Southeast Asian ride-hailing company Grab has taken a major step toward becoming a fintech player as the company rolled out its GrabPay service among third-party merchants.
On Wednesday, Grab said users in Singapore can now pay for goods and services in shops and restaurants using GrabPay, the company’s mobile wallet.
“Today is a significant milestone for making GrabPay truly a cash replacement,” the company’s co-founder, Tan Hooi Ling, told TechCrunch. “If I leave my wallet at home, I can still pay for breakfast, lunch and dinner. In time, I’ll be able to buy goods like hardware or groceries using GrabPay,” Tan said.
GrabPay turns the ride-hailing system that enables users to pay for a taxi using their credit (or pre-bought Grab credit) into one that could be used more widely as a digital payments app.
Inside the Grab app, users can tap on the GrabPay button. They just scan the merchant’s QR code, key in the amount due and hit pay.
Users can top up the mobile wallet using GrabPay Credits, credit and debit cards, other forms of digital payments such as Alibaba’s Alipay, Android pay and mandiri e-cash which is popular in Indonesia.
During an interview with CNBC, Tan said many businesses face high merchant discount rates (MDRs) — the transaction fee that is deducted by the payments processor from the total amount received — for accepting cashless payments. She believes that is likely due to costly hardware and sales processes that make the technology inefficient and “more expensive than it needs to be”.
Grab’s payment service will have zero MDR initially, according to Tan. That means merchants who accept payments via GrabPay will be able to add the full amount to their top line. “We want to make sure that merchants firstly understand what the product is, how it helps them and there’s zero cost to try,” Tan said.
But once the service picks up more users, the plan is to determine a reasonable MDR that will not become “prohibitive for anybody”.
The service is now available in Singapore, and the first merchants it is onboarding are restaurants and street food sellers. There are 25 merchants on the platform now. The plan is to grow that number to 20,000 in Singapore alone by the end of the year.
Also, Tan told CNBC it will be rolled out simultaneously across Southeast Asia by 2018 if the company gets regulatory approvals.
Tan is confident about the payments push. “For merchants in Singapore, the moment they sign up, they get access to four million customers,” she said. “Telcos and banks haven’t been able to move to mobile wallets because it requires them to adopt new customer behavior. [But] we’ve already shifted a significant portion of customer behavior.”
“Nine in 10 in Southeast Asia don’t have a credit card and 75 percent are unbanked — it’s clearly a big problem and, in our minds, larger than transportation,” Tan said.
Best known for rivalling Uber in Southeast Asia, Grab has more than 63 million app downloads, including four million in Singapore, and is available in 132 cities across Southeast Asia. The company told CNBC it expects to register its one billionth ride transaction this week.
Regarding the expansion prospect, Tan said that the company is profitable in some of the more developed markets and services, and there is no plan to expand beyond Southeast Asia.
“Our focus, as it has been for the past five or so years, is Southeast Asia,” Tan said. “There are so much value and potential there, we don’t really see any need to go elsewhere because we don’t want to get distracted.”
Grab is not the first among its counterparts to extend its business to mobile payment. Go-Jek, its billion-dollar rival based in Indonesia, introduced its Go-Pay service in 2016 while India’s Ola, which shares common investors with Grab, has operated standalone service Ola Money since 2015.
– Contact us at [email protected]