The adoption of Digital Payments in South East Asia has finally reached its inflection point and is expected to cross US$1 trillion by 2025, accounting for almost one in every two dollars spent in the region. Credit cards and ATMs are on a sharp decline as e-money surges to more than 50% of all payment volumes. This is supported by government initiatives providing fiscal stimulus incentives and subsidies to those using popular e-wallets in the transition towards cashless economies.
In South East Asia almost 300 millions adults are underbanked or unbanked with limited options for credit and other basic banking services. These large and growing populations connect to the internet primarily through their phone and depend on their phone to purchase and pay for most of their goods and services. They pay their household bills and send and receive money online using one or more e-wallets. Most of these people have regular incomes, pay regular bills, send money frequently between family and friends and yet will never meet local bank criteria to open a bank account.*
In addition to providing secure mobile banking services connecting banks and their customers, our IOUpay platform also connects billers and end-user customers, enabling the purchase of utilities and other common household goods and services. These purchases and bill payments are primarily paid for using e-wallets and debit cards which are topped up by direct bank transfer for the banked and by over-the-counter cash top ups at convenience stores and merchants by the underbanked and unbanked.
More recently we have added new platform capabilities to process Buy Now Pay Later installments and consumer loan payments which are inextricably linked to our existing merchant, bank and end user customer communities. This is a natural extension of our product offering, positioning IOUpay as a full service value-added purchase and payment processing operator.
* Sources – Bank Negara Malaysia Q1 2020 Report, Google & Temasek/ Bain, e-Company SEA 2019
We act as a multi-biller operator for the most common household and small business bills. This involves being able to process bills which are categorized as prepaid or postpaid.
The most common household bills in South East Asia are prepaid. These include mobile phone and internet data, electricity, water and vehicle and healthcare insurance. This means the biller sells these products and services in prepaid cost and usage packages. These prepaid packages provide consumers with fixed price supply and usage for a week, fortnight or a month and are continuously ‘topped up’ by purchasing and paying for the prepaid bill in advance. Industry research reports show that approximately 95% of the mobile phone subscriber market in Indonesia pay for their mobile phones and internet data using prepaid. In Malaysia the figure is 70%.*
Postpaid bills involve billing for services after they have been provided. These are less common in South East Asia for common household services as the bill costs can vary and exceed expectations and affordability. The bills are therefore usually limited to government taxes, penalty fines and longer term subscription or supply agreements which are more popular with the smaller populations of wealthier households.
Prepaid biller operations involve IOUpay purchasing the prepaid inventories and selling these online to large wholesale distribution channels (B2B) and to large customer communities whom we partner with to process big B2C bill payment volumes for their end-user customers.
* Sources – Bank Negara Malaysia Q1 2020 Report, Google & Temasek/Bain, e-Company SEA 2019
More recently we have undertaken a comprehensive platform upgrade to enable new and existing enterprise customers to connect to end users directly online or in-store through their merchant distribution networks to access and operate our turnkey Buy Now Pay Later platform services.
Our platform upgrade and expansion includes new integrated APIs, Android and IOS apps and web portals for payment gateways, merchants and consumers, enabling them to access our highly sophisticated best-in-class BNPL services. These include customer and merchant onboarding, API connection to multiple independent data points for e-KYC and credit scoring purposes, BNPL transaction processing including payment gateway and merchant modules for pre-authorisation payment processing, refund processing and settlement reconciliation.
We will continue to innovate and add value to our ecosystem of big brand corporates, merchant distribution channels and consumers, capitalising on our first mover advantage and large existing customer base.