In 2020, commerce was forced to change—but consumer expectations will drive further transformation

July 22, 2020 | By Safdar Khan

The nature of doing business in Southeast Asia has seen tectonic shifts since the beginning of the year, with many consumers and businesses making their first forays into digital commerce in order to have some sense of continuity. However, the seamlessness this has brought into people’s lives is going to radically change expectations around how commerce works for them.

For most of us, the COVID-19 and its repercussions have been unprecedented—at least by this order of magnitude. A broad array of impact has been felt at the most individual level, all the way through to the levels of the international community and the global economy. Anecdotally, it certainly feels like there’s been a change in how we’ve been conducting commerce in response to the pandemic—but the figures certainly back this up.

The latest set of Mastercard Impact Studies™ has revealed how extraordinary events influence consumers and business professionals, with major markets in Southeast Asia seeing drastic jumps in participation in digital commerce[1]. For example, in the June edition of the study, nearly half of the respondents in Malaysia, Singapore, and Thailand had increased their use of online shopping services over the course of a single month. During the same period, 40 percent or more of the respondents in Malaysia, the Philippines, Singapore, and Thailand said they had increased their usage of home delivery services. The research also found that roughly 60-70 percent of the respondents had decreased their usage of physical cash, while many had increased their use of contactless payments through their cards and their smartphones—in part, it would seem, to reduce their amount of physical interactions with others. There is no doubt that the way we do business has inexorably changed, and that change will continue past the era of lockdowns and social distancing.

It’s been fortunate for the sake of a continuing sense of normalcy that we’ve had the technology to keep many aspects of our lives going. There is some irony to the fact that a crisis that drove us out of our offices, away from social gatherings, and into our homes, has in some ways actually resulted in greater connectivity than ever before and also forced many to quicken their pace of technology adoption. With shopping and payment habits now irrevocably changed, the question on everyone’s minds now is whether the world is coming up on a kind of “static” new normal, or facing a period of ongoing commercial evolution? I believe we’re looking at the latter.

For many consumers in Southeast Asian, the pandemic necessitated them having their first experiences with e-commerce, which if you think about it, is quite a big jump to make. Where once many people had to go out, perhaps get into a car or on a scooter, drive to a supermarket or mall, get cash out of their wallet, and carry everything home, they’ve transitioned into a new way of doing things—tapping a few times on their smartphone, perhaps authenticating their payment with a fingerprint scanner, and having items delivered to their door later that day. Interestingly enough, e-commerce spend growth is increasing rapidly, even among older consumers who traditionally favored traditional stores and markets[2].

We call this moving towards a more “frictionless” economy, and this new seamlessness is the platform on which many businesses are going to be competing and surviving moving forward. When someone has to count out cash, hand it to a cashier, and wait for change—this is an example of friction. When a customer simply pulls out their card or smart device and holds it over a POS terminal to make a contactless payment, this is an example of a more frictionless transaction. As consumers come to expect increased seamlessness in their day-to-day lives, the reduction of this friction is going to be one of the key levels on which businesses compete.

At Mastercard, we’re actively developing and implementing multi-rail infrastructure with businesses and governments that allow payments to happen in real time across any number of platforms and using any number of devices. At the moment, payments tend to involve items like physical credit and debit cards, smartphones, and smart watches—but the Internet of Things is rapidly expanding the number of possible rails, which will in turn, reduce the amount of friction in the economy and our everyday lives, irrespective of whether we’re at home or at work.

By now, the example of the IoT-enabled refrigerator that restocks itself automatically is kind of cliché, but it is a good example of where things are headed—though it’s by no means the final destination. Multi-rail payment infrastructure will allow for totally frictionless experiences, while also enabling the possibility of “digital conversations” between merchants and consumers, where for instance, a shopper’s smartwatch might track certain behaviors and offer them discounts or rewards based on that. Of course, payments will undergird all of these experiences, but it will cease to be a significant part of the process of going shopping, commuting, travelling, and dining.

In much the same way that we don’t think about turning on a tap in our house and getting water, or flicking a switch and turning on a lightbulb, the future of commerce will be one where there is a payments infrastructure in place that allows us to meet our needs at any time, with little to no effort. At Mastercard, we’re not just thinking about what can be done at this moment to improve payments—we’re in the business of working out what the future of commerce may look like as a part of day-to-day life, and how access to innovative technology can help everyone thrive, in both good times and challenging ones.


[1] Mastercard Impact Studies 2020, The Black Swan Series

[2] BCG COVID-19 Consumer Sentiment Survey, March 2020

Photo of Safdar Khan
Safdar Khan, Division President, Southeast Asia, Mastercard