The problem with e-wallets? There are just too many of them, say fintech experts

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Making online payment easier is often seen as the best way to fuel Southeast Asia’s ecommerce market. Understanding this potential, digital wallets have sprouted up, but they have yet to see wide adoption among consumers.

In Singapore alone, there are 27 e-wallet providers, plus 40 in Malaysia, according to Fomo Pay co-founder Zack Yang. While the market welcomes more players, he believes having too many poses a problem to shoppers who don’t fully know how to use them.

“Cash is the common enemy here,” said Yang recently during a discussion at South China Morning Post’s China Conference 2018 in Kuala Lumpur. To solve this, people must be able to “go to any merchant and not have to worry about which wallet to use.”

Singapore-based Fomo Pay aims to allow merchants across Asia to accept transfers from e-wallets like GrabPay as well as Tencent’s WeChat Pay and Ant Financial’s Alipay. Shoppers do this by scanning QR codes.

Common problems with adoption

For Chia Chou Cheong, CEO of Malaysian ecommerce store 11street, mobile payments will only take off if people have more uses for them. That calls for “digitizing more services.”

As he explained at the conference, “This is definitely a new way of doing trade. 11street accepts all modes of payment, and is open to work with e-wallet providers. By working with them, we are serving the unbanked market.”

Chia sees that lack of awareness is the biggest obstacle for e-wallets, pointing out that “we can’t force people to use them.” He also thinks incentivizing consumers with discounts and coupons will help them see the benefits of such services.

Alipay being used at a store in China. Photo credit: Ant Financial

E-wallets are gaining plenty of traction in China and South Korea, but they’re not doing as well in Southeast Asia. That’s due to banks and financial institutions taking so long to enter this space over issues such as compliance.

As Yang noted, “Banks want to do this, but innovation takes time. So the challenge here is to find the right partner to go it with.”

While banks do not see phone payments as a top priority at the moment, they will eventually make a play for such services, predicts Mark Tan, chief marketing and commercial officer of mobile wallet operator TNG Digital, a joint venture of Malaysia’s Touch n’ Go and Alibaba’s Ant Financial.

What lies ahead