E-payment market will get more fragmented before it gets better

THE e-payment industry in Singapore is becoming increasingly fragmented - with even more non-financial players entering the space - while it should be moving towards an integrated seamless customer experience.

On Thursday, Catalist-listed Artivision Technologies, previously a media solutions and contract manufacturing company, announced that it is doing a reverse takeover (RTO) to acquire e-payment firm MC Payment for up to S$125 million.

If the deal goes through, it will create a new business in e-payment for Artivision, which only in February became a cash company with no operating subsidiaries or businesses. It will also make Artivision the latest player to capitalise on Singapore's recent push towards cashless payments.

Kenneth Goh, executive director and chief executive officer of Artivision, hailed e-payment as the next frontier. He described MC Payment as a fintech business with "expansive potential" and the RTO as allowing Artivision to be part of "the evolution that will change the landscape of transactions in the region".

Anthony Koh, founder and CEO of MC Payment, added that the company will soon launch new e-payment services. "We have a scalable infrastructure of O2O (offline-to-online) solutions and core competencies to create novel financial technologies which put us in a unique position to capitalise on the rising adoption of cashless payments in the region.

"Driven by the changing needs of the consumers, we have commenced several exciting projects with established names in the consumer industry, which include the use of blockchain technology to provide greater efficiency and convenience for both consumers and merchants."

In the last 6 months, Singapore's e-payment space has seen many such developments - though none has actually culminated in a unified e-payment system, something Prime Minister Lee Hsien Loong called for in his National Day Rally speech last year.

For instance, Razer on Wednesday announced a strategic partnership with Singtel to link both companies' e-payment systems to create a seamlessly integrated network for South-east Asia, a move that would give each partner access to the other's one million merchant points.

This partnership is one of bigwigs. Both partners are respected in their fields, are Singapore companies with a collective presence across Asia, Australia, the US and Europe; are publicly traded; and each have a market capitalisation that is decent for their respective sectors: Razer's is about S$4 billion and Singtel's is S$57.5 billion.

To boot, the partners have much to offer to each other. While Razer can tap Singtel's branding and networks to roll out a large-scale offering, Singtel can use Razer to reach out to millennial audiences. Notably, while both partners want to create the "largest e-payment network in South-east Asia", neither of them is a financial institution.

Razer, when asked about its focus on e-payment when it is primarily a gaming company, said: "We are always focused on gamers, and e-payment is a growing part of our ecosystem of hardware, software and services. On a wider note, we are also one of the leading brands for youth and millennials, a demographic that dominates South-east Asia.

"Razer is in a great position to help build an e-payment platform that meets the needs of millions of young gamers and non-gamers alike."

True Asean e-wallet

Likewise, Singtel said that e-payment is a natural extension of its existing offerings. Arthur Lang, CEO of Singtel's international group, said: "As a group devoted to connectivity, we are making a big push to create an ecosystem of digital services for our customers. Digital services from mobile payments to entertainment have become a big part of their lives, especially the millennials. "

Other non-financial players too, are forming their own alliances to boost their e-payment capabilities. Ridehailing firm Grab has developed an open technology platform to collaborate with fintech startups that have productised and are ready to pilot their services with Grab's user base of more than 90 million users across South-east Asia.

Anthony Tan, co-founder and CEO of Grab, said on Wednesday: "In the near future, we are building towards a true Asean wallet for consumers to use to travel freely across the region, and small businesses to transact and operate more affordably and efficiently without barriers.

"To break habits of using cash, Grab is creating more daily use cases for cashless payment - commuting, food delivery, paying at food and retail stalls - to drive more usage of the GrabPay e-wallet."

Speaking at a fireside chat at the Big Singapore Fin-tech Get Together on Wednesday, Mr Tan said the greatest impact to consumers, merchants, and small businesses comes when the whole industry works together. "As an industry, we must be ready to form strategic partnerships and leverage our respective expertise to serve customers."

More such partnerships can be expected in the months ahead, fuelling the bandwagon effect where players - especially the non-financial ones - clamour into the cashless space. This could lead to multiple offerings, user confusion and inefficiencies, but also reinforce the idea that payments should no longer be seen as just an afterthought for businesses.

What is clear is that Singapore's e-payment market will get more fragmented before it matures and consolidates. This could just be a case where it has to get worse before it can get better.