PETALING JAYA: Interoperability between e-wallets is the future of the industry, with three to five major players – similar to the development of the telecommunications sector, according to Boost CEO, Mohd Khairil Abdullah (pix).
He projected the e-wallet industry to follow the path of the telcos, which has its big three or four players and a number of niche mobile virtual network operators (MVNOs) such as XOX and Tune Talk, which bring a certain value to their consumers which the other players cannot replicate.
Khairil opined that the smaller players in the industry have amazing use cases, which he prefers to work with, rather than see them fold.
“I want to find out how we can interoperate and collaborate so that their niche use cases can still be relevant to their user base but work with a larger platform like us to continue to thrive together,” he told the media at a virtual briefing today.
In essence, the integration of Petronas’ payment solution, Setel, with Boost that was launched this month will serve as an example of interoperability between e-wallet operators.
Overall, he acknowledged that the industry has started to defragment, as the top four e-wallet players account for an estimated 90% of all e-wallet transactions in Malaysia.
“Towards a certain end, the consolidation is happening, not by virtue of mergers and acquisitions per se but the smaller players struggling to overcome the spend barriers of the big players have done,” said Khairil.
In June 2020, Axiata Digital managed to raise US$70 million (RM300 million) in financing from Great Eastern which will translate into support for the e-wallet.
Given the high spend among the wallet operators, he noted that the smaller players will struggle to catch up to such big ticket plays and will subsequently drop off.
Moving forward, the Boost CEO highlighted the need for e-wallet players to shift their stance from killing each other to working with each other for e-wallets to gain a greater share of transactions.
Despite the efforts and accomplishments of e-wallet operators, he cited that last year data indicated that cash and other forms of non-cash payment are still dominant relative to e-wallets, which account for less than 5% of all transactions.
“The players themselves have to do a fair bit to ensure interoperability is a reality and not just a big banner statement.”
On the regulatory side, Khairil lauded the efforts made by Bank Negara Malaysia to establish the interoperable credit transfer framework and the payment network facilitator, Paynet,
“Paynet being an extended part of the regulatory arm, I think there are a lot of things that the regulators are doing to support interoperability,” he said.
Looking ahead, Khairil hopes to see a future where niche players interoperate with the bigger players as well as among the bigger themselves particularly with the establishment of a platform like Paynet.