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Driving digital payments

Cashless payments to see exponential growth by 2020, says Fave’s Joel Neoh

Fave to acquire more partners and merchants this year, may expand to three new markets in 2019

Malaysia’s mobile payments industry may be in its early stage currently, but the landscape could see a drastic change in one to two years’ time.

At the moment, e-commerce contributes less than 5% to total retail spend, with the bulk of purchases still done offline.

“We’re at a point where it’s like this [with the majority of retail spend being offline sales] but I think it’s going to be exponential in the next few years.

“Mobile payments can be even faster than e-commerce [adoption], because e-commerce is usually individual transactions but payments have a social element,” says Fave founder Joel Neoh.

There has been a rise in the number of mobile payment providers in the market in the past year, with the introduction of a few Chinese e-wallets, Axiata’s Boost, GrabPay as well as the launch of new cashless payment options by several banks here.

The government is also actively pushing for cashless transactions.

As such, he opines that the industry will see an exponential boom once a sufficient number of merchants and locations embrace mobile payments.

Neoh believes that it is possible for as many as 70% of Malaysians to go cashless within the next five years, as the country already has a certain number of debit and credit card users, which are also forms of cashless payment.

Open to innovation

It’s only been two years since Fave was launched and less than a year before it introduced its mobile payments and loyalty platform FavePay, which offers instant cashback and promotional offers.

The platform was a natural progression for the start-up, as the team realised the model could complement the Groupon voucher model that it acquired in Q1 2017.

It has seen rapid adoption of FavePay from both merchants and consumers, to the point that the payments/loyalty model has already exceeded its voucher/promotional model, which has existed since 2011.

The start-up now has 15,000 locations across the three countries, with nearly 6,000 in Malaysia alone.

In total, there have been approximately two and a half million downloads of the Fave app across Malaysia, Singapore and Indonesia.

Close to one million of the downloads originated from Malaysia, with some 40% of users – 400,000 to 500,000 people – being repeat customers who use the app on a monthly basis.

“Out of that 40% use it every month, about 60% of all transactions are done using FavePay, with 40% done via vouchers,” he reveals.

Neoh shares that while the start-up’s team initially thought that convincing merchants to adopt cashless payments would be a tough sell, they were surprised that the merchants were ‘very open’ to it and that there was inbound interest from businesses proactively approaching Fave to find out more about the platform.

At the moment, the start-up’s biggest market is Singapore, followed by Malaysia and Indonesia.

He explains, “Singapore is the country that is closest to being cashless in Southeast Asia and it is used FavePay easily because almost every other person has a debit or credit card. Here, you still have a segment of society that doesn’t have these cards.

“In Indonesia, it’s even further off as there are still a lot of people who are unbanked [and as such] can’t pay with Fave yet. That’s why it’s our smallest market.”

That said, Indonesia could go the way of China when it comes to cashless payments, he notes, because a lot of investment is being channelled into the country to emulate China’s success in moving from cash to digital payments.

Working with partners

The start-up will cross the US$100 mil (RM403.36 mil) mark in terms of the volume it brings to businesses by year end.

Due to the large headroom in the industry – for context, mobile payments in China exceeded US$5.5 tril by the end of 2016 – Neoh says Fave is just ‘scratching the surface’ of the market as the figure is less than 1% of the total market.

The focus for the remainder of the year is on scaling and working with more businesses to help them with mobile payments and loyalty in the three markets it is in.

At the same time, he also wants to bring more partners onboard. Most recently announced was the partnership with AirAsia Group Bhd’s loyalty programme in June.

“Partnerships and marketing are key for us this year. We have a few partnerships lined up this year and we’ll scale up to more locations and make the consumer experience better.

We need to be part of an ecosystem where there’s a big driver pushing cashless or driving the digital payments space.

“Some players that are going to be building this ecosystem would be those like Alibaba, Tencent, WeChat or Grab and that’s the kind of partnership we want to work on. We need that kind of ecosystem scale because of the industry size. Being small is not going to work for this space,” he says.

Such a partnership, he adds, could result in a joint venture, an investment or an acquisition.

The next few months will also see FavePay transform into a payment aggregator by working with mobile wallet providers, where consumers will be able to attach different e-wallets to pay through its platform.

Come 2019, Neoh is eyeing expansion into the Philippines, Thailand and Vietnam.

“In the markets we’re looking to enter, we find that the governments are also pushing towards cashless payments, so I think as long as more and more consumers have ways to pay digitally or through some form of cashless solution, then we’d love to be there,” he adds.

Enabling small businesses

Fave’s aim is to work with local small businesses, restaurants and retailers and help them connect with online consumers.

He says, “Our vision is enabling businesses, especially SMEs, to benefit when consumers go cashless. Because oftentimes, they’re the ones lagging and need the most help when it comes to digitisation.

“Can we help them reduce their risk in cash handling, market better to consumers, have more data, engage better with customers? That’s the space we want to help businesses in.”

In addition, he wants to up the game in customer relationship management (CRM) for merchants.

He describes the current CRM technology and processes as the first phase, where businesses typically filter customers by age, gender and other general demographics to send out email blasts.

That said, the start-up’s business intelligence team is already looking into bringing it to the next level, to what Neoh calls ‘CRM 2.0.’

“We’re looking at Big Data type of solutions that are out there; there are certain algorithms we can build and leverage. With the 2.0, it means that an email, push notification or when you open up the app, it’s personalised to you.

“This is something we’re working on now, and hopefully we’ll get to a good point in the next one to two years,” he says.

Eventually, in five to 10 years, the third phase will be to establish a direct link between merchants and individual customers as well as give merchants more data and insights on their customers.

He adds, “We want to match that data set with merchants so they can target customers better and provide a personalised experience to and an individual customer.”


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