Paying attention in a digital world

Making a purchase a decade ago was straightforward — you go down to a shop, bring what you want to a cashier and make a payment using cash or your credit or debit card.

But as with everything else in our daily lives, making payments today have been heavily impacted by advancements in technology.

Through mobile app and online shopping, today you can make a purchase within a matter of seconds, without even fishing your wallet out. These advancements, spearheaded by financial companies like Visa, have brought convenience to millions of people all around the globe.

We sat down for a chat with Adeline Kim, Head of Products for Southeast Asia at Visa, after the DBS Asia X Fintech Festival Lab Crawl to dig deeper into e-commerce innovations and how the company is pushing the envelope to enable a frictionless and secure payment experience.

1. How has Visa been driving innovation in the e-commerce space?
 In many respects, Visa is the original fintech, having initiated the electronification of the payments system 60 years ago. We have always strived to be at the forefront of innovating payments technology.

Payments — whether it’s paying or being paid — are entering a period of change as they increasingly become untethered from a place or point-of-sale. This transition from card to digital is largely attributable to the rise in mobile connectivity, which has enabled Visa to grow its business beyond the boundaries of telephony and electricity to anywhere with an Internet.

Today, Visa has become the connective tissue to enable new payment and commerce experiences with the likes of Apple, Fitbit, Honda, Samsung, Uber, and beyond.

We will continue to bring together innovative leaders across industries and ecosystems to jointly deliver powerful new commerce experiences through Visa Developer and co-creation. This will enable new players (fintech) to build payment services at a fast pace as the world continues to move into the future commerce through millions of connected devices.

2. How do you see the e-commerce space developing in the future?
 Based on VisaNet data, eCommerce spend is growing at strong double-digit year-on-year in Singapore. In fact, the growth for eCommerce is three times faster than of face-to-face transactions. This could be due to a number of reasons. Firstly, technology is playing an integral role in the lives of consumers. Singaporeans on average, are spending 4.5 hours on their mobile devices, be it browsing their social media feeds or shopping online[1].

In addition, we are seeing this trend of what we call ‘an invisible payment experience’. This means, you can order a service, and make payment without presenting your card in a physical environment, since the introduction of on demand service players like Grab, Deliveroo, etc.

Our data shows that Singaporeans spend most online buying airline tickets, contributing close to 20 per cent of total eCommerce spend. We also see strong year-on-year growth at over 100 per cent for spend at online marketplaces and subscription businesses such as wine clubs etc. Interestingly, more than three in 10 transactions online is spent on cross-border purchases.

We believe eCommerce growth will continue to be robust, especially in the Southeast Asian region, with the growth of the middle class segment and increase in smartphone adoption.

The world is rapidly becoming more connected. Millions of devices will be connected to the internet (IoT), and the ability to pay or be paid will be at the heart of many everyday devices and services. Visa is preparing for a future that looks very different from today. Payment will be at the core of this new commerce experience, enabled by connected devices including cars, phones and home appliances.

3. What are the ways in which Visa is pushing the envelope for innovation in Singapore?
 In Singapore, one of the key areas we are working on is to expand the merchant acceptance footprint and ensure all segments of our country embrace digital payments. Recently, Visa and Land Transport Authority of Singapore (LTA) announced the pilot trial, where invited Singaporeans can use contactless payments for transit, including buses and trains in Singapore. By opening acceptance for transit, we’ve seen how growth in contactless payments usage start to accelerate.

One good example is London. Back in 2012, contactless payments only accounted for about 1 in 200 of Visa’s face-to-face payments. Since contactless payments was introduced for transit in UK, more than one in two Visa payments are now contactless[2].

Singapore is already one of the most advanced countries in the world, with one of the highest contactless penetration rates in the world at over 75 per cent. We also see more people using mobile contactless payments. In Asia Pacific, the number of transactions using the Visa Token Service increased by 79 per cent in 2017 over the previous year.

As people get more accustomed to using digital payments, more new technologies can emerge to spur innovation in the payments ecosystem. Our role at Visa is to provide the right standards for new technology, to ensure that security and interoperability is not compromised.

4. Innovation in payments have been prevalent throughout this year in Singapore such as the implementation of the national SGQR code and enhancements to PayNow — how do you see this developing in the coming year?
 Payments are an integral part of our daily lives and will inevitably be at the forefront of fintech innovation in Singapore. With the government in Singapore being an advocate for digitalisation of the nation and the payment ecosystem flourishing from the abundance of innovation, we believe the pace of growth in digital payments will accelerate.

Today, consumers are strong advocates of digital payments, but there is still work to be done in the corporate and SME space. Many of whom are still reliant on cash, so with the introduction of various forms of digital payments, we think more companies will see the benefits that digital payments bring about.

In particular, we see challenges faced by companies when they do cross-border payments, which is usually cumbersome and expensive. That is why Visa introduced

Visa B2B Connect, a platform designed to give financial institutions a secure, fast and predictable way to process corporate cross-border B2B payments.

Thanks to blockchain technology, the SME can initiate the transfer, receive immediate confirmation, and the supplier can get the funds the next day or in some cases, at real-time. The same works in reverse, where the SME can get paid just as fast and efficiently from their customer abroad. This speeds up the purchase and payment process and allows the customer to properly manage his cash flow. For SMEs, timing cash flow is very critical to their survival so this will help them grow their businesses.

5. How do you see the payment function developing in tandem with e-commerce and physical retail, i.e. the Online-to-Offline (O2O) trend? 
 Payments continue to be seamless and frictionless on both online and offline platforms. A consumer that is already accustomed to the convenience of face-to-face shopping would continue to expect that same level of payment efficiency and security when they transition to online commerce. Increasingly, payments will move from being frictionless to invisible. With the richness of data and advanced technology, consumers of the future expect companies to know what they want, serve up experiences that meet or even predict these needs.

Rewards is an area where there would be synergy in both eCommerce and retail due to the consolidation of user data. Based on our research, consumers will also be interested in using AI chatbots for their shopping experience.

6. How do you think we can encourage inclusive innovation in our society?

We can start by focusing on the overlooked people in society in our pursuit of innovation. Much attention is on the technological advancements of innovation but there are other parts of society, like the elderly, that also need our guidance to move forward collectively as a nation.

The drive for a Smart Nation has been rapid and robust and Visa believes that no one should be left behind in this city-wide transformation journey. Visa has always been in support of a digitally inclusive society in Singapore and we are currently working closely with People’s Association to educate the elderly in Singapore on using digital payments and technology.

By bringing more people into the digital financial system, we improve lives, build confidence and strengthen economies. We believe it’s important to partner with People’s Association to provide relevant education to senior citizens through knowledge sharing and hands-on experience conducted at community centres islandwide. We also intend to work closely with financial institutions to ensure more senior citizens are equipped with access to digital payments and the knowledge to use them.

Adeline Kim is Head of Products for Southeast Asia at Visa, a leading global payments technology company. She was one of the panellists for the panel discussion on “Disruptive technologies in the e-commerce space” at the DBS Asia X FinTech Festival Lab Crawl that took place on 15 and 16 November 2018.

[1] Visa Consumer Payment Attitudes Study 2017 — Singapore report

[2] ; VisaNet data