Online payments still a challenge for Southeast Asia’s tech players
The adoption of mobile payments and lack of dominant providers in Southeast Asia are among the biggest challenges for technology start-ups hoping to expand in the region, according to a panel of entrepreneurs.
In Indonesia, the region’s largest market with a population of about 261 million, payment represents the biggest problem because credit card penetration is low, as the use of cash and bank transfers remain prevalent in the region, according to Muhammad Fajrin Rasyid, the co-founder and president of Indonesian e-commerce company Bukalapak.
The slow adoption of online payment means that Indonesia’s e-commerce market was still “large and untapped”, said Fajrin, who was part of a panel on Wednesday at the South China Morning Post’s China Conference in Kuala Lumpur.
“Only about 10 per cent of Indonesia’s population have shopped online,” he said, citing payment as the main obstacle and the many users not knowing how payments work online.
The slow online payments adoption also means that companies like Bukalapak and even Klook, a Hong Kong-based travel activity booking platform, have experimented with offline methods to better engage customers.
Bukalapak is working with some 300,000 family-run stores across Indonesia that serve as agents. These shopkeepers help consumers order items online and receive cash as payment for the transaction.
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Anita Ngai, the chief revenue officer at Klook, said the company has experimented with offline travel fairs in cities like Manila in the Philippines, where shopping centres are popular areas with locals.
To meet the challenge of users who do not want to enter their credit card details into the Klook app to book travel packages, the company works with prepaid credit card firms that have booths at these malls, according to Ngai. These firms allow consumers to buy credit cards with cash so they can pay for the travel packages.
The call for an improved digital payments ecosystem in the region follow the mobile payments boom in China, where the major providers have helped drive the rapid growth of online retail, financial and on-demand services.
Another big problem with online payments in Southeast Asia is that each market in the region has multiple digital wallet services from different players, making the payments sector highly fragmented and frustrating for consumers who wish to pay online.
Even a small market like Singapore has some 27 different digital wallet services, according to Zack Yang Zhan, the co-founder of Singapore-based FOMO Pay, at a separate panel on cashless payments.
“We want to solve the cashless challenge where you can go to any merchant and pay without having to worry about which wallet to use,” said Yang, whose company provides what it described as a wallet-agnostic, all-in-one QR code payments solution to merchants.
As e-commerce drives mobile payments and transactions continue to rise, enterprises in the region must also be aware that security is imperative and should be built into mobile payments systems, according to Stephan Neumeier, the managing director for Asia-Pacific at cybersecurity firm Kaspersky Lab.
Neumeier said that it was possible for cybercriminals to hide malware in QR codes and infect the devices which scan these compromised codes.
“From a cybercriminal point of view, what can be done today is scary,” he said. “Users tend to behave in the same way they do in traditional [cash or credit card methods] when they make transactions … using e-wallets and mobile phones.
“If you can now send money to a beggar on the street using his QR code and you’re not suspicious about that then [something is wrong],” he said. “Security features need to be built into these technologies.”