Moderated by Payments Consulting Network research director Catherine Batch, a session at the June 16th-17th Seamless Asia online conference entitled ‘getting your payment checkout flows right’ addressed how the pandemic has accelerated digital payments and increased the number of people clicking ‘pay online’ by up to 80%.
Joining the discussion was Satya Tammareddy, Head of Sales – Southeast Asia for Stripe; Kannan Rajaratnam, Regional Director of Payments & Customer Operations for Zalora; and Wai Hong Fong, Chieftain and Co-Founder of Storehub. The three key themes the panel explored were technology, customer experience from a payment perspective and the future for the industry.
Satya, speaking from Singapore, identified Stripe as a company which ‘powers payments’; explored the last 18 months and how it had been transformational, with many businesses having to adapt their strategy and operating models in often drastic ways. She said Stripe’s customers had adapted to the technological changes.
“In the last 18 months we’ve seen a significant acceleration for companies of all sizes to adapt. But what we found was not every company was in that position to really set them up for that adoption. Seven out of 10 CXOs said that their firms had under-invested in online strategies over the last year. Over half have said this is now a big priority. They plan to make that investment going forward, particularly around digital transformation.”
The panel identified a strong pressure for organisations and companies to evolve along with this trend and provide the best experience for their customers.
Kannan Rajaratnam said one thing that keeps the industry awake at night is to remain relevant to customers. “I think it has always been to make sure it’s as seamless as possible,” he said.
“When it comes to some of the markets, Southeast Asia is very complex and very unique, very diverse from one to another. For example, a solution from Singapore will not necessarily be able to be applied in Indonesia and Philippines. And we noticed the popularity of COD is on the decline.”
On COD’s future, he said “I think given the demographics that are in the ecosystem right now, it’s almost impossible for it to be completely phased out.”
In an increasingly crowded online space of competitors and clients, customer experience has become a critical means of differentiation. Satya brought up the usefulness of wallets –
“When we think about checkout optimisation, we think of the entire purchase funnel.
Enabling mobile wallets: Apple Pay, Google Pay, we found that this can allow customers to check out probably three times as quickly as filling out the entire order.
I think this is particularly important given smartphones are so critical for the region and there is a similar theme around local payment methods.”
Wallets, in their online form, make it easier for consumers to pay, bringing with it an uplift in revenue.
In unpacking some of the typical pain points, Kannan said organisations should use wallets to combat modern day challenges.
“Wallets reduce the steps taken for customers to complete payment transactions. We managed to launch the key emerging wallet in every market that we operate so that really helped to accelerate the revenue. And it also reduces the friction.”
Challenges remain in some ‘wallets’ that have restrictions on the size of purchases.
Hong addressed the future impact of the buy now pay later culture, by highlighting the concern in consumer P2P lending in Indonesia.
“When the Chinese companies started up by the dozens, we saw some really major social impact when money was just being thrown around to consumers, super easily. And because of the high interest rates … that kind of destroyed consumers from a social perspective, people were borrowing money.”
“There’s just all kinds of really bad behaviour that comes from irresponsible money flowing into the market,” he said.
“You give credit to guys who typically would not have access to some degree, but at the same time, you’re also creating an environment like that in Malaysia, you attach your debit card to the accounts … it’s going to be a bit of an issue because then it’s much easier to default on a bank transfer than to get a credit card with a charge.”
The panel considered the idea of an increase in regulation, with Hong contending that eventually market stabilisers and regulatory frameworks come together to ensure that it’s a sustainable payment channel.
“What we are seeing right now is the growth phase where there’s an influx of money coming in; investors’ cash that has been supporting the industry. And obviously because they believe in the model. One of the things that we are lacking currently are the data points to understand the default rates. The traditional credit checks are not enough to support the current business model, because it’s costly to do credit checks on every customer, and the data points are not comprehensive enough to cover small ticket purchases.”
He said BNPL eventually could be a strong payment channel in the future.
“With relevant measures in place, it can be a very sustainable payment channel.”
Kannan addressed an audience question as to how his business safeguarded itself and consumers against fraud.
“Southeast Asia posts a higher risk as compared to the rest of the world when it comes to fraud. So some of the things that we have in places are multiple touch points and a team that is monitoring the transactions 24/7.”
“Even in our fulfillment centre, there is a specific platform that filters out a number of parameters and then puts them aside for our manual review.”
He said his fraud system will remain robust over the years and trickles down to a chargeback loss of 0.02%, way below industry standards in Southeast Asia.
Kannan addressed the importance of omni-channel, saying it’s always about balancing out the presence between offline and online.
“It’s a very integral part of a business. I think in the digital space, what we have realised is that being in omni-channel also means that we are existing in multiple platforms. For example, we are also driving leads or generate traffic from social channels, such as Instagram and Facebook, and that’s where a majority of the people are spending time these days because of being in a lockdown situation and whatnot.”
The general consensus from the panel was that bricks and mortar transactions are going to return as businesses reopen their doors to traditional trade, but consumers are becoming increasingly comfortable using their mobile devices for online purchases, preferring the online experience to the in-store one. Taking into account the needs of consumers, and how oftentimes these needs are informed by cultural expectations and habits is also something retailers aiming to maintain or grow a market share in SE Asia will need to keep in mind.
Author: Matt Reddin, The Big Smoke.
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Merchant Advisory was a media partner of the Buy Now Pay Later Summit Asia Pacific 2021 held last 2 December 2021.