Fintech
Lessons New Zealand can learn from Asian fintech platforms
Alipay and WeChat dominate China’s QR code-based digital payments ecosystem. Photo: 123RF
New Zealand fintech experts are advocating greater collaboration with Asia to broaden market reach and spur growth.
Fintech is one of New Zealand’s fastest growing technology sectors.
According to the 2024 TIN NZ Fintech Report, total New Zealand fintech revenues grew from $160 million in 2013 to $2.64 billion in 2023, four times greater growth than the rest of the tech sector combined in the last ten years.
Last year, 84% ($2.2 billion) of New Zealand’s fintech revenue came from overseas, up 28% to a value of $486 million year-on-year.
Growth in 2023 was driven by strong performances in North America (+26%), Europe (+29%) and Australia (+30%).
A customer scans a QR code to buy bananas in China. Photo: provided
New Zealand fintech companies have traditionally focused on expanding into North America, Europe and Australia.
However, financial experts are now urging domestic fintech companies to target the Asian market and strengthen cooperation with Asian partners.
FinTechNZ executive director Jason Roberts believes New Zealand is on the verge of rapid growth in fintech financial innovation, highlighting the importance of strong ties with ASEAN markets.
“At the moment, around 3% of our fintech revenues come from ASEAN, which is very low compared to Australia,” Roberts said.
“Our traditional markets are saturated, quite competitive and we are not expanding or growing,” he said. “If we can get our products right in an Asian market, the possibility for large-scale growth is phenomenal.”
He said countries such as China and India were experiencing incredibly rapid digital changes in business practices, adding that New Zealand should not be left behind in terms of competition and innovation.
PricewaterhouseCoopers’ Navigating the Payments Matrix report showed that the financial services sector is undergoing a significant transformation, with payments becoming increasingly cashless.
Global cashless payment volumes are expected to increase by more than 80% from 2020 to 2025, with the Asia-Pacific region leading the growth.
The volume of cashless transactions in the Asia-Pacific region is expected to grow 109% by 2025.
Swathi Parikh, Partner at PricewaterhouseCoopers New Zealand Photo: Supplied
Swathi Parikh, partner at PricewaterhouseCoopers New Zealand, said Asia’s large population has attracted more investment into the market, thus expanding the entire fintech landscape.
“The entire Asia-Pacific [region] … it has a lot of developing countries,” he says. “There’s a large population which gives dimension to the market [and] this helps attract more investment in these sectors. With the investment, many companies began to innovate. … They have directly elevated old systems to the next generation of mobile payment ecosystems.”
He said urbanization in the Asia-Pacific region and a regulatory system supporting financial inclusion have further strengthened an Asian-backed digital payments ecosystem.
The PricewaterhouseCoopers report also indicated that fast-growing Asian markets are driving new business models and innovation.
In China, Alipay and WeChat Pay (officially known as Weixin Pay) have created a new paradigm around “super apps” as payment platforms.
Weixin Pay, integrated into the WeChat app, allows users to make quick payments via QR codes and Mini Program payments.
Alipay offers equally advanced tools such as “smile-to-pay” functionality or QR code payment solutions, satisfying various digital payment needs and making cash transactions increasingly obsolete.
In China, these apps allow users to pay for food, clothing, transportation, education and entertainment using QR codes.
China boasts a smartphone penetration rate of more than 70%, making mobile payments a common part of daily life in Asia.
However, there is a very different digital environment in New Zealand.
Roberts said New Zealand’s financial infrastructure was built around a well-established Western model, with bank cards generally used to complete most transactions.
“You could use apps like Alipay, eBay or other third-party services that provide financial functionality without necessarily requiring a bank account,” he said.
“[But] it’s very different in New Zealand,” he said. “I think 93 or 94% of New Zealanders have a bank account, and so when you think about older people and younger people, that’s pretty much every single person. [New Zealand] It has a fairly consolidated environment and uses traditional systems.”
Weixin Pay entered the New Zealand market in 2016, while Alipay began offering cross-border payment services for Chinese tourists in 2013 before officially launching in New Zealand in 2016.
However, the main users of such platforms in New Zealand remain Chinese tourists and international students.
Shu Mei, strategic communications manager for Alipay Outbound Business at Ant International, said Chinese students and tourists visiting New Zealand could access QR code payment services and Mini Program online services.
However, these services were not yet available to most New Zealanders.
FinTechNZ executive director Jason Roberts Photo: Supplied
Roberts said while Alipay and WeChat Pay have established a strong foothold in the Asian community, they have yet to be widely adopted by other New Zealanders.
“Alipay and WeChat have very strong verticals in particular sectors of the Asian community because they are used to sending money back and forth, but it hasn’t been universally adopted,” Roberts said. “Banks and other providers here (in New Zealand) don’t use the same technologies to the level they do overseas.”
Mei said Alipay has partnered with the Bank of New Zealand, allowing the bank to offer Alipay as a payment option to local businesses.
“Cooperation with major local banks will definitely require time and effort,” Mei said. “But partnering with BNZ means we are recognized and accepted by the local system, and this close collaboration has entered a new phase.”
Monica Zheng, managing director of Weixin Pay Oceania, said major New Zealand merchants, including The Warehouse Group, Pak ‘N Save, duty-free and travel retailers Lagardère and DFS, and shopping centers such as Farmers and Smith & Caughey’s have adopted Weixin Pay.
“Quick Pay (scanned by merchants) and QR Code Payment, which includes dynamic and static QR codes, are collectively referred to by industry partners as scan to pay,” Zheng said.
“This method has become very popular in the New Zealand market,” he said.
“Major payment institutions and POS providers such as Windcave, Verifone and Adyen have integrated support for this mode into their devices. It is widely used by both large enterprises and small to medium-sized merchants across various industries.”
Weixin Pay, integrated into the WeChat app, allows users to make a payment via a QR code. Photo: provided
Zheng said Weixin Pay will continue to explore collaborations with New Zealand technology companies.
Parikh predicted significant growth for New Zealand fintechs once open banking APIs and consumer data rights regulations are implemented.
Roberts agrees, pointing out that New Zealand’s slow adoption of consumer rights legislation has hindered investment and innovation by banks and service providers.
“We are seeing new rules and regulations introduced or planned,” Roberts said. “You will then see innovations and new products, which could include the expansion of incoming international competitors such as Alipay, WeChat and others.”
Parikh said QR code payments, widely used by Alipay and Weixin Pay, could potentially gain popularity in New Zealand.
“We all used the COVID Tracer app, right?” she said. “People know how to pick up the phone, scan… so we’ve already trained people… Once merchants know this, and more merchants start using QR codes, it will become more widespread .
“The prevalence of digital payments will continue to increase [in New Zealand]” he said. “There will be a shift towards digital payments, QR codes and mobile payments. There will be a lot of integration between your payments and other platforms.
“But this also means that we need to place more emphasis on security, fraud prevention and data privacy. The bottom line is that our regulatory developments will need to keep pace with these evolving scenarios.”
When asked about the platforms’ security processes, Zheng said that user security and data privacy are top priorities for Weixin Pay.
Weixin Pay has prohibited any criminal behavior and has dedicated significant resources to combating online scams through technology, fraud risk prevention and reporting tools.
Citing company policy, an Alipay spokesperson said the platform strictly safeguards user privacy by adhering to relevant Chinese regulations.
Alipay’s policy also ensures that it will not share users’ personal and banking information with third parties in any form, the spokesperson said.