Sunday, June 30, 2019

Digital payment scene across Asean



Across Southeast Asia, there is a fierce battle for being the leading digital payment provided. Unlike in China where the market is dominated by AliPay and WeChat Pay, the ASEAN market is in its infancy and is very fragmented. Currently, there are about 40 e-wallets in Malaysia, 27 e-wallets in Singapore, 37 e-wallets in Indonesia, 26 e-wallets in Vietnam, at least 17 e-wallets in the Philippines.

Large untapped market for digital payments
Although there are a large number of e-wallets, the vast of Asean market remains untapped. The population of Vietnam is about 96 million people. 40% of them are under 25 years old. Almost 90% of Vietnamese are still preferring using cash. The country experienced an e-wallet boom in the last few years. Vietnam’s total transaction value in the digital payments segment is US$8,523 million in 2019, presenting a 20.3% year on year growth. There is no notable winner in this market yet.

Fintech penetration in Indonesia remains low as Indonesia has a population of 264 million but smartphone penetration was only 24%  in 2017. This means that a lot of users are not exposed to the e-wallet concept yet.

Thailand, on the other hand, has a market of 69 million people. 31% of them are under the age of 25. Digital technology is the focus of the digital push in Thailand 4.0. Thailand 4.0 is the economic model that “aims to unlock the country from several economic challenges". The government launched a digital wallet PromptPay. Support of government and the population base are a great impetus for Thailand's digital payment market.

To understand how the different brands compete with each other, we can look into a comparison table for their main features: 

Notes:
  1. True Money is the e-wallet brand under Ascend Money.
  2. GCash provides overseas payments from US sites by issuing GCash American Express virtual sites.
  3. User will need a physical Paymaya card to make cross-border payments.  
We can see from the table that all the e-wallets have similar basic features – QR code payment, transfer money, and withdrawal. The main differentiator between the brands is the cross-border service.

Some e-wallets are already offering cross-border payments or cross-border remittance services. Those who do not support cross-border transactions are having plans to do so. Touch ‘n Go is co-operating with Singapore’s EZ-Link. They will issue a dual-currency card at the end of 2019.

Boost has joined forces with Singtel’s VIA. This will enable Boost users to make overseas payments in Singapore. PromptPay is in talks with PayNow for cross-border remittance between Singapore and Thailand. Cross-border services and interoperability have been an inevitable trend of digitalization development.         


Balance limit for each e-wallet


Brand
Country
Wallet ( balance) limit
Touch ‘n Go
Malaysia
·       RM 200 for starter account1
·       RM 1,500 by linking with a bank account
·       RM 5,000 by registering for an RFID (radio-frequency identification)
GrabPay
Malaysia
·       RM 500 for starter account
·       RM 1,500 for upgraded account2
Boost
Malaysia
·       RM 200 for starter account
·       RM 1,500 for premium account3
Singtel Dash
Singapore
·       S$999
DBS Paylah!
Singapore
·       S$999 per day
·       S$2000 for DBS/POSB digibank customers
GrabPay
Singapore
·       S$5,000
GCash
Philippines
·       P40,000/month for starter account
·       P100,000/month for upgraded account
PayMaya
Philippines
·       P50,000/month for starter account
·       P100,000/month for upgraded account
Momo
Vietnam
·       VNĐ20 million/day
Go-Pay
Indonesia
·       IDR 1 million for starter account
·       IDR 10 million for upgraded account
Ovo
Indonesia
·       IDR 2 million for starter account
·       IDR 10 million for upgraded account

Another feature to look into is the balance limit for each e-wallet. Most e-wallets offer two tiers: a starter tier to entice new users to get started with it, and an upgraded tier for verified users, either with a bank account or a valid national ID. This approach prevents excessive fraudulent behavior while also making it easy for new customers to get started on their e-wallet.

Head of the pack-Indonesia



Note:
MY – Malaysia; SG – Singapore; TH – Thailand; PH – Philippines; VN – Vietnam; IDN – Indonesia                    
Based on the graph above, we can clearly see that Indonesia is currently leading the e-wallets market compared to the other country as they have the highest number of user and also highest acceptance point leading by Ovo and GoPay. However, this does not mean it is over for the other players in the market. They would have to step up their efforts if they want to capitalize on the growing digital payment trend. In fact, the growing ASEAN region market has made itself a lucrative investment target for other financial institutions around the world. According to the Google-Temasek report, the researcher has predicted the region internet economy will rise to $250 billion in the year 2025. Besides, Indonesia is also predicted as the most fastest-growing region by the year in 2025 by the same report.



The Game of Capital


Fund-raising of the e-wallets
Brand
Time
Amount raised
Investor
Line Pay
2018M
US$25 million
Advanced Info Service

2019
US$182 million
Line
True Money
2016
N/A
Ant Financial
GCash
2017
N/A
Ant Financial
PayMaya
2018
US$175 million
Tencent

2018
US$40 million
International Finance Corporation
Coins.ph
2014
N/A
N/A

2015
N/A
N/A

2016
US$5 million
Quona Capital

2017
US$5 million
Naspers

2019
US$72 million
Go-Jek
Momo
2013
US$5.8 million
Golden Sachs

2016
US$28 million
Standard Chartered

2019
US$100 million
Warburg Pincus
Moca
2017
US$200,000
Access Ventures LLC

2018
N/A
Grab
Dana
2018
N/A
Ant Financial
Ovo
2017
US$116 million
Tokyo Century Corporation
                                   
The ASEAN e-wallet market has attracted massive funds over the last few years. China's duopoly e-wallet players Ant Financial and Tencent expand the battlefield to the ASEAN market by investing in local e-wallets. Ant Financial invested in True Money in Thailand, GCash in the Philippines and Dana in Indonesia. Tencent, on the other hand, invested in the Philippines e-wallet PayMaya. Other tech giants like Go-Jek and Grab follow closely and make their bet on the promising brands. The fund injection and technology import from the leading tech firms greatly stimulated growth in this region.  In 2018 Marketing and promotions are not cheap. To compete, securing funding from established companies gives these growing companies a chance to stand-out in their marketing and customer acquisition campaigns.





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