MasterCard adds Asia Pacific exec (MA)

In this position, Sridhar will work with digital payments providers to build partnerships, thereby cementing a place for the payment network in a market continually reshaped by ongoing digital payments disruption.

The new executive position will help MasterCard build a new role as Asia-Pacific evolves.

Cash's dominance is slipping. Asia-Pacific is undergoing a shift from cash-based payments to new digital alternatives. For example, up until a decade ago, China was overwhelmingly cash-based – but the country underwent a sea change and is now projected to generate $6.31 trillion in total digital-payment volume by 2020. In November, India unexpectedly did away with 86% of the currency in circulation, also precipitating a rush to new digital forms of payment.
Digital wallets are rising. In China, Alipay and Tenpay have built a duopoly in mobile payments, holding a combined 88% of the payment type’s market share as of Q2 2016. In India, the digital wallet Paytm not only added 20 million users but also grew average weekly transaction frequency per user six-fold, from three to 18, in the two-month period following demonetization alone.

MasterCard is scrambling. As digital wallets quickly become the preferred way to pay in the Asia-Pacific region, MasterCard must rapidly define its role. But wallets can cut payment cards and the payment network out of the equation by having customers directly link their bank accounts.

To stay relevant, the provider must define a new position in the new digital payments flow with partnerships. Or it must back wallets like Apple Pay which link back to cards, and thereby keep the payment network in the loop. Whatever strategy MasterCard ultimately pursues, it has a strong product line to leverage, including tokenization services, its mobile wallet initiative Masterpass, or device-based payments.

The U.S. payments ecosystem is in the midst of a shift toward mobile, and countless new and old stakeholders are attempting to accelerate this migration, which is moving at a glacial pace relative to other markets globally. But mobile payments can rise to the mainstream. For companies seeking to build out a robust mobile payments product, China's thriving mobile payments ecosystem offers some insight — and some lessons.

Total mobile payments volume in China will reach $6.3 trillion by 2020, according to our estimates based on iResearch data. This marks a healthy 33% five-year compound annual growth rate (CAGR). In comparison, the U.S. will generate $154 billion in mobile payments volume this year by our estimates, which amounts to just 6.5% of China's mobile payments volume.

Even accounting for population discrepancies, China will generate over $1,700 in mobile payments volume per capita in 2016, compared with $475 in the U.S., based on forecasts from BI Intelligence and eMarketer. China's advantage will eventually diminish, but it will still produce around twice as much volume per capita in 2020.

China has unique factors buoying the industry, like the dominance of mobile phones, a lack of legacy infrastructure, and the surging popularity of digital retail marketplaces. Some of the characteristics behind the country's success can be mimicked, or even replicated to some extent, in other markets like the U.S. However, one fundamental barrier in the U.S. is that it's being forced to layer mobile payments on top of an existing payments system, and the ecosystem is very fragmented.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments in China that takes a deep dive into China's mobile payments ecosystem and deciphers which growth drivers can be exported to the U.S. to help spark its relatively lackluster market.

China claims the world's largest mobile payments market and serves as the global benchmark for other markets to pursue.
It dwarfs the U.S.' mobile payments industry.
Mobile commerce, a lack of legacy infrastructure, and marketplaces have fueled China's enormous success.

In full, the report:

Forecasts and compares mobile payments volume, in-store mobile payments users, mobile payments volume per capita, and mobile commerce penetration in China and the U.S.
Overviews the key competitors in China's mobile payments market, and how new entrants may shuffle the hierarchy of dominant players.
Uncovers the key drivers propelling China's mobile payments market.
Identifies which drivers the U.S. can import from China, and which barriers may be standing in the way.

Interested in getting the full report? Here are two ways to access it:

MasterCard adds Asia Pacific exec (MA)

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