Opportunities in the Southeast Asian Payment Market
More than 70% of the 600 million people in Southeast Asia do not use a bank, which is about 30% higher than the global average. E-commerce in the region is expected to reach 88 billion U.S. dollars by 2025. But convincing consumers like Phuong, who lives in Hanoi, can be tricky.
"I have never tried to use mobile payment because I don't know how to use it. It seems a bit complicated to use," said Phuong, a 36-year-old manager of a Vietnamese construction material supplier.
The mobile payment market in Southeast Asia is still open, and there are no dominant companies.
In fact, this market has long been watched by all parties. From Lazada’s HelloPay to Garena (now renamed SEA)’s AirPay, Malaysia’s MolPay, Grab’s GrabPay or GoJek’s GoPay, or Singapore Telecom’s Dash and Thailand’s Chia Tai Group’s Ascend Money, there are many on the market Players have gone through many attempts. It is estimated that none of them dare to say that they are successful.
Not the China of 5 years ago
In fact, the objective situation in Southeast Asia is still very different from China, and it cannot be directly compared to China 5 or 10 years ago. Understanding this difference is crucial to success in this market.
First of all, Alipay initially had a specific environment: China has a large number of export merchants and overseas transactions. There is no trust mechanism between them, and banks are unwilling to provide trust services for so many small transactions, so there is an opportunity here. . Afterwards, the rise of Taobao gave a large number of individual users the motivation to create e-wallets-this is very similar to the rise of PayPal's early trading with eBay. But later PayPal settled on the status quo and lost many opportunities for further growth.
The rise of WeChat Pay is based on WeChat’s very high coverage and high-frequency social applications, coupled with two very smart market strategies, red envelopes and Didi Dache. Of course, a large number of offline promotion and access work cannot be ignored.
Looking at Southeast Asia-Excluding Singapore, where offline payments are almost painless, major countries do not have strong multinational supply chains, nor do they have e-commerce platforms with particularly wide coverage. Even the chat tool is not as one-sided as China: There are many people in Indonesia using BlackBerry to develop BBM, but the development of Whatsapp should not be underestimated; although Thailand is basically the world of Line, there are still many people using WeChat or Garena’s Beetalk. .
In addition, the tying of cards between Alipay and WeChat makes it much easier for users to obtain them. The coverage rate of Southeast Asian banks is not high. If they see China's development experience, will they easily give up their entrance and surrender to a third-party payment system? So what kind of scenarios are suitable for payment in Southeast Asia? This is not ruled out. Some promising attempts to replicate China.
Copy WeChat Didi?
At present, the most frequent online application scenario in Southeast Asia is estimated to be travel. The two major local travel companies, Grab and Go Jek, both regard payment as one of their main directions. The strategy is simple: use high-coverage, high-frequency applications to acquire users and cultivate user habits, while at the same time large-scale access to third parties to finally achieve coverage.
At present, Go Jek is relatively ahead. Its payment solution, GoPay, has realized deposits and withdrawals and transfers between users. At the same time, GoJek has relatively successfully turned its 300,000 drivers into an all-pervasive cashier network.
It is understood that Go Pay has passed the stress test and has opened the test in convenience stores. It was previously expected to be open to third-party developers through payment platforms (including Doku and MidTrans) in July, but it now appears to have been delayed. It is said that the need to further improve the risk control ability is the main reason for the delay.
It is estimated that many domestic game developers in Indonesia have been waiting for this day for a long time-don't be pissed off by telecommunications companies or wait for T+75 to arrive.
And even if Go Jek does it, it's only Indonesia. Go Jek has no business at all in other countries in Southeast Asia. But compared to Go Jek, Grab's progress is slower. P2P transfer has just been implemented some time ago, and the latest news we got is that Grabpay will open its interface to third-party merchants in Singapore within two weeks to get through its payment. Features.
We think there is a reason why Grabpay is not so anxious. Grab, which has recently received high capital injections from SoftBank and Didi, should now focus on solving the battle of travel, and then the payment market can be slowly cultivated. After all, after solving (merger?) Uber's market share (that is, the stability of the scene) is guaranteed.
Scene or no scene?
Except for travel, we have not seen any scenes with high coverage and frequency. E-commerce has a loud voice, but the transaction volume and transaction frequency are still average. I think one of the important reasons is that compared with India (and China a few years ago), the e-commerce market in Southeast Asia is not in the same order of magnitude. However, with the gradual maturity of supporting facilities, e-commerce should play an increasingly important role in it.
