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Technology is at the center of Asia Pacific’s future purchasing power

T.V. Seshadri, Group Executive, Global Products & Solutions, Asia/Pacific, MasterCard | April 9, 2015
Global technology companies must innovate so that participants in the payment ecosystem are empowered and enabled, says T.V. Seshadri of MasterCard.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

The world's population is estimated to surpass 8 billion by 2030, leaving scientists and governments grappling with how to alleviate potential strains on natural resources and economic growth, respectively. 

Population growth also affects the payments ecosystem by altering the dynamics of purchasing power. A prime example of this is seen in a snapshot of Asia Pacific, where by 2030 two-thirds of the global middle class will reside, middle class consumption will have increased 5 times and close to 600 million Asians will be aged 65 years or older.

However, the real news isn't about consumption or aging -- it is about the region's exploding purchasing power. By 2030, Asia Pacific's middle class will spend more than the rest of the world combined.

Middle class consumers typically benefit from some economic security, affording them the purchasing power to buy goods from restaurants and stores, acquire services from businesses, and set aside money for investment.

Technology companies, such as MasterCard, must continue to innovate so that the payments ecosystem can meet the growing demands of this emergent segment of the population, who desire secure, safe, and simple ways to purchase products and manage their money. And technology can also help address issues linked to supporting growing economies and aging populations.

Countries that will have a larger middle class but older population in 2030 include China, Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Sri Lanka, Australia and New Zealand. Their governments will need to address the strain on government budgets caused by a less productive, aging population.

A solution for budget-conscious nations? Electronic payments.

The use of cash, which is still significant in many Asia Pacific countries, comes at a high cost. Innovation in electronic payments can deliver a more cost effective way of distributing payments and benefits, greater transaction transparency, and increased access to financial services -- particularly to the aging population.  

Electronic payments can enable economic growth and create a more financially inclusive economy. One example is the South Africa Social Security Agency (SASSA), which replaced cash with debit cards for the distribution of social welfare benefits, and as a result is saving millions of dollars, reducing theft and loss, and bringing its previously unbanked citizens into the economic mainstream.

India, Malaysia, Cambodia and Vietnam represent countries that will have a larger middle class but younger population in 2030. They will be able to continue the development path without high levels of constraint from an aging population.

These emerging markets have the opportunity to leverage on the younger and more technologically-savvy population by offering e-payments. Malaysia recently announced that it is going to roll out an e-payments system for sending and receiving fees on smartphones and tablets. And India's government is already experimenting with biometric technology to deliver government benefits to citizens of all ages. 

 

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