South East Asia’s Fierce Competition in E-Wallets

Unlimit’s presence has been rapidly expanding in Asia, with our APAC team on the ground, bringing in-depth knowledge of the payments industry to local markets. Supporting this, our experts are now sharing insights and support to merchants in Asia through our official WeChat account, with an additional focus on the Greater China area.

WeChat is most famously known for WeChat Pay, which along with Alipay, has been one of the major payment gateways in China for numerous years for businesses of all sizes in the SEA market. Back in 2018, Alipay expanded its outreach to eight different SEA countries including Singapore, Malaysia, and Vietnam. In the same year, WeChat launched WeChat Pay in Malaysia and entered Indonesia two years later.

Notably, compared to other developed countries, credit card penetration is low in SEA and people highly rely on cash payments, which has slowed down the transformation with digital in the region. However, due to the growth in the Internet industry and the pandemic since 2020, SEA users’ reliance on cash has declined significantly, with an expected decline from 60% in 2019 to 47% in 2025. Additionally, according to a BCG survey published in 2020, only 13% of the unbanked urban population in SEA uses e-wallets, however, the penetration of e-wallets among the unbanked population is expected to soar to 58% by 2025, mainly due to the boom in e-commerce. And so, whilst the use of cash is still a favorable choice, alternative payment methods are rising in popularity; and continual transformation and digitisation make it one of the most desirable markets for fintech companies to enter, including Alipay and WeChat Pay.

Alipay and WeChat are using different strategies to enter SEA. Starting from e-commerce, it is clear that Alipay wants to continue its advantaged experience in this field. In 2016, Alibaba acquired Southeast Asian e-commerce giant Lazada and then eventually integrated Lazada’s online payment tool, HelloPay, with Alipay. On the other hand, WeChat Pay focused on social payment scenarios first and collaborated with offline merchants.

Despite the promising figures and their experience in China, WeChat Pay and AliPay’s entrance into SEA were neither easy nor smooth at all. They actually face fierce competition from local competitors in local markets. Over the past 10 years, local competitors rose in response to the struggles and complexities of dated banking systems and financial infrastructures in SEA. The rapid digitalisation of SEA has created a thriving e-commerce environment, with electronic wallets (e-wallets) emerging as a popular payment solution. As the region witnesses a surge in smartphone penetration and internet connectivity, e-wallets have become an integral part of everyday life, transforming the way people make transactions. Consequently, this growing popularity has led to fierce competition among e-wallet providers in SEA, and local-level competition growing in mainly three categories: banks, Internet companies, and telecom operators.

Banks

Witnessing the rise of e-commerce in SEA, banks are determined to defend their market share. For people who already process card transactions, it is usually easier for them to accept e-wallets launched by their banks. According to BCG research, e-wallets in SEA are mainly used by customers who already use traditional banking services. In Indonesia, 57% of e-wallet users have bank accounts; in Vietnam, 42% of e-wallet users have a bank account; and in Malaysia, 31% of those who use e-wallets have a bank account.

Telecom Companies

Card penetration is low and cash still remains as an important method in SEA and is supported by the use of offline telecom payments. This method is used for many different things – utility bills, payment transfers, and even online shopping. It offers great advantages for telecom companies to establish their own digital payment methods. For example, Singapore telecom company Singtel launched its e-wallet Singtel Dash, which can be used for shopping, transfers, and public transport. It is also the first non-bank e-wallet that collaborates with Apply in Singapore. 

Internet Companies

Internet companies establish their own ecosystem with digital payment methods, covering different aspects of people’s daily life from online shopping to buying lunch from restaurants. The most famous being Grab, which started as an online car-hailing app and is now the most used e-wallet, not only in Singapore but also Malaysia. Even e-commerce platforms have taken part in the competition: Shopee launched Shopee Pay which now has taken 15% of the market share in Indonesia. 

While the fierce competition among e-wallet providers presents challenges, it also opens up opportunities for innovation and growth. To gain a competitive edge, e-wallet providers are continuously expanding their range of services, forming strategic partnerships, and adopting advanced technologies such as QR code payments and biometric authentication.

Moreover, SEA governments are actively promoting digital payments and implementing regulatory frameworks to ensure a secure and transparent ecosystem. These initiatives create a favorable environment for e-wallet providers to thrive and attract more users whilst offering assurance of security and compliance.

In Summary

It is without a doubt that foreign business faces great challenges in SEA because of the segmented payment landscape, it is crucial for overseas merchants targeting the region to navigate the challenging payment landscape effectively. While the battle for dominance among e-wallet providers continues, there is a reliable solution for merchants to simplify their payment processes and expand their customer reach with Unlimit’s in-house stackable solutions and expertise are personalised to each of our clients, enabling them to navigate regulatory frameworks, establish secure payment gateways, and optimise their operations to meet the specific needs of the region and their business strategy. Removing the need for third parties, we remove borders so that merchants across the world can launch into the SEA market quickly and with ease.