After Garena changed its name to SEA, it has recently officially submitted a listing application. Although its AirPay has many loyal users of game players, it is still far from a pan-market wallet service.
We feel that Malaysia has a very good scenario: the toll system Touch N Go (similar to the domestic ETC). Malaysia's car penetration rate is very high, so Touch N Go is almost a card per person. There are many toll stations on the road, so everyone has to take this card out and use it several times a day. Unfortunately, this company is too comfortable to sit and collect money, and has no motivation to innovate at all.
An example of motivated innovation is the BluePay team from China. We have made many interesting innovations and attempts to make electronic wallets in Thailand without bringing their own scenes. Of course, it is too early to say whether it will succeed in the end.
(B)AT?
Many friends who have vacationed in Southeast Asia in the past six months have said that they are surprised that Alipay has penetrated perfectly. Indeed, in major tourist cities, Alipay’s icons are all over the streets-but at present this is mainly for Chinese tourists, and the local transaction settlement system has nothing to do with it. It is not difficult to understand-China made 18.6 million trips to Southeast Asia in 2015, and this time the figure is expected to exceed 20 million this year. At the same time, the per capita consumption of Chinese tourists abroad is nearly 1,000 US dollars. This area was previously mainly the UnionPay market-now UnionPay's major customers (such as Singapore's LV, Gucci, etc.) are still in their hands-and many small merchants have already hung the banner of Alipay.
Ant Financial also renamed the payment platform HelloPay under Lazada Alipay before. I remember the HelloPay team came to us in 2014. At that time they were just starting to do it, and they were very ambitious. However, as the coverage and frequency of e-commerce in Southeast Asia are not high, and cash on delivery is still the mainstream, the development of HelloPay is destined to not progress by leaps and bounds. In addition, Lazada's excessive pursuit of speed before has left many problems for HelloPay, which need to be solved by ants slowly.
Another strategy of the Ali department is investment. In the past few months, Thailand (invested in Ascend Money under the True Telecom company of CP Group), the Philippines (invested in Mynt under the telecommunications company Globe) and Indonesia (joint venture with media group Emtek) have entered the payment industry through capital. The strategy should be to use Alipay's experience and technical capabilities to foster these companies (and their markets) as soon as possible.
However, these are investments made by local tyrants. In most cases, ants are small shareholders, so these investments are still risky. In contrast, Ali's investment in Paytm in India is different. After all, there is no big local tyrant behind Paytm, and Ali's influence is still relatively large.
Although Paytm does not yet have a particularly strong built-in scenario support-Paytm Mall, an e-commerce company that is currently working hard to develop, may fill this gap.
After Tencent pushed WeChat Pay through its partners in Malaysia, it didn't make any big moves. After all, Tencent does not have the strong support of WeChat overseas.
Some time ago, Tencent participated in Go Jek's new round of financing. Many friends in the industry have guessed whether there will be any action in the payment. However, we think it is more likely to occupy a position, look at the data, and understand the market; we don't think Tencent will make a big move in the Southeast Asian payment field in the near future.
All kinds of Pay fly all over the sky
In addition to these few, it is the aggregation platform flying all over the world. LiquidPay, AsiaPay, Uniweb Pay, RedDot Pay-like a red sea. Indonesia's Doku Wallet and OceanPay made by the Chinese overseas team are also disrupting the local situation.
Aggregation is very valuable. However, a big problem with most payment aggregation platforms is that they do not have any core competitiveness. And they are also doing the most tiring job: acquiring and maintaining merchants. Merchants and users have (many) choices, and various Pays lose their pricing power.
As we all know, Pay's business is very simple: small profits but quick turnover, water consumption is king. In a fiercely competitive environment, profit margins will become thinner and thinner. To get ahead, I am afraid it is more than just offline wolf operation. The gap between the rich and the poor will definitely grow wider and wider until the small players who lag behind are completely squeezed out. The happiest thing here is naturally the card issuer-at least in a few big cities, many Pay users end up making transactions through the bound Visa and Mastercard.
And the big players who have mastered the merchants will definitely hope to develop other values of these merchants. The market is constantly changing: today we say that the share of e-commerce is still very low, maybe after Double Eleven; Go Jek and Grab are still fighting, maybe they merged before Christmas.