Mobile payment firms struggle to dethrone cash in Southeast Asia


SINGAPORE/HANOI (Reuters) – Bui Mai Phuong is an avid on-line shopper, ordering something from clothes to personal-care merchandise from her smartphone. However she prefers to pay with money.

Indicators accepting WeChat Pay and AliPay are displayed at a store in Singapore Could 22, 2018. Image taken Could 22, 2018. REUTERS/Edgar Su

She is amongst lots of of thousands and thousands of individuals whom companies comparable to Softbank Group-backed Seize and China’s Tencent need to win over as they attempt to faucet into Southeast Asia’s burgeoning web sector.

Greater than 70 p.c of the area’s 600 million-plus individuals don’t use banks – greater than the worldwide common of about 30 p.c – and e-commerce is projected to hit $88 billion by 2025.

However convincing customers like Phuong, who lives in Hanoi, could possibly be tough.

“I’ve by no means tried utilizing cellular funds as a result of I don’t know find out how to use it and it appears a bit difficult to make use of,” stated Phuong, 36, a supervisor at a building materials provider in Vietnam.

Cellular funds are ubiquitous in China; a shopper can spend a day with out utilizing money in any respect in Beijing or Shanghai, and even some beggars settle for cellular funds. However money stays king in Southeast Asia.

Exhausting forex, paid on supply, accounted for 44 p.c of complete e-commerce transactions final 12 months and is prone to stay the preferred cost possibility for at the very least the following three years, in response to knowledge by analysis agency IDC.

“The largest problem for customers and retailers to undertake cashless is the truth that money stays ubiquitous, straightforward to make use of and cheap,” stated ride-hailing agency Seize, which has ventured into e-wallets.

And the cellular cost market in Southeast Asia stays vast open, with no dominant gamers.

Indonesia’s ride-hailing agency Go-Jek’s Go-Pay, Singapore-based Seize’s GrabPay, Japan’s messaging app Line’s Line Pay, Momo e-wallet proprietor M_Service in Vietnam and Voyager Improvements, which operates Paymaya within the Philippines, have all entered the fray. The gaming firm Razer Inc has additionally indicated it’s wanting to play a job.

Money on supply prices e-commerce companies greater than different cost strategies, stated Alibaba Group Holding-backed e-retailer Lazada Group.

For instance, typically a buyer doesn’t have sufficient money readily available, or shouldn’t be residence to pay for the supply. In these instances, the product have to be despatched again to the vendor, including logistical prices, Lazada stated.

Cellular funds tackle a few of these issues. They will additionally profit patrons by retaining cost in escrow and releasing it solely on supply.

However it may be troublesome to influence customers to change from money after they earn about $200 on common a month in economies like Vietnam and Indonesia, in response to financial knowledge supplier CEIC.

“To interrupt habits of utilizing money, Seize is creating extra each day use instances for cashless cost – commuting, meals supply, paying at meals and retail stalls – to drive extra utilization of the GrabPay e-wallet,” Seize stated in an electronic mail.

Cellular cost firms wager they’ll remodel their platforms into monetary supermarkets, providing every thing from loans to insurance coverage on prime of cost choices.


In the meanwhile, utilization is spotty. E-wallets will account for 16 p.c of complete e-commerce transactions in Southeast Asia by 2021, up from final 12 months’s 9 p.c, in response to IDC.

In nations like Vietnam, the place the casual economic system has lengthy been a key a part of the social cloth, many customers don’t trouble to get a checking account.

Some need to keep underneath the taxman’s radar or, like Quang Thi Si, merely don’t see the necessity for a financial institution.

Si, a 48-year-old scrap collector close to Ho Chi Minh Metropolis, stated her enterprise is all money.

“Typically I have to ship cash to my family at residence, and I usually ship in money by means of my pals,” she stated. “I don’t assume I’ll have a checking account sooner or later as a result of I don’t assume I would like it.”

However Si does have a smartphone. Greater than 90 p.c of Southeast Asia’s web entry comes by means of cellular units, in response to a Google-Temasek examine.

Even so, in nations just like the Philippines, which is thought for having a number of the slowest Web speeds in Asia-Pacific, connectivity is a significant hurdle for digital funds to clear.


Such challenges are prone to pose a setback to Ant Monetary and Tencent, that are trying exterior China for development.

Ant, which has 600 million clients and goals to succeed in 2 billion worldwide within the subsequent decade, has stepped up investments within the area, together with a stake in Thai monetary know-how agency Ascend Cash.

However its providers are largely restricted to Chinese language vacationers.

“Most of our clients are from China and they’re normally very glad to know that we settle for AliPay and WeChat Pay. This makes them extra keen to spend cash too,” stated Daphne Tan, a workers member at a store promoting durian-flavored espresso and snacks in Singapore’s Chinatown.

Tencent plans to make its first foray exterior China with an e-payment license in Malaysia for native transactions.

The Chinese language gamers are “form of late to the occasion,” stated Michael Yeo, analysis supervisor for IDC.

“By the point they arrive in with an area model, in the event that they do, the native gamers could have a major benefit,” stated Yeo.

Razer, which stated final month it might purchase the remaining stake in funds processor MOL International that it didn’t already personal, additionally signed a cope with Singtel to hyperlink its e-payments community with that of the telco.

Different current offers within the sector embrace Go-Jek’s acquisition of three monetary know-how companies, whereas Seize’s buy of a handful of firms as properly.

“It’s a extremely fragmented market. In a while, there can be acquisitions, there can be shutdowns, there can be mergers,” IDC’s Yeo stated. “The market will consolidate.”

Further reporting by James Pearson in HANOI, Cindy Silviana in JAKARTA, Neil Jerome Morales in MANILA, Chayut Setboonsarng in BANGKOK, Dewey Sim in SINGAPORE; Enhancing by Miyoung Kim and Gerry Doyle

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