviors still continue to evolve, and
new entrants and new regulations
mean that changes may occur rapidly.
Businesses not abreast with these
developments may be left wrong
footed, and either miss out on revenue
opportunities or incur losses by falling
foul of the law.
Partnering with a payments provider
with deep and intimate knowledge
of the SEA region helps businesses
optimize revenue possibilities
through features such as domestic
payment switching, payment selection,
and access to new markets, while
minimizing potential risks such as data
breaches and electronic Know-Your-
Customer (eKYC) requirements.
Fraud threats are rising and attack
vectors are becoming more numerous
and more sophisticated in SEA. New
types of attacks, fraud behavior
migration and new methods of
detection make conducting online
business in SEA more complex.
A payments partner familiar with the
latest threats and use techniques
like AI/ML, which can automate the
detection and resolution of suspicious
behaviors, will enable businesses to
counter the threats.
Authentication is a key tool in online
transaction security and bad actors
are now finding ways to breach
traditional security tools such as 2FA
and passwords.
A payments partner that has advanced
authentication techniques such as
biometrics, location, and behavioral
analysis offer far better protections
against these new attacks. An ideal
payments partner is one that can
provide a clear roadmap for its
future developments in technology
to counter emerging threats,
demonstrating its understanding of
the dynamic nature of threats.
No markets exist as islands and trends
across the rest of the world very
often affect other regions, whether
it be positive developments such as
regulation or negative ones such as
fraud threats.
A payments partner with clear
knowledge of global developments
will allow their customers to benefit
from the global views of latest
developments in regulation and
threats, and apply that knowledge to
their own technology roadmap.
1 3
2 4 5

Essential Guidance
Beyond payments: what businesses need to do to create new value for their business
Businesses need to understand the changes
that continue to take place in the payments
space in SEA, and work at leveraging those
changes to their advantage. This includes
optimizing their payment offerings to suit
the needs of customers, be cognizant of
how the digital commerce environment is
evolving, and the emerging fraud menace
that threaten revenue growth across SEA.
Despite these new developments, the region
continues to be one that is full of promise.
For businesses, the good news is that many
of the challenges can be navigated through a
comprehensive payment and fraud strategy.
1
Select the right technology and
innovations to defend against
fraud
Gain awareness of the different kinds
of fraud such as first party misuse,
understand what circumstances such
activity propagates in your industry and
which techniques are best suited to deal
with them.
Use all available tools to fight new threats;
understand the evolving nature of threats
in the region.
Pick solutions that use core technologies
such as AI and ML to detect and combat
fraudulent activities.
Implement biometrics and other forms of
authentication against the most common
types of new fraud.
2
Seize the opportunities
from intra-SEA cross border
payments in a secure manner
For first timers to cross-border selling,
explore how the new RTP schemes could
potentially boost your revenues through
opening up new markets.
For those already involved in cross-
border sales, look to see how the RTP
schemes in SEA could potentially reduce
your costs for international payments,
helping you to orchestrate and optimize
payment channel flows and revenues.
Ensure your cross-border transactions
are secure by adopting payment partners
who are aware and are fully equipped to
deal with international threats.
3
Leverage network to share best
practices across the industry
Knowledge is power, and getting
information from peers in the industry
about best practices regarding regulation
and fraud behaviors is invaluable.
New fraud behaviors can be quickly
assimilated and analyzed with counter
measures if detected by peers involved in
data-sharing agreements.
Such data-sharing agreements are
particularly useful for co-developing AI/
ML algorithms to jointly combat fraud.
With Fraud-as-a-Service syndicates now
colluding directly with fraudsters to
further their aims, the industry too must
find its own collaborative means to fight
back.

Explanation of terms used in this IDC InfoBrief
Appendix
Source: IDC 2022
Card testing: Fraudulent activity where bad actors determine the
validity of misappropriated card information through small purchases
Coupon discount/refund abuse: Abuse of promotions or refund
policies to defraud a business; a form of first-party misuse
Cryptocurrency: Digital currency which uses cryptography to secure
transaction records
Distributed ledger technologies: Decentralized peer-to-peer
database which eliminates the need for intermediaries to process
and authenticate transactions
eKYC: Electronic know-your-customer, remote processes used by
institutions to verify their customer identity and details
First-party misuse: Knowing misrepresentation of identity or intent
for the purpose of fraud, typically through chargebacks to reverse
transactions. Also known as friendly fraud and could also manifest as
coupon or refund abuse.
Loyalty fraud: Bad actors exploiting loyalty programs for fraudulent
transactions and other activities
Phishing: Using deceitful methods to gain access to personal and
valuable information such as passwords or payment details
Pharming: Fake online portals to which users are redirected by
using malicious codes. Portmanteau of ’phishing’ and ‘farming’
Rules-based fraud prevention: Preventing fraud by using ‘rules’
to define which payments are allowed to be authenticated and
processed
Sharing economy services: Online services such as Uber and
Airbnb where assets and services are shared between private
individuals
Social engineering: Using psychologically manipulative techniques
to coerce victims to perform actions unwittingly
Whaling: Phishing for high value targets such as high net-worth
individuals using more customized and targeted approaches

M E S S A G E F R O M T H E S P O N S O R
Common problems require
unified solutions
Success in the digital economy requires keeping up with rapid
developments in payments and fraud. New innovations, trends and
threats are constantly emerging to disrupt established business strategies.
These challenges may be daunting, but you don’t have to tackle them
alone. Wherever you are, consider tapping into a network that seeks to
solve the same problems you are facing.
SIMPLIFY PAYMENTS WITH 2C2P
Scaling your business across Asia and overwhelmed by the sheer number of payment
methods, rapidly shifting consumer trends and differing regulations?
A leading payments platform with 20 years of local expertise in the region, 2C2P simplifies
payments for your business.
With just one point of integration, tap into our established network of financial institutions
and payment providers to securely accept over 250 types of payment methods from your
customers, anywhere, anytime.
Grow your business with 2C2P today.
Contact us: https://2c2p.com/contact
COMBAT FRAUD WITH THE MERCHANT RISK COUNCIL
Is your business struggling to keep up with the latest fraud actors and suffering a hit to
your revenue?
The Merchant Risk Council (MRC) brings together the best-in-class merchant players,
solution providers, and law enforcement strategies to combat fraud and optimise payment
processes.
Faced with common fraud and payments challenges, we empower you to craft winning
strategies and keep you up-to-date with the best practices through conferences,
educational programs, online forums, career development and networking events.
Join the MRC today.
Visit https://merchantriskcouncil.org/

Copyright 2022 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Permissions: External Publication of IDC Information and Data
Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager.
A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Email: ap_permissions@idc.com
IDC Doc. #AP241383IB
IDC Asia/Pacific
83 Clemenceau Avenue
#17-01 UE Square, West Wing
Singapore 239920
T 65.6226.0330
About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events
for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business
executives, and the investment community make fact-based decisions on technology purchases and business strategy. More
than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in
over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business
objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company.
This publication was produced by IDC Custom Solutions. The opinion, analysis, and research results presented herein are
drawn from more detailed research and analysis independently conducted and published by IDC, unless specific vendor
sponsorship is noted. IDC Custom Solutions makes IDC content available in a wide range of formats for distribution by various
companies. A license to distribute IDC content does not imply endorsement of or opinion about the licensee.
idc.com
@idc

2C2P-IDC-InfoBrief_AP241383IB.pdf

More Related Content

What's hot (20)

Similar to 2C2P-IDC-InfoBrief_AP241383IB.pdf (20)

Recently uploaded (20)

2C2P-IDC-InfoBrief_AP241383IB.pdf