Grab grows financial inclusion and its payments impact across Southeast Asia

• Grab is rapidly moving towards its goal of offering its e-wallet cross-border to support financial inclusion across ASEAN
• It is partnering with banks to increase its reach, adding 3 million merchant locations via a partnership in Thailand  
• While ubiquity and interoperability remain challenging, new solutions offer opportunities

“This year we announced we wanted to solve the issue of financial inclusion, to give consumers and merchants the ability to improve their economic reality,” said Grab senior managing director Reuben Lai. “We’ve been working hard on this big problem statement.”  To solve it, Lai explained, Grab intends to use partnerships and a common wallet across ASEAN,   

Grab started with an app for transport, food delivery and express delivery, and with QR codes for offline purchases, Lai explained. It has since used a combination of services developed internally and partnerships to move towards offering a more seamless payments experience for consumers and merchants alike.

For consumers, Lai said, Grab offers “more services that they can pay with on our platform, making it easy for them to pay, and making it more rewarding. This allows us to start piecing together the puzzle of having a common wallet across ASEAN.” On the merchant side, which includes agents and drivers, Grab offers working capital loans so they can expand their businesses, microinsurance so they can protect their income, and better engagement with consumers through insights that Grab generates from its vast trove of data.  

Lai said key objectives going forward include driving increased acceptance of e-wallets, adding more big brand names to the rewards programme, and developing a lower-cost payments infrastructure, “We are trying to bring in the middle-forty consumers,” Lai said, with costs as low as possible. “They have been fragmented, expensive for banks to serve. Being cost-conscious is important, to serve them in an economically viable way.” Grab also wants to make technology disappear into the background. 

Building the payments ecosystem

Partners are what differentiate Grab from other players, Lai feels, citing examples such as Tokopedia for ecommerce, HappyFresh for grocery delivery, and Ping An for healthcare. Grab also has partnerships with global brands such as KFC, McDonald’s, Spotify and Starbucks in its rewards programme.

Another example is its partnership with Mastercard for prepaid virtual or physical cards which, similar to UnionPay’s and RuPay’s partnerships with Discover, gives access to merchants worldwide by using the Mastercard infrastructure. “Go to France, swipe a Mastercard, pay with a Grab Pay wallet, balances will be instantly reflected,” Lai said. Another example is the partnership with Kasikorn Bank, announced on 8 November, which enables Grab’s customers to transact at three million merchants in Thailand and access the PromptPay network. Across Southeast Asia, Lai added, the goal is to “get the ASEAN 6 up and running,” then to “move into the other 4.” Grab is looking for licensees and partners.

Grab is also working with financial institutions on pilots across five countries in ASEAN for loans to drivers, who primarily use the funds to repay existing loans, upgrade their phones, fund their children’s education or pay for car maintenance. “With our insights, our ability to control risk, weekly or daily deductions, we’re able to price (loans) in a way that’s more affordable,” Lai said. Non-performing loans, which Grab defines as being 1 day late rather than the traditional standard of 90 days, are relatively low.  

Lai said Grab is working with regulators, either directly or through partners, to make sure it follows regulations in each country and to help regulators roll out innovative regulations which protect both economies and consumers. Regulators are supportive of financial inclusion and are pushing cashless, he pointed out, so Grab has the “wind on our back.”

Business Expansion

Grab has leveraged its infrastructure and partnerships to enter six countries and has a full e-money license directly or through partners in each of them. “We’ve grown 2.3 times in payments volumes, 3.5 times in monthly active users” in recent months, Lai said. Grab’s net promoter score of 80 or 90 in several markets demonstrates its favourable reception by customers.

The next step, Lai said, is to develop a single wallet across ASEAN that “allows merchants and consumers to procure goods, to move money across ASEAN in a seamless, affordable way. Grab is the best place, for three reasons. We have unparalleled reach, 125 million downloads in Southeast Asia, the lowest customer acquisition cost. Second, huge consumer insights allow us to give them products and services that give our customers value. Third, a trusted app that increases customer stickiness, usage.”  

Grab Financial’s goals are indeed laudable, and it has moved faster than many might have expected. Tightly held data makes it difficult to assess growth fully, though, and Grab remains dependent on partners even as it moves into areas that could affect their revenue. Interoperability from Asian Payment Network partners could be a challenge too, though few APN member have NPS as high as Grab. Overall, Grab is playing a valuable role in moving towards the greater financial inclusion that will lift the lives of many within ASEAN.