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FSA Study Reveals Singapore & Malaysia To Be Ideal Testing Grounds

Curacao, 01-17-2014

 The Financial Study Association of Amsterdam, the largest of its kind in the Netherlands, has identified Singapore and Malaysia as ideal testing grounds for merchants who want to expand their business internationally and explore the potential of the Asian market. Even though the ecommerce markets in Singapore and Malaysia are relatively small compared to Asian giants like China (US$190 Bn) and Japan (US$64 Bn), the study illustrated that these two smaller countries stand out with respect to the size of the cross-border share of the ecommerce market, offering unique ecommerce propositions which will help merchants to adapt locally and understand the particularities of this rapidly growing ecommerce region.

The study entitled “Cross-Border eCommerce in Asian Markets: Singapore and Malaysia” is the result of joint efforts by Payvision, independent Payment Solution Provider specialized in Global Card Processing for the ecommerce market, and the FSA Research Project, an initiative of the Financial Study Association of Amsterdam. The study focused on the benefits offered by cross-border ecommerce in Singapore and Malaysia to ISOs, PSPs, acquirers and their worldwide merchants.

According to the opinions of industry experts and the data studied, an estimated 55% of all ecommerce in Singapore and 40% of all Malaysian ecommerce is cross-border, an extremely high percentage compared to cross-border ecommerce figures for Japan (18%) and South Korea (25%). Moreover, Singapore and Malaysia offer international companies a fertile entrepreneurial environment, a developed digital landscape and very advanced IT infrastructure to successfully test and adapt their products and marketing strategies, and therefore establish a strong foothold in Southeast Asia.

“The multicultural, multilingual nature of both societies and their developed ecommerce ecosystem represent a perfect landscape for ecommerce companies with the ambition to expand into Southeast Asia and, in a next phase, to tap into well-established Asian ecommerce markets. Over the last years, ecommerce has been growing rapidly throughout the region and Singapore is turning into a regional ecommerce hub. With more than 60 million people browsing the web, Southeast Asia is a significant market for ecommerce businesses”, said Marrit Teirlinck, researcher FSA.

“We were delighted to work with FSA and be able to provide the ecommerce and payments companies with updated, insightful data, which will support their international expansion strategy. Asia is the fastest growing e-retail market in the world, with very challenging and specific market features. Southeast Asia could be the ideal testing ground for merchants who aim to expand their business internationally through profitable cross-border ecommerce in the region”, said Gijs op de Weegh, COO Payvision.

The report also showed that credit cards are the preferred payment method for about 80% of the cross-border transactions, and more than half of the products bought overseas are purchased from online stores based in the USA. However, many Singaporeans speak Mandarin, and this will prove to be an important driver for cross-border ecommerce between China and Singapore. Chinese websites like TaoBao are tapping into the Singaporean market by launching local websites. The signing of the Free Trade Agreement with the EU will boost cross-border ecommerce between Europe and Singapore.

Another key conclusion of the report is that in order to successfully expand into these new markets, merchants need to partner with an international card processor with a global acquiring network, who has expertise in all aspects of cross-border ecommerce and extensive understanding of rules and regulations, multi-currency processing and risk management.

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About the Report

Over 25 industry experts in Singapore and Malaysia were interviewed and industry trends and opportunities were discussed with local representatives of multinationals such as PayPal, Expedia and DHL. In addition, executives of local companies with a major foothold in the local ecommerce industry have been included in the study, such as AirAsia, Singapore Post, Lazada, iPay88, Luxola. Apart from the information collected during the interviews, the research took into account the findings of other several industry reports. A complete list of the interviewees and the industry reports can be found in the last chapter of this Report.
The researchers made the report public and it can be downloaded from Payvision’s White Papers web page.