Southeast Asia is a major and strategic market for on-demand payment apps. Can you provide our readers with an overview of the size of the market and what drives the success of these services?
Southeast Asia is where we operated since our founding, in 2012. The region has immense potential, with a 660 million strong population – twice that of the US. Citizens are young and mobile-first, with over 50% under 30 years old, and the percentage of households with at least one smartphone is expected to grow to 84% by 2025 from 68% in 2020.
Firstly, the COVID-19 pandemic hastened the region’s digitalisation wave, and millions of users benefited from digital economy access. In 2020 alone, 237,000 Grab driver-partners transitioned to do deliveries. In 2021, 680,000 small businesses joined the platform, and the number of merchant-partners onboarded to GrabPay grew by 72% year-on-year.
Secondly, the pandemic also quickened consumer cashless adoption. A 2021 Boku and Juniper Research report stated this is the fastest-growing region for digital wallets globally, with new payment methods emerging to meet this demand, like Buy Now, Pay Later (BNPL).
Thirdly, cashless adoption is robustly supported by governments. We work closely with them to use their real-time payment rails to move money from bank accounts to the GrabPay wallet account, such as PayNow in Singapore and InstaPay in the Philippines. In addition, interoperable QR is crucial to drive nationwide digital payment adoption, with many countries already implementing this – QRIS in Indonesia, SGQR in Singapore, and DuitNow QR in Malaysia.
Short checkout routes mean users get convenience, while merchants receive boosted conversions. There is no need to download a new app to use GrabPay either. Users have the flexibility to pay now, next month or in interest-free instalments.
BNPL is increasingly popular, as nine in ten Southeast Asians do not have credit cards and the payment flexibility is an attractive proposition.
Robust risk management is vital for BNPL to succeed in this financially underserved region. This is where Grab’s proprietary transactional data, generated by over 30 million MTUs (Monthly Transacting Users, as of Q2 2022), sets us apart. Artificial intelligence and machine learning help assess who should be offered BNPL, and we set a customised spending limit. This is different from other players who rely on existing credit card approvals from issuing banks.
At the same time, user security must also be a priority. Customers choosing alternative payment methods should be protected via stringent security measures, like two-factor authentication and real-time risk assessment. Successful AI-driven fraud protection should be led by high-quality data.
GrabPay and PayLater started as payment options for Grab services, and now they also provide payment solutions to merchants. To accelerate acceptance, GrabFin has signed partnerships with leading global (Adyen, Stripe, Shopify) and regional payment platforms (2C2P, AsiaPay, Razer Merchant Services).
Generally, merchants want to know how payment providers can deliver more value, such as increasing sales or generating demand at a low cost. With Grab, our partners get more value from our super app platform. We recently announced integrated partnerships with Coca-Cola and Starbucks regionally – and with McDonald’s in Singapore, where consumers can pay for their orders via GrabPay in-store and in-app, earn GrabRewards, order food or beverages, and have them delivered through GrabExpress.
For smaller merchant-partners, we provide GrabPay and tailored BNPL options, including working capital loans, rewards, ads, and analytics – aiming to help them ride the ecommerce wave and boost their presence online.
A super app should focus on solving hyperlocal problems. We started Grab to solve transportation safety in Malaysia – and then we looked into other local challenges we would be able to solve. Today, our super app helps drivers access income opportunities, merchants get tools and insights to build their businesses, while customers have access to safe rides to their destination.
Economic empowerment is what drives most super apps, and customers should be able to have a saying in the economy to keep moving things forward.
Our platform enables millions of people each day to access driver and merchant-partners to order food or groceries, send packages, hail a ride or taxi, pay for online purchases or access services such as lending, insurance, wealth management and telemedicine.
Moving forward, we will sharpen our focus on helping our driver and merchant partners - many of whom are underserved by the traditional financial institutions today - with their financing and insurance needs.
This interview was first published in Payment Methods Report 2022, the most updated overview of trends and developments in the payment methods space and the innovative technologies that these methods work upon, emerging consumers habits, and strategies on how to win at conversion and retention.
Kell Jay is the Regional Head of GrabFin, the fintech arm of Grab Financial Group. In this role, he is accountable for the development and execution of the company’s fintech vision of bringing financial inclusion to the six in ten Southeast Asians who are underserved. Before joining Grab, Kell Jay led complex customer analytics projects for large multi-national clients in his previous stint at Accenture.
Grab was founded in 2012 with the mission to drive Southeast Asia forward by creating economic empowerment for everyone. We operate across the deliveries, mobility, and digital financial services sectors in 480 cities in eight countries in the Southeast Asia region, enabling millions to access driver/ merchant-partners to order food or groceries, send packages, hail a ride or taxi or pay for online purchases - all through a single ‘everyday everything’ app.
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