Despite late entry, GrabPay to cash in on mobile wallets

• GrabPay claims it can succeed in crowded space as market is big enough
• Fragmentation, behaviour, culture shift, regulation amongst the challenges

SINGAPORE-based ride-company GrabTaxi Holdings Pte Ltd is confident that its newly launched GrabPay mobile wallet in Malaysia will succeed despite being a late entrant into an increasingly crowded marketplace because of its active install base, high app usage and brand awareness.

Speaking to the media during the launch on June 26, Ooi Huey Tyng (pic), managing director of GrabPay for Malaysia, Singapore and the Philippines, noted that Grab not only has a “large user base but people who are already very active using the Grab app” for ride hailing purposes.

“Our app is being used every day and our users are already familiar with it,” the newly appointed head of GrabPay said in response to a question from Digital News Asia (DNA).

“The next step then is just to use the same app with a familiar user interface to make payments. This is our differentiator,” she declared. GrabPay is GrabTaxi Holding’s payment arm.

First launched in November 2017 in Singapore, GrabPay targeted signing up 1,000 local merchants two months after its launch. Earlier this year, the company indicated that Malaysia will be the next stop for it to launch GrabPay. Other Southeast Asian countries are set to follow.

Since the launch in Singapore last November, Ooi claimed the number of merchants who have signed up has jumped fourfold to 4,000 merchants today.

Asked what lessons GrabPay learned in Singapore that it could possibly use to guide its push for adoption here in Malaysia, Ooi said the key is to demonstrate to merchants that they can increase their revenues without having to invest much into GrabPay.

“We focused not so much on quantity as the quality of the merchants,” she explained. “Our game plan in Singapore was to target smaller food & beverage (F&B) players and to help them get on the digital economy.

“We also showed them how cumbersome it was to handle cash, including the difficulty in providing loose change for cash transactions. Once they saw this benefit, using GrabPay became ‘sticky’ and we saw healthy traction [in adoption],” she claimed, adding that this would likely be a similar strategy that will be used in Malaysia.

Still, Ooi conceded that the usage of cash is a very stubborn habit to break in both countries. Citing statistics from Malaysia’s central bank Bank Negara Malaysia, Ooi noted that more than 80% of transactions in Malaysia still take place on cash terms.

She however remained bullish, arguing that three years ago in Singapore, many consumers were still paying for taxi rides with cash, but this is no longer true today.

“It’s not going to be an easy journey but it’s about addressing the pain points of using cash and getting them to move away [from cash].”

To make the transition easier for merchants, Ooi said merchants initially do not have to pay any kind of fee to use GrabPay but did not say how long this moratorium period would last. Asked when GrabPay would eventually charge merchants, Ooi said that has yet to be determined.

“Even when we do charge, we will ensure that it will be affordable,” she argued.

Ooi also said GrabPay has targeted to sign up 1,000 merchants in Malaysia from the 500 it has today in the next two months. On other merchants it plans to sign up besides F&B vendors, Ooi acknowledged that F&B vendors were the lowest hanging fruit to target as Grab also runs the GrabFood delivery service.

“We want to harness this synergy first [between GrabFood and GrabPay], after which we will expand GrabPay to other retailers,” she said, declining to give any timeframe for this to happen.

At the launch, Ooi said GrabPay is accepted in some 500 food and beverage merchants in eight major cities nationwide. These merchants are based in the Klang Valley, Penang, Johor Bahru, Ipoh, Melaka, Kota Kinabalu, Kuching and Kuantan.

Examples of the brands represented are Tealive, TeoChew Chendol, Devi’s Corner, KGB Burgers, TedBoy Bakery, China House, Burps & Giggles, Kopi Ping, Big Bowl Ice and Coffee Gallery. GrabPay has also signed an agreement with KLIA Express to allow commuters to use the app to pay for their rides.

Besides these merchants, it has tied up strategically with Maybank, which will allow consumers in the future to use GrabPay credits at Maybank’s nationwide network of QR-enabled merchants.

GrabPay users are also able to transfer Grab credits from one to another, as well as split bills between users when using the app to pay merchants.

For more on how to sign up for GrabPay, go here.

Next page: Is the market big enough?