Mobile payment growth continues in Southeast Asia

While Africa gets most of the attention for widespread adoption of mobile payments, the services are growing across parts of the Asia-Pacific region and some communication service providers (CSPs) are leading the charge, particularly in Southeast Asia.

According to the GSMA’s latest Mobile Economy Asia Pacific 2022 report, there are 86 live mobile money services in the region. At the end of 2021, the number of registered accounts increased 30% to 328 million in the East Asia and Pacific region and 11% to 283 million in South Asia. The total transaction value across the regions was nearly $300 billion.

But every market in the Asia Pacific is different and CSP mobile payment and financial services strategies vary widely, explained Malcolm Rogers, Senior Analyst at GlobalData. In China, where giants Alibaba and WeChat Pay are dominant, CSPs have not ventured into mobile money, he said. The situation is similar in Australia, where bank cards and payment terminals are common.

“In Asia Pacific, the markets where telcos have had the most success in growing mobile money and mobile financial services have been those with high rates of cash usage and unbanked or under banked consumers,” said Rogers, noting that the market where CSPs have had the most success is the Philippines.

Banking on unicorns

The stand-out CSP in Southeast Asia for mobile payments is Globe Telecom with its Mynt subsidiary that provides GCash services. Globe created Mynt in 2017 in partnership with Ant Financial Services and Filipino conglomerate Ayala with the aim of increasing “financial inclusion” and modernizing payment services. By late 2021, Mynt was valued at $2 billion and became the country’s first tech unicorn (a startup worth more than $1 billion).

GCash has 71 million registered users, 5.5 million merchants, and gross transaction value of 4.8 trillion Philippine pesos (US$88 billion), according to Globe’s financial report for the nine months to 30 September 2022.

At first, GCash focused on offering mobile payments and peer-to-peer transfers and then expanded into other financial services, including “buy now, pay later,” credit services, insurance, savings accounts, and investment services, according to Rogers.

In an interview with McKinsey, Martha Sazon, President and CEO of GCash, said the number of registered users accounted for 70% of the country’s adult population. “GCash is already embedded in users’ daily lives. This popularity is based, I think, on the trust we’ve earned—on our ability to simplify communication and demystify financial services for the masses,” she told McKinsey.

But Globe is not the only CSP on the Filipino mobile payment scene. Mobile operator Smart launched PayMaya in 2004. The business was recently rebranded to Maya and sits within the operator’s digital technology subsidiary Voyager Innovations that is jointly owned by PLDT and Smart. After raising $210 million in new funding in April 2022, Voyager was valued at $1.4 billion and followed Mynt into unicorn territory.

Like GCash, Smart’s service started by offering mobile wallets. But in May 2022, Maya expanded into digital banking, offering savings and loans, insurance, investment, and crypto purchasing services. According to Rogers, Maya had over 47 million registered users for its mobile wallet service as of the end of March 2022, while Maya Bank had 1 million customer accounts by the end of September 2022.

Other markets in Southeast Asia where CSPs are active in mobile money and financial services include Indonesia, Malaysian, Singapore, and Vietnam:

• In Indonesia, Telkomsel’s LinkAja has grown beyond its mobile wallet roots and expanded into a mobile financial services company that offers banking as well as mobile payments, said Rogers. It had 68 million users as of March 2022.
• Malaysian operator Axiata offers financial services across seven countries in Southeast Asia through its Boost fintech division. As of 30 September 2022, its mobile payment service Boost Life had 10.2 million users, marking an increase of 9% compared to the previous year, and 538,000 merchants, which was 33% higher than the previous year.
• In Vietnam, where 40% of the population does not have a bank account, mobile payment services are just starting to take off. In early 2022, Viettel and Vietnam Posts and Telecommunications Group launched services, joining MobiFone. Government figures from August 2022 show the number of mobile money users quadrupled to nearly 1.8 million since services were launch earlier in the year.

In a more developed Southeast Asia market like Singapore, the CSP strategy is slightly different. Last year, Singtel launched GXS, a digital banking joint venture with super app Grab that provides food delivery, digital payments, and ride-hailing services, after winning a digital banking licence.

“The strategy here is not necessarily to boost the telco business, but rather leverage the existing technology platforms and non-financial data (telco user data) to provide digital banking services that can disrupt traditional banks,” said Rogers.

Mobile payments are among the new consumer services that TM Forum tracks in its telco revenue growth report series. The latest report finds many operators in Asia that have established lines of business for mobile payments and contribute modest revenue (less than 1% of total), including AIS, Axiata, Korea Telecom, Singtel, and SK Telecom. For a few operators in Asia, mobile payments are a core service at a group or operating company level, namely, Airtel, KDDI, and NTT – according to the report.

Although there are signs of growth for mobile payments and financial inclusion in Asia Pacific, the GSMA flags that there are still some barriers for some people. “Security and preference for cash payments” are deterrents in markets such as India and Indonesia, while a gender gap in mobile device ownership is a factor some countries, such as Bangladesh.