Despite late entry, GrabPay to cash in on mobile wallets

  • GrabPay claims it can succeed in crowded space as market is big enough
  • Fragmentation, behaviour, culture shift, regulation amongst the challenges


Despite late entry, GrabPay to cash in on mobile wallets


SINGAPORE-based ride-company GrabTaxi Holdings Pte Ltd is confident that its newly launched GrabPay mobile wallet in Malaysia will succeed despite being a late entrant into an increasingly crowded marketplace because of its active install base, high app usage and brand awareness.

Speaking to the media during the launch on June 26, Ooi Huey Tyng (pic), managing director of GrabPay for Malaysia, Singapore and the Philippines, noted that Grab not only has a “large user base but people who are already very active using the Grab app” for ride hailing purposes.

“Our app is being used every day and our users are already familiar with it,” the newly appointed head of GrabPay said in response to a question from Digital News Asia (DNA).

“The next step then is just to use the same app with a familiar user interface to make payments. This is our differentiator,” she declared. GrabPay is GrabTaxi Holding’s payment arm.

First launched in November 2017 in Singapore, GrabPay targeted signing up 1,000 local merchants two months after its launch. Earlier this year, the company indicated that Malaysia will be the next stop for it to launch GrabPay. Other Southeast Asian countries are set to follow.

Since the launch in Singapore last November, Ooi claimed the number of merchants who have signed up has jumped fourfold to 4,000 merchants today.

Asked what lessons GrabPay learned in Singapore that it could possibly use to guide its push for adoption here in Malaysia, Ooi said the key is to demonstrate to merchants that they can increase their revenues without having to invest much into GrabPay.

“We focused not so much on quantity as the quality of the merchants,” she explained. “Our game plan in Singapore was to target smaller food & beverage (F&B) players and to help them get on the digital economy.

“We also showed them how cumbersome it was to handle cash, including the difficulty in providing loose change for cash transactions. Once they saw this benefit, using GrabPay became ‘sticky’ and we saw healthy traction [in adoption],” she claimed, adding that this would likely be a similar strategy that will be used in Malaysia.

Still, Ooi conceded that the usage of cash is a very stubborn habit to break in both countries. Citing statistics from Malaysia’s central bank Bank Negara Malaysia, Ooi noted that more than 80% of transactions in Malaysia still take place on cash terms.

She however remained bullish, arguing that three years ago in Singapore, many consumers were still paying for taxi rides with cash, but this is no longer true today.

“It’s not going to be an easy journey but it’s about addressing the pain points of using cash and getting them to move away [from cash].”

To make the transition easier for merchants, Ooi said merchants initially do not have to pay any kind of fee to use GrabPay but did not say how long this moratorium period would last. Asked when GrabPay would eventually charge merchants, Ooi said that has yet to be determined.

“Even when we do charge, we will ensure that it will be affordable,” she argued.

Ooi also said GrabPay has targeted to sign up 1,000 merchants in Malaysia from the 500 it has today in the next two months. On other merchants it plans to sign up besides F&B vendors, Ooi acknowledged that F&B vendors were the lowest hanging fruit to target as Grab also runs the GrabFood delivery service.

“We want to harness this synergy first [between GrabFood and GrabPay], after which we will expand GrabPay to other retailers,” she said, declining to give any timeframe for this to happen.

At the launch, Ooi said GrabPay is accepted in some 500 food and beverage merchants in eight major cities nationwide. These merchants are based in the Klang Valley, Penang, Johor Bahru, Ipoh, Melaka, Kota Kinabalu, Kuching and Kuantan.

Examples of the brands represented are Tealive, TeoChew Chendol, Devi’s Corner, KGB Burgers, TedBoy Bakery, China House, Burps & Giggles, Kopi Ping, Big Bowl Ice and Coffee Gallery. GrabPay has also signed an agreement with KLIA Express to allow commuters to use the app to pay for their rides.

Besides these merchants, it has tied up strategically with Maybank, which will allow consumers in the future to use GrabPay credits at Maybank’s nationwide network of QR-enabled merchants.

GrabPay users are also able to transfer Grab credits from one to another, as well as split bills between users when using the app to pay merchants.

