Author: Micky Choo
The Southeastern Asia marketplace economy is booming, with arguments over whether Thailand — with 11 million online consumers expected to double every three years — or Indonesia, expected to have a $130 billion e-market by 2020, is truly in the lead for the region. Beyond those two nations, there are a number of e-commerce and marketplace economy startups in other southeastern Asia countries, including 270+ in Singapore and over 30 in Vietnam.
The landscape for payments in Southeast Asia is particularly intriguing because it's a potentially huge market with no current major player. China, which dominates most of the Asian continent, has seen Alibaba and WeChat Wallet split their payments economy. The U.S. has PayPal and Venmo (now the same company), and Africa has M-PESA. But despite nearly a trillion dollars of potential value in Southeast Asia, no one has risen to the top. 2.5 billion people globally don't have a bank account, and a hefty chunk of those reside in Southeast Asia. Most payments systems in the first world are tied back to bank accounts; even the ones that don't, like M-PESA, tend to have solid local reach.
So what payments companies in Southeast Asia are standing out in a crowded, locally-driven marketplace economy? Who could rise?
- Lenddo: Use your social connections to find local financial services.
- Ayannah: This allows users micro-insurance products, money remittances, and more.
- Numoni: This is a big play for unbanked citizens, including migrant workers — it's a completely cashless payments system.
- CodaPay: Mobile phone subscribers (more on that in a second) can make pre-paid or post-paid payments.
- Fastacash:The best-funded fintech startup in Southeast Asia right now, it has a host of apps that empower its users to send and receive money across the marketplace economy
One of the reasons for the crowded payments space in Southeast Asia is that it's genuinely a mobile-first part of the world. Consider the case of Indonesia:
Further evidence that Indonesians have embraced mobile-first initiatives comes from social media, with Indonesians having the highest mobile Facebook usage rate worldwide, with 63 million users in 2015. Further projections put Indonesians’ future Facebook access via mobile being almost 99 percent by 2018, showing a real dominance over desktop platforms. The mobile-first path that Indonesia has taken also allows retailers to focus on creating mobile functionality, presenting unique opportunities to dominate in the retail space.
Because some countries in Southeast Asia have massive populations (Indonesia, for example, is north of 250 million), the mobile-first movement is a huge deal. This allows the seller side to have hyper-personalized data and tailor their products even more, as opposed to generalized swaths of information about a huge population. That's also why so many companies are rushing into the payments space — it's a relatively low barrier to entry, and the inherently mobile nature makes for better decision-making around what users want.
70-80% of Southeast Asians should be on smartphones by 2021 (it's about 50% now), which would approach U.S. and Japanese levels. But there are already major payments players in those spaces, and not so among the southeastern Asian economies.
Uniquely Southeast Asian
It should also be noted that one quirk of the Southeast Asian marketplace economy is that e-commerce developed before payments or logistics, meaning it spent years as a series of informal markets on platforms like Instagram. Only recently have payments been formalized in the area.
Also critical to understand in Southeast Asia: if you analyze net promoter score, a quality metric for customer advocacy, local payment systems — if fragmented — consistently score higher than major enterprise options based elsewhere. For example, in Indonesia Tokopedia (local) has an NPS of +7 while Amazon's NPS is -24.
To fully understand how the sharing economy might impact and affect Southeast Asia and other regions where it's not fully emergent, it helps to more broadly understand the landscape of the sharing/marketplace economy.
3 Unique Opportunities for Payments in the Sharing Economy