The internet has changed the way most of us live. Through internet related technological innovations such as the Internet of Things (IoT), big data and e-commerce, a lot of our day to day tasks have been made easier. Such innovations could also boost many industries, making it easier for those who engage in certain types of business to carry out their tasks.
The mushrooming of e-wallets in Asia – particularly Southeast Asia – could be useful for the tourism industry. E-wallets or digital wallets allow an individual to make cashless electronic transactions. E-wallets are usually linked to your bank account, credit cards and some can even store cryptocurrencies.
According to the World Tourism and Travel Council (WTTC), the tourism sector in the region directly contributed a whopping US$135.8 billion in 2017 to the region and this figure is projected to reach US$245.5 billion in 2028, which makes up 5.2 percent of the total gross domestic product (GDP) for the whole region.
With e-wallets, most of the payment hassles associated with travelling can be made easier. At the moment, one of the biggest hassles when it comes to travelling is foreign exchange. Looking for an ATM machine and finding a money changer can take a lot of time and effort. With the introduction of e-wallets, this time-consuming process could become obsolete.
In Southeast Asia at the moment, Chinese based e-wallets are making inroads here as they are looking to expand their market. It was reported that Tencent (the group that owns WeChat Pay) and Alibaba’s Alipay are looking to expand their respective markets to Southeast Asia. In addition to these companies, there are also a growing number of local based e-wallet companies. Malaysia, which is looking to reduce dependence on cash transactions by 37 percent within the next two years, launched its first community-built e-wallet, TaPay, last year.
The growth of the e-wallet industry in the region is already bearing fruit in the tourism sector – especially in Thailand. Thailand is currently the leading destination for tourists from China who use e-wallets extensively on their travels in Southeast Asia.
For the first time ever, 2018 marked the year Thailand welcomed more than 10 million Chinese visitors. China is Thailand's largest tourism market and Chinese arrivals make up one-third of the overall number of visitors to Thailand. They are the biggest contributors to the tourism sector with more than US$103 billion generated from more than 9.8 million tourists in 2017.
More Thai merchants are integrating WeChat Pay and Alipay’s systems to cater to these tourists. WeChat currently has 1.08 billion active users monthly and 900 million of them use WeChat Pay. If more merchants in the region start integrating WeChat Pay and Alipay, they could quickly start cashing in on the boom of Chinese tourists visiting the region.
One way how businesses and local governments can improve the tourist experience in Southeast Asia using e-wallets is by integrating them into local transport systems. At the moment, most public transportation systems in Southeast Asia have their own payment systems which include bus passes, train cards and regular tickets. If e-wallets were integrated into these systems, it would be easier for tourists on a day trip or short visit as they wouldn’t need to purchase weekly passes or such. Also, since many Western tourists who come to the region tend to visit several ASEAN countries at a time, the integration of such systems would create a seamless system for them.
However, a new problem arises with the mushrooming of different e-wallets. Tourists would have to install a bunch of different apps depending which e-wallet is the most popular in a particular country or city. Merchants can’t be expected to serve all the different types of e-wallets too. This could be bad news for smaller vendors and local e-wallets. Major brands such as Apple Pay, WeChat Pay and Alipay could monopolise the market while smaller e-wallet brands could struggle.
Business owners need to be aware of the new trends emerging as a result of the growing e-wallet phenomenon. They need to adapt and learn fast to take advantage of e-wallets and ride the wave of a booming tourism industry. However, business owners need to also be aware of the many potential dangers that any new technology brings to the table. Security, piracy, scams and even privacy concerns could potentially harm their businesses.
This article was first published by The ASEAN Post on 18 March 2018 and has been updated to reflect the latest data.