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Google Pay shaping up to be serious contender in South-east Asia

Claudia Chong
Published Wed, Mar 10, 2021 · 05:50 AM

Singapore

WHERE is BB Loh? The question gripped many over Chinese New Year, and is perhaps quite telling of how adept Google Pay is at getting consumers' attention.

The payments platform is muscling in on the Singapore market armed with viral marketing campaigns and cashback promises. In India, it has grown large enough to pose a serious threat to homegrown players, and observers say it could do the same in South-east Asia.

User acquisition is a pain for new players, but Google Pay seems to have cracked the code. Since last September, it has been offering cashback to users who send money, make payments and refer others to the app.

That's nothing new, but the mystery cashback comes in the form of scratch cards - attractive to anyone who can try their luck by simply sending S$10 to a friend. Several users The Business Times spoke to excitedly called it "free money".

The elusive BB Loh is among five characters users must collect for a shot at winning up to S$88.88. Its rarity spurred discussions online on how to maximise chances of getting it by increasing certain transactions.

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Google Pay declined to reveal its number of users in Singapore. But App Annie data showed that the app jumped from 19th place in 2019 to ninth place in 2020 for top finance apps in Singapore by downloads.

This comes as Big Tech increasingly encroaches on financial services. Mass data on consumers' financial patterns helps streamline advertising and make these companies attractive for financial institutions to work with.

Apple launched a credit card with Goldman Sachs in 2019 while Facebook launched payments through its family of apps in select markets.

Although Google Pay is building a platform of financial services, it has no intention of being a bank, said Patrick Teo, who heads the unit in Singapore. "Our strategy is to partner with all these providers."

Users can make or receive payments by linking credit cards, or bank accounts from DBS, OCBC or Standard Chartered. Google Pay has also tapped PayNow, Singapore's major fund transfer network.

Mr Teo, who is site lead and engineering director for payments at Google Singapore, said Google Pay aims to help consumers access a range of services through a single app.

It wants to build an ecosystem connecting users, providers and merchants.

That sounds like the super app ambition of companies like Grab and Gojek. "Google Pay will test players like Grab and Fave's ability to retain fickle consumers in search of the best deals," said Herston Powers, managing partner of fintech-focused venture capital firm 1982 Ventures.

Although Google Pay in its sleek, revamped form has not been rolled out to other parts of South-east Asia, observers believe the region is too attractive for it to ignore.

Mr Powers noted that Google has an edge because of its ubiquity. "In South-east Asia, Android has 86 per cent market share and Google Pay may be able to help push regional digital payments past US$1 trillion in the next few years."

Google Pay is built on existing payment infrastructure, he added.

The establishment of Indonesia's real-time payment system, BI FAST, could benefit it and other fintech players.

In India, Google Pay and Flipkart-owned PhonePe have captured the lion's share of the market for transactions through the national Unified Payments Interface (UPI).

PhonePe processed 968.7 million transactions in January 2021 while Google Pay processed 853.5 million. India-based Paytm trailed far behind with 332.7 million transactions, data from the National Payments Corporation of India showed.

Google Pay in India lets users buy gold and pay for bills, and could soon offer loans and insurance. Meanwhile, merchants can create in-app digital business fronts discoverable online and in-store.

Can Google Pay's inroads in India be replicated in South-east Asia?

"South-east Asia will be tough as it's a very fragmented region. You need strong local presence on the ground, and some countries are not mature in their payment infrastructure," said Chia Hock Lai, president of the Singapore Fintech Association.

Singapore, in particular, is a developed market that calls for stronger product differentiation.

Google Pay is expanding beyond payments - there are close to 2,000 food merchants on its platform that users can order from. Movie ticket booking can also be done through the app.

But other more established apps have these functions as well. Mr Teo declined to say what other services Google Pay is looking to include in Singapore.

In the United States, the platform helps users manage their finances, and will soon let them open a mobile-first bank account. The checking and savings accounts are offered by banks and credit unions, including Citi.

With Google expanding deeper into other aspects of consumers' lives, the tech giant might need to tread more carefully.

Zennon Kapron, the director of fintech research and consulting firm Kapronasia, said data privacy and protection could potentially be the largest threat to these business models.

"Globally, there's been an increasing realisation that if you're not paying for the product, then you are the product," he said.

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