THE ASEAN consumer market, which is expected to reach US$4 tril by 2030, is still very tied to cash transactions, implying that there would be an enormous demand for e-wallets as consumers gradually shift to digital payments.
After all, the World Economic Forum (WEF) has estimated that 70%-80% of new consumer population growth will be driven by tech-savvy working middle-class population from three emerging ASEAN countries, namely, Indonesia, the Philippines and Vietnam which form 70% of the region’s population.
WEF also expects the rise in working middle-class to significantly boost productivity and spending to the point that the gross domestic product (GDP) growth rate of emerging ASEAN would surpass that of China’s.
“Furthermore, by 2030, the emerging ASEAN will be young, tech-savvy and increasingly urbanised,” noted Kenanga Research in a thematic report on digital payments.
“When this population enters the workforce or migrate to big and small cities, consumption will spurt in Indonesia, the Philippines and Vietnam. As such, the future of e-payments seems bright and enticing for e-wallet players.”
Back home, the Government has rolled out the Malaysia Digital Economy Blueprint to accelerate the development of the country’s digital economy; the first thrust of the blueprint requires all federal and state level agencies to offer digital payment services (eg bank transfers, card payment, e-wallet) by 2022 or by making it a preferred method of transaction.
Moreover, to encourage the adoption of e-payment for both merchants and consumers, the Government will endorse e-payment on-boarding programme by incentivising both parties to use e-payment.
To re-cap, last year saw the Government rolling out the e-Tunai initiative for eligible Touch ‘n Go e-Wallet users to claim RM30 as a method to encourage the adoption of e-wallets across Malaysia
Kenanga Research is bullish about the growth potential of e-wallets in Malaysia given the country’s high mobile cellular penetration which stood at 135.4% in 2019, an indication that a huge majority of the population owns a mobile phone and can easily download the various e-wallet applications available in the market.
“With the Malaysian Government and regulators incentivising the public to promote a cashless society (eg e-Tunai, e-Belia, e-Penjana) coupled with e-wallet players providing users with various promotions and cashbacks, more consumers will be encouraged to download and use these platforms,” opined the research house.
“In order to remain competitive and appealing to the public, e-wallet players are constantly upscaling their platforms by increasing the functionality of their e-wallets (ie from buying insurance to flight tickets).”
Moving forward, the potential oversaturation of e-wallet providers in the country is inevitable, notably with peers trying to outlast each other by incurring heavy marketing
expenses by providing incentives to customers (ie discounts and special offers) with hope to gain market share.
“In that respect, we believe that different e-wallets should exist to cater to different markets as some niches could be better catered by certain players than others, and that there should not be a single dominant player in the market as that would eliminate competition in the market which could be a drawback for the mass market,” added Kenanga Research. – April 7, 2021