HUI FENG, LUKE HOUGHTON, ERNEST FOO, DIAN TJONDRONEGORO AND KHONDKER MOHAMMAD ZOBAIR |
Mobile payment platforms (MPPs) have become the vanguard of financial technology (fintech), enabling instant payment and settlement with the convenience of mobile devices. It is widely seen that the emerging technology and industry will become one of the key drivers of the new digital economy, help foster financial inclusion for those unbanked and underbanked population, and—for the first time—make the prospect of a cashless society within reach.
Mobile payment technologies were not originated in China, but have flourished in China since the early 2010s in commercial applications. Platforms such as WeChat Pay and Alipay for example have grown in use and adoption. The explosive growth of mobile payments and the broader fintech sector in China reflects a perfect storm of conditions, including technological development, business innovation, and conducive regulation.
The same trend has also featured in the Asia-Pacific region on the back of dynamic economic growth, diversified business patterns and pervasive entrepreneurship. The huge success in the home market propelled Chinese payment providers to go global since 2015, especially in the Asia Pacific, with mixed results so far.
A joint team of researchers from GAI, Department of Business Strategy and Innovation, and the School of Information and Communication Technology has recently published a report on the development and risks of MPPs in Australia and the wider Asia-Pacific region. The report provides a more nuanced understanding of the mobile payments landscape in this region through four country studies: Australia, New Zealand, Singapore and Thailand. Each case examines the industry trajectory in the local markets, the involvement of the Chinese players, and their regulatory contexts. It finds that Southeast Asian markets, such as Singapore and Thailand, are more advanced in adopting the technology, whilst the Australia and New Zealand markets bear more influence from the banks despite the advent of the tech giants. At the same time, the Chinese MPPs have adopted different strategies in different national contexts. It involves business partnerships with local firms in Australia and New Zealand, but relies on mergers and acquisitions in e-commerce in Singapore—in Thailand, they cooperated with both public and private stakeholders in facilitating business expansion.
A multidisciplinary approach is employed to identify and assess the risks of the system and the challenges for regulatory authorities. These range from vulnerabilities in cybersecurity in the payment processes, lack of security standards and data/privacy protection, to loopholes in international tax evasion, money laundering as well as liquidity risks that may destabilise the wider financial system.
In addition, a range of political and legal risks are also identified in particular for the Chinese MPPs and their business partners. Based on the historical account and technical analysis, a number of recommendations are presented on how to improve the regulation of the emerging industry for the international community. This is a multilevel, holistic approach. On the national level, regulatory authorities should strengthen mechanisms on consumer protection, and ensure market competition and regulatory access to the exclusive data held by mobile payment operators. On the international level, the establishment of a global industry body that collaborates with stakeholders in the community will be the key to establishing an efficient, secure and responsible framework for a more sustainable industry and the wider digital economy.
Dr Hui Feng, Dr Luke Houghton, Associate Professor Ernest Foo, Professor Dian Tjondronegoro and Dr Khondker Mohammad Zobair
The report can be downloaded from: https://www.griffith.edu.au/asia-institute/mobile-payment-platforms.