E-wallet challenge
THE announcement by PUC Bhd that it has secured an e-wallet licence seems to have gotten some of its investors excited, with its shares being actively traded yesterday.
However, procuring a licence to operate an e-wallet is just the beginning of a journey in a business that many others are trying to break into. All banks and another more than 20 non-bank entities have licences to issue e-wallets.
Typically, e-wallets, e-money, or digital wallets come in the form of mobile applications that enable the electronic payment for goods and services.
The potential for e-wallets is massive, going by the experience in China, with the likes of Alipay and WeChat Pay.
China’s mobile payments in 2016 amounted to US$5.5 trillion (RM23.02 trillion) going by some reports.
However, getting a customer to use an e-wallet in Malaysia is not going to be easy.
Firstly, Malaysian customers are already widely served by traditional banks, with most people having at least a debit card that makes cashless payments a cinch.
On top of that, most banks have also embarked on the path of digitalisation, with their own mobile apps and e-wallets for their customers to use. Maybank has the Maybank2u and MaybankPay apps, with the former being an e-account while the latter holds Maybank card data, where users can use their smartphones to tap onto Visa PayWave terminals to complete transactions.
Hong Leong Bank Bhd’s Connect app enables the transfer of funds using mobile numbers and allows users to scan quick response (QR) codes to pay for retail and food and beverage (F&B) purchases.
Non-bank entities trying to break into the e-wallet business will have to convince customers to use their services.
Hence, it is presumed that the customer acquisition cost is going to be quite high, with operators having to fork out hefty sums to draw more users, and maintain its userbase.
E-wallet operators will have to invest in marketing and promo- tional activities and possibly tie up with other partners to expand the reach of their e-wallets.
While it may be great for consumers who are going to be spoilt for choice, given all these available options, the e-wallet operators going into this game are bound to face challenges in growing their market reach.