Asia’s mo­bile pay­ments face shakeout as mar­ket booms

The Korea Times - - FEATURE -

HO CHI MINH CITY/HONG KONG/ SIN­GA­PORE (Reuters) — Just next to Ho Chi Minh City’s fi­nan­cial dis­trict, two dozen street ven­dors’ stalls dis­play col­or­ful ad­verts for e-wal­lets backed by pri­vate eq­uity firm War­burg Pin­cus, ride-hail­ing firm Grab and Sin­ga­pore sov­er­eign wealth fund GIC, among oth­ers.

Be­tween them, the stalls — sell­ing ev­ery­thing from crab soup to Viet­namese Banh My sand­wiches — ac­cept pay­ment from most of Viet­nam’s 28 dif­fer­ent e-wal­lets, which also al­low users to make cash trans­fers through their mo­bile phones.

The wal­lets, which hope to take ad­van­tage of Viet­nam’s plan to be­come a cash­less econ­omy by 2027, com­pete fiercely to gain many users to help them to turn a profit, a bat­tle for mar­ket share repli­cated across South­east Asia.

Not all of them will sur­vive. Al­ready, the re­gion’s crowded mo­bile pay­ments sec­tor is start­ing to shrink, with each na­tional mar­ket ex­pected to sup­port only two mass e-wal­lets, ac­cord­ing to con­sul­tancy Oliver Wyman.

“The e-wal­lets spend a lot of money on at­tract­ing cus­tomers and re­tain­ing them, get­ting them to use the wal­let in their daily life,” said Dun­can Woods, head of Oliver Wyman’s Asia Pa­cific re­tail and busi­ness bank­ing prac­tice.

“When you’ve got so many of them out there, it’s about who’s got the deep­est pock­ets,” he said.

South­east Asia has at least 150 e-wal­let li­cence hold­ers, and firms in­clud­ing Grab, Go-Jek, Ten­cent Hold­ings, Ant Fi­nan­cial, Sin­ga­pore Tele­com, Ai­rA­sia and dozens of fin­tech firms are fight­ing for dom­i­nance.

Many have the cash. Grab plans to in­vest $500 mil­lion in its Viet­nam busi­ness, with pay­ments a fo­cus area. Softbank’s Vi­sion Fund and GIC in­vested $300 mil­lion in e-wal­let VNPAY’s par­ent com­pany in July, and e-wal­let Momo raised $100 mil­lion from War­burg Pin­cus in Jan­uary, ac­cord­ing to news pub­li­ca­tion DealStreet­Asia.

Some are us­ing the cash to build scale, oth­ers to buy it, as they race to se­cure a dom­i­nant po­si­tion in a mo­bile pay­ments mar­ket es­ti­mated by No­mura to grow seven-fold to $109 bil­lion by 2025.

Merger ma­nia

Softbank-backed Grab is in talks to merge its In­done­sian dig­i­tal pay­ments firm, OVO, and Ant Fi­nan­cial-backed Dana, both of which are among In­done­sia’s top five e-wal­lets, to bulk up and power ahead of ri­val Go­jek, sources said.

In Viet­nam, e-wal­let Vimo merged with pay­ment pro­cesser mPOS and re­branded as Nex­tPay in June, and kicked off a $30 mil­lion fundrais­ing round and an am­bi­tious growth plan.

“We ex­pect to be present across Viet­nam and win 50 per­cent of the mar­ket with 300,000 ac­cep­tance points by 2023 from 60,000 mer­chants now,” Nex­tPay’s CEO Nguyen Huu Tuat said, while not­ing that get­ting cus­tomers to change their habits was a chal­lenge.

Street sellers in Ho Chi Minh City echoed this view, de­spite gov­ern­ment ef­forts to change be­hav­ior. Some wal­lets, in­clud­ing the part­ner­ship be­tween lo­cal firm Moca and Grab, of­fer buy­ers dis­counts of up to 30 per­cent if they use their wal­let, stall­hold­ers said.

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