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Southeast Asia E-Money Market Report Shows Tech Firms Disrupting Banks
Despite the economic contraction amid COVID-19, electronic money payments are growing in at least three large Southeast
Asian markets due to the popularity of reloadable wallets offered by popular e-commerce and ride-hailing firms. Technology firms that combine commerce with payments will seek to extend their dominance from e-money into electronic banking.
Highlights
- Electronic money payments are growing in at least three large Southeast Asian markets due to the popularity of reloadable wallets.
- Nonbanks have overtaken banks as primary payment providers in Indonesia and are experiencing high growth in the Philippines.
- Grab Holdings Inc., Sea Ltd. and Ant Group Co. Ltd. are among the e-money companies with the largest geographical footprint, offering payments in at least six countries in Southeast Asia.
Nonbanks have overtaken banks as primary payment providers in Indonesia and are experiencing high growth in the Philippines, while banks remain dominant in Singapore, Malaysia and Thailand, according to S&P Global Market Intelligence’s latest Southeast Asia E-Money Market Report.
The report looked at the usage of three popular retail payment instruments in the region: debit and credit cards; e-money comprising reloadable prepaid cards and digital wallets; and real-time interbank transfers. It shows that the primary instrument of cashless payments for everyday transactions in Southeast Asia is e-money, which refers to prepaid monetary value stored and transferred electronically using cards or e-wallets.
Click here to read the full Southeast Asia E-Money Market Report on the MI Platform.
E-money payments in the region, excluding the Philippines, grew to $26 billion in 2019 from $15 billion in 2018. Indonesia surpassed Thailand as the largest e-money market in the region, registering $10 billion in payments.
Thailand’s e-money payments stood at $9 billion, Malaysia handled $4 billion and Singapore processed $2 billion. In 2020, e-money payment values are likely to have grown in Indonesia, Malaysia and Thailand.
E-money a proxy for fintech payments
Popular technology firms with varied business interests in the region are investing in e-wallets. The low penetration of traditional cashless instruments makes it imperative for firms to provide consumers with access to a viable instrument to perform digital transactions. Provision of payments and other financial services have thus become central to their customer acquisition efforts.
Grab Holdings Inc., Sea Ltd. and Ant Group Co. Ltd. are among the e-money companies with the largest geographical footprint, offering payments in at least six countries in Southeast Asia. They have e-money licenses to operate payments in most of these countries.
For example, Sea has e-money licenses in Malaysia, Thailand, Indonesia, the Philippines and Vietnam. Grab works with domestic e-money partners in Thailand, Indonesia and Vietnam, while it has e-money licenses in Thailand, Malaysia and the Philippines. In Singapore, they enjoy a temporary exemption from holding payments licenses.
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