GrabPay head Jason Thompson says he wants to help improve financial inclusion in Southeast Asia. (JG Photo/Tabita Diela)
Grab Executive Lays Out Ambitious Plan to Kill Cash in SE Asia
BY :TABITA DIELA
APRIL 26, 2017
Jakarta. Singapore-based ride-hailing service Grab seeks to implement a new lucrative payment system in Southeast Asia as part of the company's long-term strategy to move its business beyond transportation.
Founded five years ago as an online taxi-hailing service, Grab is looking to obtain government permits to allow the company to implement its payment system, GrabPay head Jason Thompson said in Jakarta on Tuesday (25/04).
"In 2020, we think the transportation marketplace will be worth about $25 billion. However, the payment marketplace is expected to be 20 times greater than that," Thompson said, quoting company estimates.
"So will Grab's payment [system] be larger than its transportation services? I think any analyst will tell you, 'yes.' I think it's a huge opportunity for us," he said.
Grab introduced a cashless, online payment system in November last year, several months after local competitor Go-Jek implemented a similar service.
Go-Jek has since developed many innovative tools to enhance its diverse payment system. For example, the company allows customers without bank accounts or credit cards to top up their "Go-Pay" balance by handing cash directly to drivers or transfer credits to other customers lacking cash.
Despite lagging in development, Thompson believes Grab's system offers a larger safety net for customers compared with those of competitors.
Without mentioning names, Thompson said there are examples of companies growing too fast in Indonesia, and that has created significant risks of fraud and identity theft. In other cases, some companies have built innovative tools but lacked broad consumer bases, he added.
"We really invest in both. We extensively invest in fraud management and make sure our systems and processes are robust," Thompson said.
In addition to appointing Thompson as GrabPay's chief, the company recently also acquired the local online payment startup Kudo to expand its network across the archipelago and work more closely with the Lippo Group, an affiliated corporation.
"We have a very large transport business here, and now we have a very large payment business as well," he said.
Acquiring Kudo – part of Grab's plan to invest $700 million in the country by 2020 – has helped to expand GrabPay's presence to more than 500 cities across the archipelago. More than 400,000 small merchants are reportedly using the payment service.
The company currently employs more than 780,000 drivers in Southeast Asia, a significant portion of them in Indonesia. Nearly half of all Grab transactions have been conducted through GrabPay, Thompson added.
"GrabPay's integration into our transportation system is working very well. We are bringing more people into the cashless economy and giving them access to online services," Thompson said. "That's how you reach 250 million customers."
However, Thompson admitted that Grab will not change Southeast Asia's cash-based economy overnight. Many Indonesians, for example, still do not have bank accounts.
The archipelago nation has fallen behind in efforts to increase financial inclusion for its citizens, compared to other economies in the region. According to the World Bank, Indonesia's financial inclusion rate in 2014 was 36 percent of its total population, compared to 53 percent in India, 78 percent in Thailand and 96 percent in Singapore.
To expand its reach, Grab has established several research and development centers to design and tailor services to specific markets. The company has established research facilities in the United States, China, India, Singapore, Vietnam and Indonesia.
Thompson said his goal is to introduce more Indonesians to GrabPay to ultimately ease transactions for customers. Many partner drivers currently face difficulties to cash out their earnings – an issue Thompson said the company is working diligently to resolve.
In some cases, drivers have had to wait up to five days to receive their earnings from affiliated banks.
"Resolving this is very high on my agenda," he said.
Thompson said Grab's services are expected to develop quickly over the next 18 months to outpace emerging competitors in the region, namely from India and China.
"It's going to be a tough 18 months, but I will be focusing myself here. I have moved my family and I intend to stay," said Thompson, who is currently based in Singapore.
The Jakarta Globe and Grab are both affiliated with the Lippo Group.