Getting small merchants on the digital payment wagon


The more, the merrier: Khairil, flanked by Teh (left) and Lee (right), welcomes more players into the market to help with consumer and merchant education.

SMALLER businesses are often hesitant about new technology mainly due to investment costs and a lack of awareness.

So when Axiata Group launched its Boost e-wallet, Axiata Digital Services Sdn Bhd chief executive officer Mohd Khairil Abdullah says it specifically focused on smaller merchants to help them take advantage of the cashless ecosystem.

“If you want to be a cashless society, you can’t just focus on the top-tier branded merchants because they already have other payment options like credit cards. You’ve got to focus on the tier-3 and tier-4 merchants.

“This technology helps the underserved segment. They were facing a lot of pain points,” he says.

Khairil notes, for example, its user base in East Malaysia.

“In Sabah and Sarawak, Chinese tourists there have been using Alipay and WeChat wallets. But the locals can’t. So when we introduced Boost there, they thought, ‘great, we can finally do what the tourists are doing’.

“So adoption was very high there. We were pleasantly surprised,” he says.

He adds that users in Sabah and Sarawak have remained active with weekly usage at 61% and 57% respectively. In comparison, active rate in the central region – where a large part of its users are based and payment options more widely available – is at 15%.

Boost claims to be the largest e-wallet in the country.

According to Khairil, Boost had 3.8 million registered users and 70,000 merchants as at end-February. And the numbers, he adds, are growing rapidly.

About two-thirds of its merchant base are made up of smaller businesses such as food hawkers, food trucks and pasar malam vendors.

He notes that most of these vendors did not previously have alternative payment options aside from cash. The introduction of e-wallets to these businesses enable them to tap a wider base of customers.

“We have been aggressively acquiring merchants so that consumers can use Boost anywhere,” he says.

One of them is Raymond Teh, the owner of Fresh Garden, a fruit store in Serdang.

Last May, Teh made Boost available as a payment option for his customers and has received positive feedback from them.

“It was easy for us to push this as a payment option to our customers. There are transactions with Boost every day,” says Teh.

About 20% of payments at Fresh Garden is done through e-wallets, the bulk over Boost.

Teh notes that it is an easier payment option to implement as there are no merchant charges or lengthy registration process.

It also makes it easier to upsell customers, he says.

Meanwhile, for Petaling Jaya-based pasar malam vendor, Passion Hot Bun owner Ken Lee, the use of e-wallets has helped overcome a lot of his pain points.

Lee was introduced to Boost about a year ago when Boost agents approached the traders community to give the e-wallet a try. Most of the younger vendors were quick on the uptake. Among them, was Lee.

“There are a lot of advantages to using it. We don’t need to calculate or return change to the customers, and there is no risk of getting counterfeit money or theft. Also, on rainy days, paper money tend to stick together, so we could lose money.

“Consumers like it because they can get cashback. So we get repeated customers. The more they transact, the more cashback rewards they get. And when there is a queue in front of your store, it attracts more new customers,” he says.

Boost is looking into more bundled propositions that would include offerings from these smaller merchants to help them increase transactions. This could be done through targeted campaigning to consumers.

“We will continue to invest in innovating new products, and on consumer and merchant education and incentives,” says Khairil.

The growth of Boost in the e-wallet segment has also enabled the group to roll out other banking-type services such as micro-insurance and financing for its merchants.

“In Indonesia and some parts of Malaysia, we’ve launched some form of micro-insurance and financing for merchants, and this is done via our sister company in the group.

“After they have done enough transactions, (there is a track record and) we can give them loans. We’ve dished out a number of loans. In Malaysia, we’ve given out about 5,000 loans with an average ticket size of about RM3,500. The average ticket size of loans in Indonesia is US$61. They are very small,” he says.

It is also working with businesses in Indonesia to provide them with supply chain payments, which could also be expanded to Malaysia.

Another service that Boost provides is micro-insurance for smaller items such as generators and smartphones, which are important devices for small merchants.

“So we’ve built businesses around that (the e-wallet) to support the merchants,” he says.

Boost currently operates e-wallets in Sri Lanka, Cambodia, Malaysia and Indonesia and Khairil is confident that there is only upside potential for its business.

He welcomes more players into the market as that would help with consumer and merchant education.

“When we first launched in October 2017, it was hard to get the market to accept Boost. The turning point came when other competitors started coming in around mid-2018. That’s when we saw our numbers grew. They helped make up the hype.

“So, the more, the merrier. Our user base grew six times last year. This year, we can quite easily move to 5 million,” he adds.

However, he thinks the market will eventually stabilise with three to five large players with interoperable wallets and a few more niche providers with limited-use e-wallets.

Khairil believes its success will depend on its ability to create a landscape that is easy for consumers and merchants.

He is aiming to have half of Boost’s base to be active daily users by 2021.

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