On March 19, 2024, Grab made waves in the digital payments space by introducing a brand new feature: cryptocurrency top-up capabilities within its digital wallet. This move marks an important milestone in the region's super apps landscape. As I have been following blockchain and crypto since 2016, I couldn't resist delving into this innovation to evaluate its potential impact on the payments industry. Here is a brief summary of my observations:
1. Improve the consumer experience:Curiosity piqued, I embarked on a test of this new feature, eager to discover its value proposition to consumers. Does it offer a smoother payment experience, cost savings or greater security compared to existing digital payment methods? Well, there is room for improvement. First of all, it is not cheaper but more expensive for consumers. Unlike bank transfers, card payments or PayNow, which are typically free, crypto top-ups incur gas fees (the fee for validating transactions on a blockchain network) and fiat-to-cryptocurrency conversion costs.
(Linking with bank account, cards and banking app is free of charge, while reloading cryptocurrencies will incur a gas fee and fiat and cryptocurrency spread costs)
Secondly, I can't say that transferring cryptocurrency between cryptocurrency wallets is more convenient than bank transfer between different accounts using PayNow or FAST. In reality, it is more complicated, especially for crypto beginners. It includes switching between at least two crypto wallets, copying and pasting wallet addresses, verifying that all information is correct, and going through multi-factor authentication processes.
(Switching between different crypto wallets and copying and verifying the wallet address are not easy tasks for crypto beginners)
Furthermore, the โreloadโ process itself resembles a deposit at an ATM in the digital realm, and lacks seamless integration with direct links to the bank account and credit/debit card without the need for reloading, as seen in other regions' super apps like Alipay and WeChat. Pay. In terms of security, the disparity between cryptocurrencies and traditional digital payments is negligible. However, for traders and cryptocurrency enthusiasts, this feature presents an attractive avenue to use their assets in daily transactions.
2. Empower merchants:Digging deeper, I explored the value proposition for merchants. While the appeal of reduced costs and fees associated with crypto payments is undeniable, it is not the whole picture. In this scenario, Grab takes on the role of โmerchantโ, with Triple A acting as โacquirerโ in parallel to the traditional card-based retail payment model. By accepting crypto payments, merchants can bypass the 2-3% interchange fees typically paid to card-issuing banks (a small percentage also goes to card acquirers and networks). However, it is essential to note that this does not equate to free transactions. The emergence of new โmiddlemenโ in the crypto payments value chain introduces fiat-to-cryptocurrency conversion spreads similar to traditional foreign exchange (FX) rates. Merchants should weigh the comparative costs and, if the crypto route proves cheaper, consider passing the savings on to consumers through innovative rewards, discounts and loyalty programs tailored to crypto payments.
Finally, although Grab's new cryptocurrency payment feature is not perfect and still has room for improvement, as a regional super app and the second most used digital payment app in Singapore according to Forrester. consumer tech data, Grab has great potential to further develop and expand its cryptocurrency payment offerings to broader ecosystems, such as introducing new loyalty programs, improving the digital payments experience, and integrating with future digital currencies from banks. central in the region. This will unleash more exciting innovations and alternative payment methods in APAC.
To learn more details about innovations in digital payments in APAC and innovations in cryptocurrencies and digital currencies, Forrester clients can read the reports. The state of digital retail payments in Asia Pacific in 2023, The State of Central Bank Digital Currencies in Asia Pacific and Digital Asset Custody: Introduction and schedule a orientation or consultation session with me.
