When Grab announced that they wanted to take a stake in e-payments, many made the comparisons to Tencent’s Alibaba. That was no coincidence. After acquiring Uber (and a potential monopoly) in the Southeast Asian region, Grab has come out with their ambition to become an everyday app.
Almost in rapid succession, Grab comes out with other offerings—Grabfood, a partnership with an online grocery shopper, its various shuttle services, GrabBike, GrabCycle (emulating the now-defunct oBike) all while continuously pushing the extension underlying it all, GrabPay.
Now it has come out that Grab has its eye on the Philippines.
Grab Has Secured an E-Money License for a Mobile Wallet in the Philippines.
Image Credit: Grab
With blessing from the Filipino regulator Bangko Sentral ng Pilipinas (BSP), the ride-hailing company will be able to expand its GrabPay wallet into the Filipino market soon—which would encompass bill payments, in-store purchases and access to its multitudes of services that will no doubt follow.
The Philippines will be joining the likes of Indonesia, Singapore, Malaysia and Vietnam as a recipient of the company’s app—and Grab is strategic in its choice of regional expansion.
Vietnam’s Prime Minister has greenlit a cashless project that hopes to reduce the ratio of cash transactions to below 10%.
Malaysia’s central bank has issued the Interoperable Credit Transfer Framework (ICTF) seeking to foster a more innovative payment landscape while Indonesia is constantly rethinking its e-money regulations to better keep up with industry needs.
Without coincidence, all of these markets have been described as fertile ground for e-wallets to flourish—and the same applies to the Philippines.
Its Philippine Opportunities and Challenges
Image Credit: Asian Development Bank
BSP in February accredited 3 separate e-money issuers, while in June, it is said that more industry players are expected to start using Instapay, which is said in turn will drive up the volume of e-money transfers, payments and managements by the Philippine Payments Management Inc. (PPMI).
The Philippines is uniquely positioned for e-wallets to thrive, because according to BSP, 77% of Filipinos remain unbanked.
Lack of funds is a huge issue that the Philippines needs to grapple with for its populace, but besides that, 18% of respondents cite lack of documentation as a barrier to opening a bank account, while others mention the high cost of opening a bank account, lack of knowledge, joblessness and lack of awareness as reasons behind their unbanked state.
E-wallets, with the right expansion strategy, could be the great equaliser that grants Filipinos access to financial services otherwise reserved for banked populations—and grants them opportunities in the global digital economy.
The problem though is that despite regulatory and industry push, the same report by BSP records that only 1.3% of adults have an e-money account, taking into account that one person may have several accounts on different platforms.
Not only will Grab have to invest a significant amount of labour and cash into educating the populace about e-wallets, we think that the high number of Filipinos without access to funds will put Grab in a relatively more difficult position as well. It remains unclear if Grab has goals towards ubiquity of its app in the Phillippines, but if it does, the company will have to sweeten the pot and give the poorer Filipinos reasons to adopt their app.
Nevertheless, Grab remains optimistic.
Ooi Huey Tyng, Managing Director of GrabPay Malaysia, reportedly stated:
Ooi Huey Tyng
“The convenience of Grab’s many services and the millions of customers already using the Grab app every day, make us confident about the GrabPay wallet’s prospects. With the support from Bangko Sentral ng Pilipinas, we can now help millions participate in the cashless, digital economy without the need for a bank account or to download additional apps.”
Business Mirror reports that Grab Philippines will be launching its GrabPay services on October 8th, and similar to how it did it in other regions, all users of the base Grab app will automatically receive it in their mobile devices with an update. Ooi Huey said that half the smartphones in the region has the Grab app downloaded.
It will be interesting to observe if Grab will go with the money-bleeding cashback method that many wallets in the Southeast Asian region seems to be going for, or if it will be emulating any strategies already employed in other regions.
