The APEC E-Payment Readiness Index: Ecosystem Assessment and Status report assesses the level of readiness and future potential of the 21 APEC economies to engage in, adopt and reap the broad range of economic and societal benefits that e-payments hold. The report was undertaken with a view to testing the assumption that there is a strong and growing link between e-payment penetration and economic growth. And that, any such link was worth identifying and beginning to measure, along with a canvassing of the barriers to e-payment adoption across the various APEC economies.
Using sample data from five APEC economies, the study found that a 1% change in online retail sales is associated with at least a 0.1% growth in GDP per capita among these five APEC economies. This is a substantive finding and calls for a follow up and more substantive and empirically based survey of e-payments access and opportunities across APEC economies.
An APEC E-payment Index, comprising four pillars and 39 indicators, was constructed to gauge the readiness and capacity of each of the 21 APEC economies to engage in e-payment (including both e-payment and m-payment services), and to further develop their overall e-payment ecosystem. The APEC E-payment Index is based on four ‘pillars’ of this ecosystem: i) the regulatory and policy environment, ii) infrastructure, iii) demand and use, and iv)innovative products and services (or the supply-side of the e-payment ecosystem). Using these four pillars, the Index examines the readiness of APEC economies to adopt and utilise e-payments, as well as their future development potential
APEC economies’ readiness to adopt and utilise e-payments varies widely. Overall, the United States comes out as best positioned to benefit from the ongoing development of e-payments, with a high score of 65.5 (out of a possible 100 – see below for details), while at the other end of the table Papua New Guinea scores 19.1. The level of economic development of an economy is, of course, one key factor driving such a wide range. Indeed, when the economies’ e-payment readiness is overlaid against GDP per capita, there is a generally linear relationship. And, using this approach, APEC economies can be clustered into three distinct groups: (i) advance, (ii) in transition, and (iii) nascent to emerging.
Some key trends and insights:
- APEC economies’ level of advancement and experience in the development of an e-payment ecosystem varies widely. The growth of and innovation in e-payment can come from all income levels but the types of innovation will be different as the needs that these innovations are trying to meet are different.
- The readiness and capacity of an economy to engage in e-payment is strongly influenced by its stage of development. High-income economies are more likely to have a thriving ecosystem for e-payment.
- Yet, APEC is becoming mobile first and major growth will come from economies where smartphone adoption is growing and the proportion of services offered through smartphones are increasing. These economies are not necessarily high-income ones.
- None of the economies ranked in the top five of all the pillars in the e-payment ecosystem. Thus, in economies in every stage of development have an opportunity to improve on one or more aspects of the e-payment ecosystem.
- There is no single pathway to promoting and developing e-payment. E-payment needs to be developed holistically by considering the ways in which each of the pillars in the e-payment ecosystem affect or reinforce the other in the context of each individual economy.
The APEC E-Payment Readiness Index: Ecosystem Assessment and Status Report is a joint study by the Australian APEC Study Centre at RMIT University and TRPC, a specialist technology research consultancy, based out of Singapore, with offices in Hong Kong, Beijing and Sydney. PayPal generously supported development of the report.