Leaders in e-wallet emerge


  • Banking
  • Monday, 02 Dec 2019

PETALING JAYA: When e-wallets began booming in Malaysia at least three years ago, everyone wanted to have a piece of it.

A total of 48 e-money licences have been granted by Bank Negara so far, including for five banks.

This could mean at least 48 e-wallets in the market, but the figure may be higher as some companies provide white labelling services.

With a population of only 32.6 million, the crowded e-wallet scene in Malaysia is not expected to stay around for long.

China, which has a population of around 1.4 billion, is served by two main e-wallets, WeChat Pay and Alipay.

The bloody battle to acquire users and the larger market share is truly a competition of whose pockets were deeper and who has the larger pool of cash to continue enticing users to their side.

The smaller e-wallets will either see themselves being acquired by the bigger boys or live long enough to die a natural death.

It was in 2015 when the usage of WeChat Pay in China skyrocketed when Tencent, the parent company of WeChat, gave out US$80mil worth of e-hongbao (e-red packets) for the Chinese New Year festivities.

Most e-wallet companies in Malaysia are still in the red with the various freebies and cashbacks being thrown about for customer acquisitions.

Three years on, although e-wallet providers here are still in acquisition mode, the scene might be starting to see some sanity.

Some smaller players have noticeably gone inactive following poor performances, with some surprisingly having only slightly less than 1,000 app downloads.

For context, top e-wallets such as Touch ‘n Go e-wallet, Grab and Boost, have achieved download figures to the tune of millions.

TNG Digital Sdn Bhd, which has the strong backing of China’s Ant Financial Services Group and CIMB GROUP HOLDINGS BHD, is gaining traction with its Touch ‘n Go e-wallet which is now at the 6 million mark in number of active users with more than 100,000 merchant acceptance point.

Its chief executive officer Ignatius Ong said the e-wallet scene is still very highly saturated, with one too many e-wallet service providers catering to the daily lifestyle of Malaysians.

It is however, a good thing as the public is becoming more aware of the functionalities of e-wallets.

Ong added that the industry is still fairly young and had just passed its infancy stage. It will take a few more years for the industry to mature and stabilise and when that happens, subsidies will no longer be sustainable.

Subsidies in the form of cashbacks will inevitably dwindle down as pumping out more funds to entice users will not be a sustainable plan in the long run.

“Instead of using cashbacks, I see merchants and e-wallet companies working together to leverage off each other’s industrial capabilities. For example, Touch ‘n Go eWallet’s growing user base can become a good platform for merchants who are looking to elevate their business.

“At the same time, higher discounts will then be funded by the overall revenue these merchants have generated. This way we are not only enhancing the user experience but the internal structure of financial management that will benefit all parties.

“However, during this early stage, I still think that subsidies in the form of cashback, rebates, and promos are the way to go to attract users. We look at it as a form of education and introduction to the e-wallet system,” said Ong.

Meanwhile, vcash, one of the pioneers in the Malaysian e-wallet sphere, decided to call it quits earlier this month.

It was not a small player to begin with, as it had the backing of the yellow man.

Saturday marked the last day of the e-wallet’s operation since its launch in the fourth quarter of 2017.

Digi.com Bhd said the decision to cease the service was part of its long-term strategy to prioritise innovations in new digital services to capture revenue growth in the consumer and business segments.

Group chief digital officer Praveen Rajan said the e-wallet business today is crowded and consumers are driven to use it because of convenience as well as the heavy subsidies and rewards given.

“The main value proposition at the moment seems to be driven by discounts and cashbacks.

“Based on our long-term strategy, it was prudent to prioritise revenue-generating services that could benefit our consumers and business customers, ” he said, adding that while consolidation is something that will happen naturally in any crowded market, it was more important for the industry to be able to promote the real value proposition of e-wallets, which is convenience and security, as compared to traditional cash.

Digi is not the only telco with a fintech initiative. Other telcos such as Axiata Group Bhd and Tan Sri Vincent Tan’s U Mobile Sdn Bhd are also in the e-wallet scene.

Axiata owns Boost, which currently has 4.9 million users and 125,000 merchants.

Boost chief executive officer Mohd Khairil Abdullah said the e-wallet’s user base has increased close to 40% year-to-date (y-t-d) while its merchant base has more than doubled.

Its users’ weekly gross transaction value (GTV) per week has also increased six-fold from RM47 last year to RM258 this year.

“The user acquisition cost then was high but now, because of the increasing awareness on e-wallets, this acquisition cost has dropped to very sustainable levels.

“Since we started about two years ago, our user acquisition cost has dropped nearly 45%, ” he said.

U Mobile recently launched GoPayz, which also offers a physical card, similar to that of AIRASIA Group Bhd’s BigPay.

And even for BigPay, which has been around since end-2017, it is still loss-making but it has been registering increasing revenue.

It saw losses before interest, tax, depreciation and amortisation of RM21.29mil on the back of the expansion of its user base for the third quarter this year but its revenue has recorded a 393% jump to RM4.17mil against the same period last year.

In this gestation period where cash is still king, it will not take long for the smaller players to fizzle out.

RinggitPlus CEO Liew Ooi Hann said competition is always good for consumers but as with any industry that is nascent and mature, there is consolidation.

“The problem with choice right now which is about to change with e-wallets, is the closed loop systems.

“Bank Negara’s push for the interoperable credit transfer framework (ICTF) will allow for the industry to consolidate but still have sufficient players who can interoperate.

“For me, that’s a key thing that should address the balance, ” he said.

Khairil hoped that in future, closed looped e-wallets, such as toll payments and ride hailing would open up their proprietary use cases to other e-wallets, saying that it would be a win-win situation for all parties.

Recently, the market has seen several partnerships involving e-wallets to increase merchant touchpoints and also to adopt DuitNow QR, the common QR standard for Malaysia.

With the current sustainability of e-wallets being reliant on cashbacks and subsidies for the users, a huge question remains - how long and how much more should e-wallets continue to bleed before the market can finally see a truly mature e-wallet audience?


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