Cashless payments to pave growth for cashlite companies

This is due to the recognition of cash as being an ‘inefficient’ form of payment, according to Fave founder


Mobile and cashless payments are the next stage of growth for cashlite companies looking to tap into a larger consumer database, while reducing the hidden cost of handling physical tender, according to Fave Group Pte Ltd.

The mobile reward and payment platform currently facilitates over US$100 million (RM403 million) in online transactions via FavePay, boasting close to 15,000 merchants and 600,000 transactions a month across Singapore, Malaysia and Indonesia.

Fave founder Joel Neoh Eu-Jin (picture) said acceptance among previously offline businesses has been strong due to the recognition of cash as being an “inefficient” form of payment both in terms of marketing reach and hidden costs.

“For a majority of these companies, a problem they face is how to grow their businesses without having the access to data that bigger companies have,” Neoh told The Malaysian Reserve in an interview yesterday, adding that Fave bridges this gap by connecting mobile payments to marketing.

“These businesses want to reward customers for coming back, but don’t know how to do it well — and physical promotions such as stamp cards and vouchers tend to get lost,” he added.

Via a mobile payment platform, he said companies now have access to a database of consumer trends and behaviour, while simultaneously having a marketing platform to reach out to customers.

“For every dollar saving offered to the consumer, a company can track and reach out to that customer — card and cash payments do not have this advantage.”

He added that there are a lot of hidden costs in handling cash offline, including security risks, staff costs and money lost upon exchanging hands.

While over US$30 billion in mobile payments are projected in South-East Asia by 2021, adoption among retail and food and beverage (F&B) players remains low.

Neoh said 95% of payments in the retail and F&B segments in Malaysia are conducted offline, while less than 5% is done via e-commerce platforms.

“Retail and F&B are actually the biggest category of payments — if these segments are not on board, it will be very difficult to get people to move into cashless (payments),” he said.

Government and financial institutions play a big part in facilitating digital payments both via policies and licensing, and Malaysia together with its central bank are pushing towards this end.

For instance, the Malaysian government is encouraging petrol dealers in the country to adopt digital payments as 70% to 80% of transactions are still in cash, according to Neoh.

“As a consumer, when you are paying RM50 at the pump and the petrol station takes a RM200 deposit, it deters you from going cashless,” he said.

“These are small things, but it has a large impact on the consumer — when we remove all these friction points, we will see better cashless adoption.”

Fave completed its acquisition of Groupon Malaysia — part of the larger US-based reward and online marketplace Groupon — earlier in 2017 and is striving to provide a holistic blend between promotions and payments, which was absent in the previous Groupon model.

“Groupon Malaysia was a good model, but it cannot stand alone (as a reward platform exclusively) because businesses do not offer promotions all year long, but instead three to four times a year,” Neoh said, adding that deals need to be complemented by a reliable payment platform.

“If a customer can pay via a specific platform and get a better deal and discount at the same time, then you drive more volume in both payment and promotions — they work in tandem.”

He said Fave is now being equated more with its payment platform Fave- Pay than its previous Groupon links as its volume of payment with cashback currently exceeds promotion volume.

Neoh said Fave has a few agreements in the pipeline to add to its high profile partnership with AirAsia Group Bhd’s loyalty programme, which will be announced over the next months.

The company is further looking to enter two to three new Asean countries next year — namely the Philippines, Thailand and Vietnam.

By year-end, Fave is aiming to double its 600,000 transactions and grow its merchant base by 50% to 100%.