E-payment players like AirPay, Alipay, and GrabPay have big dreams to extend its network throughout ASEAN. But, do they have what it takes?
By Joelyn Chan
At the 31st ASEAN summit, Philippines turned over the ASEAN chairmanship to Singapore. Unlike its predecessor’s preference for a sense of togetherness and common identity, the key themes of Singapore’s chairmanship are digital economy and e-commerce. Senior Minister of State of Trade and Industry Koh Poh Koon said, “The digital economy in ASEAN could grow to US$200 billion (S$277 billion) over the next 10 years, with e-commerce accounting for US$88 billion.” There is undoubtedly more to expect from the digital economy and e-commerce development.
The payment industry may be overly saturated
Following the advancement in technology and prevalence of smartphone, e-payments and e-wallets are gaining popularity. Banks and technology firms rush to offer online payment services. Using Singapore as an example, there are mobile payment platforms like Apple Pay, Android Pay, Samsung Pay, DBS PayLah, UOB (United Overseas Bank) Mighty and Liquid Pay. These new players compete with debit cards, credit cards, and other traditional payment modes.
Atypical players have also started to enter the industry. Ride-hailing apps like Grab and Go-Jek offer its own GrabPay and Go-Pay. Telecommunication service provider Singtel launched Dash while e-commerce firm Lazada launched HelloPay. This month, Fitbit partners with local banks to launch Fitbit Pay in Singapore. With more companies expanding from their usual domain to offer payment services, the competition for consumer’s dollars is intensifying.
If you can’t beat them, join them
The head-on competition between local and international players makes it hard for most players to establish a strong presence in all 10 markets. It takes more than financial resources and strategic planning to outshine the competitors.
Merger and acquisition is another option for companies eager to grow. This year, Ant Financial merged with Lazada’s HelloPay and rebranded HelloPay as Alipay Singapore, Alipay Malaysia, Alipay Philippines, and Alipay Indonesia. Lazada Indonesia co-CEO Florian Holm said, “It (Alipay) has massively better systems. It’s extremely important to have good fraud detection… Alipay is the biggest and most sophisticated wallet in the world.”
By tapping on an existing firm, Alipay can better gain local insights and expand its foothold. The e-payment players share the same dream of extending its payment network throughout ASEAN. Alipay is no exception and has a huge ambition to expand beyond China.
Sea Limited dreams of the unachievable
Garena Interactive Holding Limited is one of Southeast Asia’s renowned technology startup. It later rebranded itself as Sea Limited. Today, the company has Garena, Shopee and AirPay. China’s technology giant – Tencent Holding Limited holds 35% of Sea’s shares. Without the financial backing since 2010, Sea would probably have struggled for an even longer time before becoming what it is today.
Sea tries to differentiate itself from the other competitors who strive hard to sway tech-savvy customers over. In 2014, Sea launched AirPay to facilitate in-game purchases for Garena customers. This brainchild helps to maintain its monopoly in providing game credits needed for Garena games. Apart from having just a mobile application – AirPay app, AirPay has AirPay counters all over Southeast Asia. For instance, the AirPay counters in Thailand aim to provide huge convenience and service to the communities. Through the Airpay counters, customers also enjoy free delivery of lower priced snacks.
To grow its user base further, Airpay partners a local bank to co-issue virtual prepaid cards under Mastercard. These cards are widely known as AirPay cards. Sea’s plan does not stop with just the AirPay card; it continues to expand its current network of 178,000 AirPay counters. To date, it achieved 388 use cases on AirPay. It still needs more initiatives for underbanked users to convert their physical cash into e-Money easily. At the same time, Airpay also needs more merchants to accept e-Money as payment. The winner of this digital connectivity race will be the one who can provide users with seamless shopping experiences.
AirPay’s ambition is to become the key enabler of cashless society across Greater Southeast Asia (GSEA). GSEA comprises of Indonesia, The Philippines, Taiwan, Vietnam, Thailand, Malaysia and Singapore. Out of the seven markets, it currently has a presence in five. Looking at AirPay’s total gross transaction value in the past one year, there is a 172% year-on-year growth.
Source: Sea Limited
The synergies between Airpay, Garena and Shopee will continue to fuel organic growth in the future. Garena and Shopee will attract gamers and shoppers, while AirPay generates transactional revenue from their customer base. However, this may not be enough in the face of harsher competition. According to its September quarter 2017 results, net loss attributable to shareholders has doubled to US$132.8 million. Until Sea Limited achieves profitability, its big dreams may be crippled by any withdrawal of investments.
For now, digital connectivity is a dream that many failed to achieve
Apart from Airpay, there are still many competitors. Ant Financial’s merger with HelloPay is a signal of greater investment from China. The local firms mostly fumble with competition at home and abroad. Although everyone is eager to generate profits from the booming industry, none has demonstrated a strong capability to be a market leader and bring digital connectivity to a whole new level.
As of today, the aspiration for digital connectivity is nothing more than a dream. As the next ASEAN chairman focusing on digital connectivity and e-commerce, there may be an introduction of a game changer or an accelerator to change the current dynamics. We will just have to wait and see.