On December 20, Ant Financial made a strategic investment into Vietnam’s e-wallet provider eMonkey which is under the fintech company M-Pay Trade. The funding amount was undisclosed. While Ant Financial gains less than 50% of eMonkey’s share, it is said that Ant Financial will influence the company tremendously, while simultaneously providing technical knowledge transfer.
eMonkey has obtained the required licenses from the National Bank of Vietnam, and established partnerships with some of the country’s largest banks and telecommunications enterprises. Hence the acquisition on the company will allow Ant Financial to boost its presence in Vietnam, while tapping into the country’s thriving market of 100 million consumers.
Several years ago, Ant Financial started expanding to overseas markets to realize its globalization plan of achieving 50-50 international and domestic customers by 2020; this strategy addresses directly the slowing domestic market. In contrast to its biggest rival, Tencent, Ant Financial chooses to cooperate with local enterprises instead of applying for the mandatory licenses, accelerating its expansion process as well as the need for localization.
In November 2019, China’s fintech behemoth announced a plan for raising USD 1 billion to back fintech startups in Southeast Asia and India.
Over the past few years, Ant Financial has invested considerably in the Asia-Pacific region’s e-payment business. Vietnam’s eMonkey is the latest in a string of cooperative ventures in the region.
The region has become a melting pot for investment in the burgeoning internet market due to its large population of 650 million people at a relatively young average age. Moreover, Southeast Asia has the largest Chinese community, with an estimated population of 30 million.
However, fintech companies are still struggling to penetrate into the market as over 70% of the population still does not use banks, a figure much higher than the global average of 30%. Even on delivery and e-commerce platforms, hard currency reigns as the mode of payment, accounting for 44% of the transaction in 2017, according to the IDC. In general, e-payment only managed to grab 12% of the market.
The main concern of the region with regards to the low adoption of credit and debit cards is the security issue, as stated in the ‘Shopper Trends Report.’ Currently, instead of linking debit or credit cards to the mobile wallet providers, the Southeast Asian region prefers to use top-up schemes to the mobile wallet balance, meaning users convert hard currency in physical stores, hence it is not exactly ‘cashless’.
Furthermore, there are multiple startups seeking to dominate the highly fragmented e-payment market in each country, which remain unintegrated. In the small state country of Singapore alone, a total of 27 e-wallet have emerged in the past few years.
The battle of enterprises providing digital wallet services in the region remains fierce. In Indonesia, the two common providers GrabPay by Grab and GoPay by Gojek, are trying to change for cashless habit with their one-stop delivery platform, and are also offering a considerable cashback through e-wallet transactions.
Despite these instances, the region is expected to have the fastest rate of adoption of e-payment compared to the rest of Asia, thanks to the increasing usage of smartphones and internet, and the support of local government through the implementations of policies favoring a true cashless society.