As technology opens new doors to more sophisticated services and offerings in the payments space, it is important to remain inclusive – especially in Asia, where there is a sizeable untapped market of consumers who do not have access to traditional financial services. Xiou Ann Lim takes a look at two e-wallets
Founders Jeremy Tan and Alex Kong are at the helm of two e-wallets with very different propositions, but there is one thing they agree on: Apple Pay, Android Pay and Samsung Pay are not e-wallets.
“It is a misconception that they are e-wallets – they are actually replacements for physical credit cards,” says Kong, CEO of TNG Wallet.
“Even then, you still need to pull out a physical card for transactions above HK$1,000 ($130),” he reveals.
Tan, CEO of Singapore-based Liquid Pay, agrees: “They are digital card carriers.”
Liquid Pay – which combines discounts with mobile payments – is more than just a card carrier. It selects the payment method that gives consumers the best returns by aggregating all the discounts from the different cards a user owns, and allowing merchants to run deals and promotions to users on the fly.
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“This is our dynamic pricing engine: We combine the savings that users can get from their cards, programmes or membership providers and merchants – then we translate that into direct savings on the user’s expenditure,” Tan explains, adding that the e-wallet allows discounts to be displayed and deployed at the point of purchase.
What else qualifies as an e-wallet? According to Kong, an example of an e-wallet is Alipay, because it facilitates payments and money transfers to banks as well as to peers.
“TNG Wallet offers all those services and much more,” says Kong.
He adds that TNG Wallet – which is headquartered in Hong Kong – is the only e-wallet that operates in 13 countries.
Kong says there are a few e-wallet functions that only TNG Wallet offers: “Apart from P2P as well as bank transfers (across 813 banks in 13 countries) – we are the only e-wallet that allows users to make cash withdrawals and that provides instant global remittance directly from the wallet.”
He adds that TNG Wallet is also the only one to allow global bill payments and global SIM card top up.
But Kong points out that even more impressive than the strong network of banks TNG Wallet boasts is the around 190,000 cash pick-up points.
“If you look at developing countries such as Indonesia, the Philippines, Vietnam, Myanmar and Thailand – up to 80% of the population do not have a bank account: they are the unbanked,” he shares, pointing it out as an opportunity.
“They can collect cash from post offices, local pawn shops, convenience stores or the money changer,” he explains.
Kong says this is why TNG Wallet is growing in popularity among foreign workers such as domestic helpers who send money back home to their families.
“We waive the transaction fee and offer the best exchange rate as well as instant cash withdrawal once the money is transferred,” he explains.
The recipient will receive an SMS with a pick-up code, which is presented along with their identification at the point of cash collection.
Going cashless in Asia
E-wallets have been touted as one of the main drivers in helping countries go cashless. But is this possible in Asia?
Kong says one of the main stumbling blocks in going cashless for Hong Kong is culture. “It’s not about the technology or infrastructure – people are just used to paying with cash.”
This is in spite of the fact that ‘e-wallets can now pretty much offer the services provided by traditional banks, but much more efficiently and at a lower cost’.
Meanwhile, Tan reveals that the retail sector in Singapore is seeing a growing usage of cards.
“Cash is still being used, but the numbers are not that high,” he adds. He also says that payment for public transport is pretty much cashless, with the final frontier being hawker centres.
“There is a proliferation of ATMs in food courts, and banks have to bear the cost of refilling those ATMs.”
If there is a cost attached to handling cash, why do banks still enable the use of cash through widespread distribution of ATMs?
“In delivering the most convenient services to consumers, we somehow reinforce their wants and certain behaviours – which makes it harder for us to change them.”
Tan is of the opinion that when a cashless solution is introduced to hawker centres, it has to be convenient and easy to use.
“In small businesses such as hawker stalls, the owner may be multitasking as the chef and the cashier,” he points out.
This means they will have to learn to use the terminal – to turn it on, replace the paper, etcetera – apart from operating the business.
“If we want to run the final mile in going cashless, we need to simplify the cashiering environment – and this is where we can say Liquid Pay is making a dent,” he adds, explaining that the solution makes it convenient for merchants to accept payments.
“Consumers just need to have their QR code scanned and pay before the merchant receives notification of payment – the merchant doesn’t have to take or swipe the card, tear off a slip of paper and tell customers where to sign – they can focus on doing other things as the payment is made,” he says.
Tan believes there are three stumbling blocks to becoming truly cashless: “Some payment solutions are still too cumbersome, cash is convenient as ATMs are easily available, and we’re not making it painful for people to use cash.”
In fact, he points out that it is still convenient for people to use cash as they are being charged for using electronic payments.
But at the same time, Tan says change is starting to take place: “Banks are starting to realise the cost of handling cash and are looking to invest in non-cash alternatives.”
He also highlights the Monetary Authority of Singapore’s (MAS) initiatives to develop a National Payments Council and to consolidate all POS terminals so there is more integration.
“It’s a step in the right direction – but we still have to use a terminal,” he points out.
The payments landscape in Asia is quickly becoming competitive as consumers start to develop higher expectations, so e-wallets such as TNG Wallet and Liquid Pay are constantly rolling out new offerings to grow their market share.
For example, Liquid Pay is at the stage of implementation – having just launched in Singapore in November – but is looking to hit the ground running in Malaysia, Indonesia and Thailand by the first quarter of 2017. Tan is already eyeing Hong Kong, India, Australia and New Zealand next.
“For the first two quarters, there will be a rapid growth spurt for us as we’re deploying in various markets,” Tan shares.
“Everything changes rapidly, so we’re planning to move quickly as well by identifying markets that are most receptive and taking off there,” he reveals.
Meanwhile, TNG Wallet – which is at a more mature stage since its launch in November 2015 – has been launching two to three new features every month, its next being Make Money, which allows users to earn money through gamification or completion of tasks such as participating in a survey.
“From October to November, our growth was 156%,” Kong discloses. Looking at the current trajectory, he forecasts a 260% growth from November to December.
“This has exceeded our expectations and we are now facing a problem with capacity,” he admits.
In order for TNG Wallet to offer remittance and bank transfer services, regulators require them to conduct full KYC checks.
“Our office in Hong Kong has 34 counters for this purpose – consumers who wish to sign up for our service have to present documents for verification,” Kong explains.
“The cost of conducting these checks is also high – there’s a cost incurred before they even use our services – and that is another challenge,” he says, adding that conducting in-person KYC checks is also a monumental issue in geographically fragmented markets such as Indonesia.
But Kong remains positive, and believes that collaboration will help steer the use of e-wallets forward:.
“We’ve established the Global e-Wallet Alliance and we welcome any e-wallet providers to join this alliance to enable other e-wallets to work in foreign markets through partnerships with local providers.”