<article>Fresh from raising $85 million in a Series C funding round, Singapore-based e-commerce company Carousell is the latest to venture into the fragmented payments space in Southeast Asia.</article>

Fresh from raising $85 million in a Series C funding round, Singapore-based e-commerce company Carousell is the latest to venture into the fragmented payments space in Southeast Asia.
During the annual Tech in Asia conference in Singapore on Tuesday, co-founding CEO Siu Rui Quek revealed that the company will launch its digital wallet, CarouPay, next month to allow instant checkouts.
Carousell&#8217;s foray marks the latest attempt to tap the potential of digital payments in a market of over 600 million consumers with a significant proportion of internet savvy, mobile phone enthusiasts.
<h3>Razer acquires MOL; New entrants eye payments</h3>
In a bid to expand its presence in the payments space, gamer gear company <a href="https://www.dealstreetasia.com/?s=Razer">Razer</a> had earlier announced the acquisition of Malaysia-based MOL Global. The Malaysian firm claims to be one of the largest e-payment networks in Southeast Asia, having handled over $1.1 billion of total payment value last year.
“Southeast Asia represents one of the highest GDP growth regions with one of the youngest demographics in the world,” Min-Liang Tan, Razer’s co-founder and CEO, said. “The integration of MOL Global’s businesses represents an exciting new business segment with boundless potential that Razer can extend into.&#8221;
New players are also trying to disrupt the region&#8217;s mobile payments space. Take <a href="https://www.dealstreetasia.com/?s=SpherePay">SpherePay</a>, a Singapore-based mobile payment solutions firm that has raised over $10 million to boost its regional expansion.
The company, which claims to cater to over five million users across Southeast Asia and work with over 10,000 merchants in the region, is now eyeing a rapid expansion across Southeast Asia to Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, and Cambodia by the second quarter of this year.
“Since our inception last year, we have been making good progress to ensure that SpherePay will be one of the most highly utilised mobile payment apps in the region,” Joseph Chen, CEO of SpherePay, was earlier quoted as saying.
With the region’s digital economy said to be worth $50 billion in 2017, according to Temasek and Google, Razer’s acquisition of MOL and the entry of new payments players are seen as strategic and timely.
According to the World Bank, only 27 per cent, or 162 million, of Southeast Asia&#8217;s 600 million people have a bank account. In poor countries like Cambodia, the number drops to just 5 per cent.
With a young population of over 600 million people who love to spend, Southeast Asia has become a magnet for financial services and payments companies, according to Jianggan Li, founder and CEO of venture builder and investment consultant Momentum Works.
“People and companies are trying to innovate to become key players in the region’s financial services sector. There is strong optimism in this market,” he said.
<h3>&#8216;Grab&#8217; the opportunity</h3>
Singapore-based ride-hailing service <a href="https://www.dealstreetasia.com/?s=Grab">Grab</a> is among the companies that clearly see the opportunities in the region. After launching its mobile payments service last year, Grab has extended its financial services offering by introducing micro-loans and insurance options for Grab drivers using GrabPay.
<a href="https://www.dealstreetasia.com/?s=GrabPay">GrabPay</a> seeks to become the &#8220;unilateral wallet&#8221; of Southeast Asia, leveraging its data and wide network, Jason Thompson, Managing Director for GrabPay Southeast Asia, said in an earlier interaction with DEALSTREETASIA.
To further expand GrabPay, the ride-hailing giant acquired Indian payments startup iKaaz and Indonesian firm Kudo. But more than offering an online wallet, Grab also launched Grab Financial to offer payment services, rewards and loyalty services, financial services, and agent services.
In an interview with CNBC, Grab Group CEO Anthony Tan said the company is trying to solve the problem posed by lack of access to financial services in the region.
“[Grab] is very, very focused on sectors that I would consider most people who are invisible, which is majority of Southeast Asia. Many who are unbanked. How do you make the invisible visible?” Tan was quoted.
<h3>The Great Wall of Chinese Competitors</h3>
Becoming a leader in the region’s mobile payments and financial services space, however, will not be very easy for Grab as other major players are also boosting their presence in the market.
In fact, the day Grab expanded its financial services play, China’s <a href="https://www.dealstreetasia.com/?s=Alipay">Alipay</a> also announced the expansion of its cross-border payments business in the region.
Alipay, the mobile and online payment and lifestyle platform operated by Alibaba affiliate Ant Financial Services, added four new countries to its network &#8211; Cambodia, Myanmar, Laos, and the Philippines, cementing its presence in eight out of the 11 countries in Southeast Asia.
