TechNode gathered four industry experts at its ORIGIN conference, during Malaysia Tech Week 2019, for a discussion on “Payment Solutions in Southeast Asia.” Kenneth Ho, CEO of the cross-border business matching engine Beam and moderator for the panel, began the talk by asking, “What is the landscape like for mobile payments in Southeast Asia (SEA)? Who do you think is going to be the dominant player? And will Grab simply kick everyone’s ass?”
“Every country has at least 30 to 40 e-wallets. Competition is definitely going to be high in Southeast Asia because of the low barriers of entry,” said Jeremy Wong, head of partnership at e-commerce company Fave. Aiza Azreen Ahmad, director of strategic partnership at lifestyle e-wallet company Boost, said, “For Malaysians today, I’m sure your phones would easily have three e-wallets.”
However, Ahmad said that adoption rates of cashless payment among both merchants and consumers are worryingly low. Given the competition and adoption rate in SEA, digital payment solutions are still a work in progress. Mobile payments in the region are only just starting to take off despite the growing number of players, said Patrick Ngan, CEO & co-founder of mobile payment technology service QFPay. The region is barely scratching the surface of the regional market, he added.
Ngan said that the key to surviving in the region is to establish strong partnerships with the existing dominant players. “Mobile payment eventually should not be restricted to Southeast Asia. Instead, companies should all aim to transcend their own borders to truly succeed. Mobile solutions should be borderless,” said Ngan.
While it seems that QR code payment may be the future, Wong cautioned that it is not necessarily suitable for all countries in the region.
Regulations have not kept up with the adoption of e-wallets in the region due to their relatively recent emergence, Wong said. “The regulations around e-wallets need to be loosened for them to see greater adoption among merchants and consumers,” said Ahmad.
Ngan also emphasized the importance of securing government approvals as they play a major role in pushing the initiative and facilitating adoption.
Lessons from China
Ngan called on local players to look to the Chinese market for knowledge and insights without aiming to directly replicate their models. Although the technology behind mobile payment and e-wallets may be the same, he said, differences between the SEA and Chinese cultures and markets mean that companies cannot simply transplant their strategies. Rather, there is a need to localize the system to meet market demands.
Ahmad lauded the bravery of Chinese players, citing Alipay’s recent investment in Touch and Go as an example of the risks that China companies are willing to take.
Major players loom
China’s digital payment operators represent industry titans—and their looming presence in Southeast Asia casts a shadow over local firms. However, although our speakers recognized their presence as a threat, they did not overstate the potential competition from international players.
“Competition can help us to educate the users, and we welcome that,” said Ahmad. “When Boost first started, we were struggling but with greater competition, our company began growing.” Likewise, Ngan said that focusing on this aspect would generate unnecessary worries.
“I often tell my team to forget about the competition and do what you do best. Focus on what you are asked to do and focus on developing the product. If you do a very good job in both, people will naturally use your product because it is well developed,” said Ngan.
Wong encouraged SEA digital payment companies to take heart, saying that the war is not lost just because Chinese companies are pouring investments into the region. Rather, he said, the key in the region is to understand the wants and needs of local users and merchants.