The Asia-Pacific region has a great potential for businesses working in the digital payments industry, driven by rapid urbanisation, increasing digital literacy, and widespread smartphone adoption. As of 2024, the Payment Service Provider market in this region is valued at approximately $17 billion, with an expected CAGR of 13.3% through 2030. Launching a PSP in this market offers immense opportunities but also presents significant challenges. This article is based on the guideline “How to Start a PSP” made by Transferty and explores the current market landscape, major obstacles, and strategic approaches to launching a PSP efficiently in the Asia-Pacific region.
Asia-Pacific PSP Market Overview
The Asia-Pacific PSP market is the largest and fastest-growing globally. Among the key growth drivers are:
High Smartphone Penetration
Countries like China and India exhibit smartphone penetration rates of 85% and 75%, respectively, facilitating widespread access to digital payment platforms.
Booming E-commerce Sector
The region’s e-commerce market is expanding rapidly, with consumers increasingly preferring online shopping, thereby boosting the demand for efficient payment solutions.
Preference for Digital Wallets
Digital wallets have become the most popular e-commerce payment method in the Asia-Pacific region, projected to account for three-quarters of e-commerce payments by 2025.
The regulatory landscape in the Asia-Pacific region is diverse, with each country having its own set of regulations governing payment services. Regulatory bodies are increasingly focusing on enhancing security measures, promoting financial inclusion, and encouraging innovation in the payments sector. For instance, India’s Unified Payments Interface has changed digital payments by providing a standardised platform for instant money transfers, fostering competition and innovation among PSPs.
With sustained urbanisation and increasing digital literacy, the Asia-Pacific region is expected to continue its lead in PSP growth. The proliferation of smartphones and the internet, coupled with supportive government policies, provide ample opportunities for PSP entrants focused on mobile and digital wallet solutions. However, new entrants must understand a complex landscape characterised by intense competition, diverse consumer preferences, and varying regulatory requirements across countries.
Main Challenges Facing Businesses While Launching a PSP
Capital and Initial Investment
Launching a PSP requires significant financial resources for infrastructure setup, licensing, and compliance with stringent security standards like PCI DSS. Startups without adequate capital may struggle to sustain operations and compete.
Complex Regulatory and Licensing Requirements
Navigating the regulatory landscape across diverse markets is challenging. PSPs must meet regional licensing requirements and maintain ongoing compliance, which demands financial and operational resources.
Establishing Brand Trust and Customer Acquisition
Gaining trust is critical in a market dominated by established players. A new PSP must overcome consumer scepticism by demonstrating security, reliability, and value.
Technical Integration and Customisation
Integration with merchant platforms and payment networks often involves non-standardised interfaces. Balancing cost-efficiency with the demand for customised solutions can delay onboarding.
Strategies to Launch a PSP Faster
Launching a PSP in the Asia-Pacific market can be daunting, given the region’s complexity and competitiveness. To accelerate entry PSPs must adopt a multi-faceted approach that addresses regulatory, technical, and market dynamics. Here are two strategies to ensure faster and more efficient launches:
Targeted Solution Product-Market Fit
To launch a PSP successfully, it is essential to understand and address specific market demands. Tailoring services to sectors like e-commerce, service industries, and small businesses can help PSPs establish a strong entry quickly. By solving niche pain points, PSPs not only attract a focused customer base but also position themselves as experts in specific domains, gaining trust and loyalty early.
E-commerce businesses in the Asia-Pacific region present a significant opportunity, with high transaction volumes and diverse consumer preferences. Offering seamless features like one-click checkout, multi-currency support, and mobile integration can cater to these needs effectively. Similarly, service industries such as healthcare, education, and hospitality benefit from tools that integrate customer management, automated invoicing, and subscription billing. Meanwhile, small and medium enterprises are rapidly embracing digital payments. PSPs offering easy onboarding, flexible pricing, and customised tools for SMEs can capture this underserved yet high-potential segment.
Focusing on targeted solutions minimises the time and cost associated with developing generic services, enabling PSPs to launch more efficiently. Additionally, this approach builds a loyal customer base by addressing sector-specific needs.
Leverage Strategic Partnerships
Strategic partnerships within the payments ecosystem can significantly accelerate the launch of a PSP by enhancing capabilities and building credibility. Collaborating with established providers allows PSPs to deliver comprehensive solutions without investing heavily in in-house development. These partnerships also help PSPs gain market trust by associating with reputable entities.
Key collaborations might include tokenisation providers for enhanced data security, fraud detection platforms to minimise chargebacks, and banking institutions to enable seamless integration with local banking systems. Analytics providers can offer merchants actionable insights into consumer behaviour, while partnerships with cross-border payment networks simplify international transactions, a critical need in the Asia-Pacific market known for its high demand for cross-border commerce.
Strategic alliances speed up the development of advanced features, reduce costs, and allow PSPs to focus on their core business. They also open up opportunities to tap into existing networks, ensuring faster market entry and creating a strong foundation for growth.
Advantages of White-Label Payment Gateways
For PSP startups, white-label solutions provide a cost-effective and scalable alternative to in-house infrastructure development. Here are some main benefits of such cooperation:
- Cost-Efficiency: Saves significant investment in technical development.
- Quick Market Entry: Pre-built and customisable solutions enable faster launches.
- Security and Compliance: Meets industry standards, reducing regulatory burdens.
- Scalability: Adapts to demand fluctuations without extensive reinvestment.
- Focus on Core Business: Allows startups to concentrate on marketing, customer service, and growth.
White-label gateways streamline operations, enabling PSPs to compete with established players by:
- Reducing time-to-market.
- Ensuring high reliability and security.
- Enhancing scalability to support growth.
Conclusion
Launching a PSP in the Asia-Pacific region is a promising venture in a rapidly expanding market. However, it requires strategic planning to overcome challenges. By employing targeted solutions, forging strategic partnerships, and leveraging white-label payment gateways, businesses can accelerate their market entry and streamline operations. As the region continues to lead global PSP growth, new entrants have various opportunities to establish themselves effectively. However, the success is depending on the decisions and partnerships businesses make while entering the market.