The expansion means merchants in those countries are now connected to 520 million active users in China via Alipay’s in-app marketing platform, the Chinese payments firm said.
<a href="https://www.dealstreetasia.com/?s=WeChat%20Pay">WeChat Pay</a> is also expanding in Southeast Asia. Last year, Tencent announced plans to unveil WeChat Pay in Malaysia in early 2018, after obtaining an e-payment license for local transactions in the country.
If the plan pushes through, it would be a first for the platform beyond mainland China and Hong Kong, allowing users in Malaysia to link their local bank accounts to WeChat Pay and pay for goods and services in ringgit.
While AliPay says it has 520 million users in China, WeChat Pay is embedded in WeChat, China’s most popular social media app with 938 million active users.
Momentum Works&#8217; Li, however, said that while local payment companies such as Grab’s GrabPay, Go-Jek’s GoPay, and those in Thailand and Malaysia are also bullish on the market, it will be totally different for them to copy the model of Alipay, the world’s most valuable financial services company.
“I think they have different objectives. Chinese companies, such as Alipay, want to provide data exchange. They want to be at the back while local companies – Singapore’s Paynow, Thailand’s PromptPay, GrabPay, and GoPay – want to be in the front accepting and processing payments,” he said.
<h3>AirAsia expects payments to take off</h3>
With Southeast Asia&#8217;s cross-border remittance and lending businesses witnessing heightened interest from different players, low-cost carrier AirAsia is also dipping its toes into this space.
Recently, AirAsia launched its digital payments arm, <a href="https://www.dealstreetasia.com/?s=BigPay">BigPay</a>, which founder and CEO Tony Fernandes said should disrupt the remittance market and money lending business in Southeast Asia.
Fernandes, however, acknowledges the intense competition in the digital financial services space in the region. “This is not a zero-sum game – there will be others too out there, and we think we can all co-exist.”
Local entities, however, have the advantage over their foreign competitors because financial services regulations vary from each country.
<h3>Go-Jek beefs up payments arsenal</h3>
In Indonesia, for instance, Go-Jek, the country’s largest ride-hailing service, is beefing up its formidable payments arm to become a dominant player in the country, armed with a local understanding of the regulations and market behaviour.
In December, Go-Jek signed deals to acquire three local financial technology companies &#8211; Kartuku, Midtrans, and Mapan &#8211; to boost its payments arm, Go-Pay. Collectively, the three companies and <a href="https://www.dealstreetasia.com/?s=Go-Pay">Go-Pay</a> processed close to $5 billion of debit card, credit card and digital wallet transactions for its users, service providers and merchants.
These deals will add formidable firepower to Go-Jek, that is already the leading mobile-based consumer transactional platform in the country with 15 million weekly active users, in its battle with competitors such as Grab, DEALSTREETASIA reported last year.
“2018 will be the year that GO-PAY moves beyond the GO-JEK ecosystem, providing convenient, secure and reliable payments both offline and online,” Andre Soelistyo, Go-Jek Group president, had earlier said.
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<h3>Consolidation on the cards?</h3>
An industry executive who spoke on the condition of anonymity does not see any consolidation in Southeast Asia’s financial services space because the market, he said, is big enough for everyone to take part of.
&#8220;No consolidation will be possible for the next couple of years, because in the payments space, all are strong players and have reasonably strong pockets. The market is currently big enough for everyone to ride it &#8211; as it was in China a decade ago, when there were over 40 players.&#8221;
Payments consolidation will come when ecosystems are built, he added.
“In China, Tencent built Wechat and eventually everyone had to be on it &#8211; similarly if everyone in Southeast Asia is riding Grab and using Grab Eats, at some point the ecosystem may be big enough to force people to use GrabPay,” he said.
Commenting on the region&#8217;s financial services space, the Manila-based Asian Development Bank (ADB) said in a report that digital financial solutions could play a significant part in closing gaps in the region’s financial inclusion.
“Digital finance alone cannot entirely close the gaps in financial inclusion. But we estimate that the cumulative effect of digitally driven acceleration in financial inclusion could boost GDP by 2% to 3% in markets like Indonesia and the Philippines, and 6% in Cambodia,” the ADB said.

With a population of more than 600 million people, who are largely unbanked but are mostly internet-savvy and mobile users, Southeast Asia has become the new battlefield for companies wanting to become leaders in the region's financial services space.

Carousell latest to throw hat into SE Asia's fragmented payments ring

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