Southeast Asia is home to ten countries and 650 million people, making it more populous than North America despite being five times smaller. With its diverse languages, cultures and religions, the ASEAN region is ripe for a surge in economic development. Attendees at a 2018 ASEAN economic meeting projected that the region’s growth rate would collectively make it the 4th largest economy by 2030. And as the economy booms, so will the desire to travel.
This is primarily fuelled by a growing middle class, with the Asian Development Bank predicting that by 2050, the Asian middle class will represent 55% of the global total, up from 25% in 2010.
It’s a trend that airlines and travel operators must be aware of if they want to take advantage of a rising region and increased disposable income. However, a survey by Bain & Co. of business leaders across various industries revealed a significant gap in readiness. While 77% of executives recognize that the expanding middle class is a crucial growth driver, only 15% reported being fully prepared to harness this potential. This disconnect underscores a critical opportunity for proactive strategies and preparation in the sector.
With 34% of the ASEAN region under age 35, this young demographic, believed to be second only to China and India, is driving the rapid adoption of new technologies. And this trend is pushing the travel and payment industries to quickly adapt.
Growth Outlook for ASEAN Travel
In 2019, the ASEAN region accounted for 11% of global passenger airline traffic. Predictions for the end of 2023 indicate that demand will have returned to 90% of pre-COVID levels, showcasing the region’s strong resilience in travel. A survey across thirty-two countries featuring key regional tourism destinations like Singapore, Vietnam, and Thailand found that 72% of travelers believe travel is always worthwhile regardless of global uncertainties.
Other findings illustrate the growth potential of Southeast Asia: Southeast Asia Travel Market Report 2021-2025, which examines the market’s short-term dynamics, covering key aspects such as:
- Gross bookings in the ASEAN region will reach 94% of record 2019 levels.
- Digital transformation is taking over, with online bookings expected to double between 2022 and 2025.
- By 2025, mobile gross bookings are expected to be double that of 2019.
In short, the growing middle class has a strong desire to travel; ASEAN nations are actively developing their tourism economies to meet this demand, aiming to sustain the growth trends seen in recent years.
The Role of Digital Payments in the ASEAN Travel Landscape
ASEAN’s dynamism and growth potential represent an opportunity to create a megamarket. Globally recognized as the next hub for the digital consumer market, ASEAN, with its young and dense population, is quick to embrace technology. As of 2023, internet penetration is anticipated to hit 61.3%, with 88% of internet users accessing it via smartphones.
This has resulted in digital payments rapidly surpassing traditional methods like credit cards and cash in the ASEAN region. By 2025, digital transactions are expected to account for 91% of all transactions. This has been accelerated in part by strategically accommodating legislative and regulatory environments; according to Deloitte, most governments in South and Southeast Asian countries have introduced supportive policies to boost development of the digital economy and digital infrastructure.
Alongside its leading mobile footprint, this has translated into the world’s fastest-growing region for mobile wallets. Vietnam, for instance, is projected to experience a 300% surge in mobile wallet usage, reaching an estimated 440 million users by 2025. Despite these impressive numbers, about 40% of the region still lacks regular internet access. This highlights a significant opportunity: businesses that successfully roll out next-gen financial technology can capitalize as internet penetration expands.
Despite growing demand, businesses must provide solutions to meet those needs, especially in the travel sector. And many are, including Thailand’s flag carrier Thai Airways, which recently announced support for Alipay, the dominant mobile wallet of China.
Creating, implementing, and innovating in-house solutions require significant investment, typical of technological advancements. This is why travel businesses, such as airlines and tour operators, look to partners that can provide the ready-to-use fintech solutions they need.
How UATP Supports Travel Industry Growth
As digital payments gain traction across ASEAN, airlines and travel operators must consider several challenges.
They need to offer a variety of diverse payment methods, provide solutions that simplify the payment process within their organizations and for their customers and passengers, and comply with a web of rules and regulations across ten countries. Given Southeast Asia’s preference for digital payments, it’s clear that airlines must adapt by accepting various eWallets and ePayment services to take advantage of the region’s growth opportunities.
Few universal payment apps exist across the region, however. Instead, the region’s leading economies see vast differences between the services in use. According to Rakuten Insight, the most popular payment apps are the following:
- Indonesia – 78% prefer GoPay.
- Philippines – 61% prefer PayPal.
- Malaysia – 92% use Touch ‘n’ Go.
- Thailand – 83% pay with TrueMoney Wallet.
- Singapore – Nearly half of the market comprises PayPal and GrabPay.
- Vietnam – 76% use MoMo.
The kicker is that many of these most popular apps are only available within their countries of origin, resulting in a massive headache for airlines and travel operators across the region. Building an in-house solution accommodating every payment option is an enormous undertaking.
This is where UATP can help. UATP is a global payments platform that works with some of the biggest brands, enabling travel operators to accept many of the region’s most popular payment options. With a solution like UATP, it becomes simple for brands to launch in new markets and drive growth while significantly reducing the costs of establishing and maintaining a truly global payments infrastructure.
Passengers benefit from this range of variety as they can choose their preferred payment method. And instead of developing multiple separate infrastructures for each market, travel brands can streamline their processes using a unified payment platform like UATP.
Consumers are increasingly considering options like BNPL, mobile wallets, and traditional card payments. In this evolving landscape, travel operators require a partner like UATP for secure, cost-effective transactions. UATP helps airlines and travel businesses navigate the hurdles of entering new markets or expanding their presence in the ASEAN region and offers instant connectivity to the global payments ecosystem. This access to future-proof financial technology is a crucial advantage in the rapidly growing ASEAN market.
As the ASEAN payment landscape rapidly evolves and ASEAN governments continue implementing supportive policies for digital payments and infrastructure, secure payment methods that offer the diversity and convenience consumers and businesses expect are pivotal to gaining a competitive edge in this market and elsewhere. With digital payments and travel changing rapidly, switching to next-generation financial technology and payment capability isn’t a choice but a necessity if airlines, travel brands and other businesses want to stay competitive in Southeast Asia.
Contact us here to learn how UATP can help your brand enter the ASEAN market or optimize your regional payment strategy.
Written by:
Carolina Lopez
Managing Director, AFP Sales & Partnerships
UATP