For more on how to sign up for GrabPay, go here.

Next page: Is the market big enough?



Too many players?


Despite late entry, GrabPay to cash in on mobile wallets


The market for mobile wallets is heating up in Malaysia as more players enter the fray in a bid to cash in (no pun intended) on the booming growth of cashless payment systems via smartphones.

In January this year, Axiata Group’s digital arm, Axiata Digital Services Sdn Bhd, introduced its Boost app to the market with bold ambitions to be the market leader for mobile wallets, pledging to acquire as many as 100,000 merchants by the end of 2018.

Boost claims to have over 2.5 million users and online and offline merchants located in over 25,000 touchpoints.

READ ALSO: A year on, Axiata Digital tags on mobile wallet to Boost app

And three months before that, rival startup Fave – formerly known as Groupon Malaysia and a brainchild of Joel Neoh – launched its mobile wallet FavePay, signalling its intention to stake a claim in the payments game. FavePay claims to be available in over 10 cities and three countries across Southeast Asia.

Besides Boost and FavePay, traditional banks such as CIMB Bank Bhd has Touch ‘n Go and CIMB Pay; Maybank has MaybankPay, which claims to be the first mobile wallet in Malaysia. 

Meanwhile, older technology companies are trying to branch out, namely Kipple from Green Packet Bhd, as well as non-financial players trying to enter the payment game in the form of AirAsia Bhd’s BIGPay.

The challenge to adoption isn’t only in the form of multiple players but from the fact that cash itself is so ubiquitous and therefore almost impossible to displace.

In Singapore, where technology adoption is considered the most advanced in the region, the gambit to channel consumers into mobile wallets has not paid off, as reported by media outlets The Straits Times and Channel News Asia.

Even Singapore’s prime minister, Lee Hsien Loong had commented on this in his National Day Rally speech. The debate is similar in Malaysia, where industry players admitted as much that cash is still king in the country.

GrabPay’s Ooi acknowledged that the market is crowded but remained optimistic of its chances to succeed. When asked why was this so, she argued that since 80% of Malaysians are still hooked on cash, the market is big enough to enter.

“The market is fragmented and consolidation will likely happen, as it is inevitable,” she said.

“However, we believe our differentiator is that GrabPay users never have to leave our app to use the service,” she argued. “As we drive more transactions within the platform, we will add more services to it.”

Analyst weighs in

Research firm IDC estimates the value of Singapore’s and Malaysia’s e-wallet transactions to be about US$450 million and US$520 million respectively as at the end of 2017. It noted that Malaysia’s total e-wallet transaction stands at 10.2%, while Singapore stands at 9.7% of total digital transactions.

According to research manager for IDC Financial Insights Sui-Jon Ho, the challenge with most mobile wallets is that they are inherently branded.

“Consumers might find themselves having downloaded a wallet for say ‘company X,’ which can only be used with the said provider’s partners.

“But these partners seldom align with the merchants/billers a consumer would like to interact with,” he argued. “This poses the problem of acceptance within the ecosystem – the individual cannot make payments through their preferred wallets (if any), and merchants cannot accept all methods unless they are willing to bear the fees introduced by such alternative payment brands.”

Ho explained that fragmented efforts by the supply side impair the ability of payments technologies to gain critical mass. As a result, the market becomes flooded with too many players and their respective propositions – far too many for consumers to choose from, he added.

“The thing is, consumers still have a finite spending capacity, regardless of payment method,” he said. “Success stories like AliPay (in China) are rightly infrequent, and one would find that they are often the sole first-mover in a technological gambit that has made them successful.”

Still Ho believes that given time, user behaviour or preferences could change given the right incentives. But for such changes to occur, the misalignment between the ecosystem's supply- and demand-sides need to be addressed, he argued.

“In this respect, regulators have a part to play. They must take a stance in deciding not just what paperwork to fill when a payment is made, but what actual payment functions must be made available by merchants or financial institutions. The Bank of Thailand's recently mandated QR-code checkout is a prime example.”


Related stories:

Has cashless finally arrived in Malaysia? Not really

Grab aims to be Malaysians’ everyday app

FavePay anticipates paying over US$100mil to merchants by year-end


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