GrabPay and Go-Pay are examples.
Singapore continues to lead in digital payment services adoption across Southeast Asia with 52% of Singaporeans already using such services, according to Google and Temasek’s e-Conomy SEA 2018 report.
It was followed by Indonesia and Malaysia at 46% and 45%, respectively.
Also read: Check out mobile wallet adoption across Asia
Many firms have invested in building their own digital payment solutions across the region, whilst offering loyalty programs and rewards schemes in a bid to incentivise adoption amongst customers.
Ride hailing companies in particular were found to have made digital payments a cornerstone of their strategy to become ‘everyday apps’ with Southeast Asians by launching solutions such as Go-Pay and GrabPay and leveraging on the consumer trust they have secured for their core services.
“Beyond online transport and online food delivery, the third focus area for ride hailing players is the development of online financial services,” the research stated.
On top of those, ride hailing firms announced plans to offer a broad range of online financial services, which include money transfers, personal lending, investment products, and insurance services which are sectors the report noted where they will face the most competition from established banking and insurance players, as well as a wave of fintech startups.
“They are all aiming to win the preference of Southeast Asian internet users in the still largely untapped online financial services space,” the report's authors added.
These firms have also partnered with other startups and established businesses to leverage on their existing networks of customers, agents and merchants.
“Southeast Asia’s largest banks have also been active, launching and promoting their own digital payment applications connected to existing banking relationships,” the firms said. “Global tech companies are progressively rolling out their digital payment solutions amongst Southeast Asian users and merchants as well.”
On the other hand, Southeast Asia’s digital payments landscape remains fragmented with less than one in two internet users in the region adopting digital payment services with adoption reaching as low as one in five users in the Philippines and one in four in Vietnam.
“That is remarkably low when compared, for example, with China, where digital payment solutions like Alipay and WeChat have gained ubiquitous usage amongst both online and offline merchants,” the firms stated in the report.
Despite being open to pay for digital goods and services if more convenient digital payment solutions were available, most Southeast Asian internet users still opt for traditional payment methods and advertising supported alternatives, the report found.
“On the other hand, for physical goods, whilst all leading e-commerce players in the region accept payments via cash on delivery (COD), this comes with friction and costs for both user and for e-commerce players which face a higher proportion of cancelled orders and incur higher charges by delivery companies.”
Amidst the fragmented landscape of digital payment solutions, the e-Conomy SEA 2018 research noted how policies which promote common standards and interoperability, as well as partnership between leading players could help address this remaining challenge.
“Digital payments could then become a gateway toward online financial services, like money transfers and remittances, personal lending, investments and insurance products.”
The report is a multi-year research project that aims to shed light on Southeast Asia’s internet company by covering four key sectors: online travels, online media such as gaming and subscription music, ride hailing in terms of transport and food delivery, and e-commerce. It covers the six largest markets in Southeast Asia, namely Indonesia, Philippines, Malaysia, Singapore, Thailand and Vietnam.
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