Asia Payments Research

Grab has long had its eye on Indonesia, the home turf of its rival Gojek and Southeast Asia's largest economy. If Grab is going to be region's dominant super app, it needs to have a strong foothold in Indonesia, which by population is nearly as large as the Philippines, Vietnam, and Thailand combined. By leading a US$100 million Series B funding round in Indonesia's homegrown e-wallet LinkAja, Grab is signaling its intention to challenge Gojek more forcefully in the country's burgeoning digital finance segment.

After years of solid growth, global remittance flows are set to shrink in both 2020 and 2021, weighed down by the pandemic and its associated economic fallout. Asia, one of the fastest growing regions for remittances in recent years, will be one of the hardest hit regions, the World Bank estimates. Remittances in East Asia and the Pacific are projected to fall by 11% in 2020 and 4% in 2021. In South Asia, remittance flows are predicted to fall 4% this year and 11% the following year.

By at least a few metrics, Ant Group-backed GCash is the Philippines' top e-wallet. GCash, a subsidiary of the Globe Telecom-owned fintech startup Mynt, recorded 10 million downloads in the first nine months of the year, more than any other finance app, according to analytics firm AppAnnie. User growth rose 130% over that period. GCash expects transaction volume to reach P1 trillion this year, an amount that it took the company the three previous years combined to reach.

Buy now, pay later is taking the payments world by storm in Europe, the United States and Australia. Firms like Klarna, Afterpay, Sezzle and PayPal (with its "Pay in 4" product) are tapping strong consumer demand for interest-free installment payments. In Southeast Asia, however, BNPL remains at a nascent stage. None of the big BNPL players have launched their services in the region yet. There are some promising local startups though.Singapore-based hoolah is one of Southeast Asia's ascendant BNPL startups. In March, Hoolah raised an undisclosed eight-figure sum in its Series A round. Hoolah will use the cash to expand regionally. Investors participating in the round included venture-capital firm Allectus, iGlobe Ventures, Genting Ventures, former Lazada group CEO Max Bittner, and FNZ CEO Tim Neville.

Hoolah has been in Singapore since 2018 and works with merchants including HipVan, Castlery, Sennheiser and Skin Inc. The firm charges merchant-partners a fee for every successful transaction. Hoolah's BNPL service lets shoppers make purchases in three interest-free monthly installments. The company's key customer segments are youngsters (aged 18-26) who are not yet able to qualify for a credit card, some 26 to 35-year-olds and gig-economy workers. The latter segment likes using hoolah because the workers do not receive fixed salaries.

Hoolah enjoys a first-mover's advantage in Singapore. In an interview with Vulcan Post last year, co-founder and COO Arvin Singh explained why BNPL has been slow to arrive in Southeasts Asia. “There’s a high degree of complexity of achieving a seamless checkout experience while managing a flexible payment solution that includes risk management, consumer payback, direct merchant integration, merchant side funding and the commercials," he said.

In September, hoolah launched its BNPL service in Singapore's physical retail stores, where it sees an opportunity to grow sales as the pandemic eases in the city-state. To use the service, customers scan a QR code at the point of sale with hoolah's app. They then enter the total order amount, which is divided into three monthly payments.

Hoolah launched in Malaysia earlier this year and plans to expand to Hong and Thailand before the end of 2020.

Meanwhile, of the major global BNPL players, Afterpay is likely to be the first to expand to Southeast Asia. The Australian firm is reportedly mulling the acquisition of EmpatKali, which like hoolah is based in Singapore, but is focused on the Indonesia market. EmpatKali has "an established, albeit, very early stage position in Indonesia,” Afterpay's CEO Anthony Eisen told Reuters.

Ant Group's IPO is a big deal. In fact, the listing is expected to raise US$34 billion, would make it the biggest IPO of all time. Ant's valuation based on the pricing will be roughly US$313 billion, similar to Mastercard (US$319 billion) and JPMorgan Chase (US$309 billion). Can Ant justify that valuation? After all, the company derives the vast majority of its revenue from just one market: mainland China. And Ant has long benefited from a dearth of digital competition. Once the IPO is over, Ant will likely use some of the proceeds to fund its expansion in Southeast Asia. Ant has invested in a large number of e-wallets across the region and applied for a digital bank license in Singapore.

TransferWise is one of the few European fintechs making inroads in Asia. That's because the UK-based firm has a coherent Asia strategy: Enhance payments of every stripe - cross-border, domestic, real-time, credit card, e-wallet and more - and enable its partners to integrate the TransferWise open API directly into their infrastructure. TransferWise's APAC headquarters are in Singapore and it operates in Australia and New Zealand as well. The company has inked a deal with Alipay that allows it to begin serving the China market, albeit in a limited manner.

October 15 2020

Afterpay is on a hot streak

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Australia's Afterpay is riding high on the BNPL boom sweeping its home market, the United Kingdom and United States. Afterpay is valued at US$23 billion, while its share price has risen about 960% since the ASX bottomed out in March. Both the UK and U.S. are key growth drivers for Afterpay, accounting for 41% of its revenue in FY 2020. Services like Afterpay's are gaining in popularity not only because people are shopping online more often, but also because credit is harder to come by during the pandemic-induced downturn. Some lenders are concerned about the ability of consumers to reliably make payments. As a result, consumers are more apt to be interested in installment payments.

October 12 2020

Is Airwallex defying gravity?

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Airwallex is among a handful of loss-making fintech unicorns that has continued to raise vast sums from investors amid the coronavirus pandemic. Established in Australia in 2015 and now headquartered in Hong Kong, Airwallex is set on a bold path of international expansion and plans to use the US$40 million raised in an extended Series D round that closed in September to bring its cross-border payments business to the United States, Middle East and Africa.

Kakao's fintech ecosystem is coming into its own. The key units, the Kakao Pay e-wallet and digital bank Kakao Bank, are both gearing up for IPOs in 2021. Kakao Pay is slated to list first, in what will also be the first time a Korean mobile payments firm goes public. Kakao Pay's IPO is expected raise up to 10 trillion won (US$8.5 billion).

If ride-hailing companies can aspire to be digital banks and super apps, then perhaps airlines can too. In fact, consumers probably trust airlines with their data more than they do Grab and Gojek. For Malaysia's AirAsia, which lost a record US$238 million in the second quarter, developing new revenue drivers is a necessity as the pandemic keeps international air travel grounded. That's why the company is expanding its fintech services - including possibly applying for a Malaysia digital bank license - and launching an Asean focused super app that covers entertainment, shopping and travel.

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