Mobile payments are common in China where a consumer can spend a day without using cash at all in Beijing or Shanghai, and even some beggars accept mobile payments. But cash remains king in South-East Asia.
Hard currency, paid on delivery, accounted for 44% of total e-commerce transactions last year and is likely to remain the most popular payment option for at least the next three years, according to data by research firm IDC.
The biggest challenge for users and merchants to adopt cashless is the fact that cash remains ubiquitous, easy to use and inexpensive.
And the mobile payment marketplace in South-East Asia remains wide open, with no dominant players.
Indonesia’s ride-hailing firm Go-Jek’s Go-Pay, Singapore-based Grab’s GrabPay, Japan’s messaging app Line’s Line Pay, Momo e-wallet owner M_Service in Vietnam and Voyager Innovations, which operates Paymaya in the Philippines, have all entered the fray. The gaming company Razer Inc has also indicated it is eager to play a role.
Cash on delivery costs e-commerce businesses more than other payment methods, said Alibaba Group Holding-backed e-retailer Lazada Group.
For example, sometimes a customer does not have enough cash on hand, or is not home to pay for the delivery. In those cases, the product must be sent back to the seller, adding logistical costs.
Mobile payments address some of those problems. They can also benefit buyers by keeping payment in escrow and releasing it only on delivery.
But it can be difficult to persuade users to switch from cash when they earn about US$200 on average a month in economies like Vietnam and Indonesia, according to economic data provider CEIC.
“To break habits of using cash, Grab is creating more daily use cases for cashless payment – commuting, food delivery, paying at food and retail stalls – to drive more usage of the GrabPay e-wallet,” Grab said in an email.
Mobile payment companies bet they can transform their platforms into financial supermarkets, offering everything from loans to insurance on top of payment options.
At the moment, usage is spotty. E-wallets will account for 16% of total e-commerce transactions in South-East Asia by 2021, up from last year’s 9%. – The Star