GrabPay’s retreat is GXS Bank’s gain

Discontinuing the GrabPay Card can be seen as Grab consciously stepping away from areas of overlap with GXS. / Photo credit: Grab

When news broke earlier this month that ride-hailing giant and fintech platform Grab would discontinue its GrabPay Card issued by Mastercard from June 1, many were quick to see it as a casualty of Grab’s profitability drive.

Indeed, that might have been a factor in Grab’s decision to kill off the product.

But, looking at the bigger picture, cutting the service might point instead to the company pushing the utilization of the payment methods offered by GXS Bank, the digital bank backed by Grab and Singtel.

This seems to be a more plausible scenario, especially when considering the roots of the GrabPay e-wallet.

GrabPay was initially launched as a way to keep customers within the Grab ecosystem, with the debit card offered as a sweetener.

Rewards for using the GrabPay Card came in the form of Grab loyalty points, which could be used on the platform’s app. The technology company saw this as the start of a virtuous circle, where customers would spend with Grab even if their GrabPay Card transactions went beyond the ecosystem.

Fast forward to today, Grab has undergone the cycle of pain felt by e-wallet operators, who consistently lose money on each transaction as the cost of cash can not be eliminated.

But, GrabPay has an advantage over some e-wallet operators. With a digital bank, it could see some cost savings in handling transactions.

In a market such as Singapore – where the population is highly banked and not lacking for options in debit or credit cards – perhaps retreating from this space is a valid strategy.

After all, users have also complained that the rewards points for GrabPay have lost a lot of luster over the years.

With GXS now in the picture, the GrabPay Card could be seen as potentially cannibalizing the digital bank’s payment business.

With GXS customers acquired from ecosystem partners Grab and Singtel, it would make sense to funnel payment usage through the bank – with lower costs – rather than through GrabPay.

This isn’t the first service that GrabPay has shuttered in Singapore. Last September, it discontinued investment services AutoInvest and Earn+.