Cash is king? Not in this part of the world

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When it comes to embracing contactless payments, Asian consumers lead the way and are faster adopters than their peers in other more developed markets, according to a survey by financial services consultant RFi Group.

Making payment with a wave of your credit card over a reader or a digital wallet such as PayPal – otherwise known as contactless payment – seems to be more common in Asia, with countries like Singapore (45 percent), Taiwan (41 percent) and Hong Kong (32 percent) topping the global average of 26 percent. The U.K. and the U.S. only has 23 and 9 percent of respondents, respectively, who have made a contactless purchase, according to the study which involved online interviews across 16 markets around the world.

China, Indonesia, Hong Kong, India, Malaysia, Vietnam and Singapore are also among the top markets where respondents can imagine a cashless society, the study released Tuesday noted.

Factors such as a highly-connected population with a rapidly-increasing smartphone penetration, an emerging middle class and a relatively younger demographic have facilitated the adoption of smart payment solutions in the region, said Gerald Ferguson, general manager of RFi Group.

Emerging markets like Indonesia, China and Vietnam have the highest potential of seeing cash go out of fashion.

"Emerging markets have an advantage because there's no strong legacy of a traditional payment method so consumers seem more enthusiastic at the introduction of digital or mobile payments," Ferguson said.

"In places like Indonesia and China, it's a pure numbers game. They have a large population with a digitally-engaged younger generation that's more willing to accept different payment methods," he added.

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Barriers remain

While there is progress, Asia is still far from becoming a true blue cashless society.

Money is still preferred when it comes to low-value purchases such as a cup of coffee, with regional countries like Thailand (75 percent), Malaysia (71 percent), Indonesia (69 percent) and Singapore (65 percent) having the highest number of respondents who prefer cash usage in this instance. The global average is 63 percent.

The RFi report also noted hat Asian retailers prefer traditional payment methods further inhibits the transition to contactless transactions.

Singapore was singled out as one of the Asian countries where merchants are seen as less receptive to high-tech payment solutions; only 15 percent of respondents cited good merchant acceptance. This comes as a surprise as the affluent Southeast Asian country has the highest ownership of debit or credit cards enabling contactless payment in Asia at 54 percent. Within that group, nearly half have completed a transaction with their contactless cards.

"The evolution of payments in Singapore has been unconventional compared to other Asian or even Western countries. Despite a high ownership of contactless payment supported card and quality of infrastructure to support such payments, many retailers as well as the public remain slow in adoption. This means that the country also lags behind in other options such as digital wallets and bitcoins," the report said.