THE future looks exciting for Chan Kok Long. He speaks animatedly about new technologies in the retail industry and of omnichannel strategies that will proliferate across companies.
His enthusiasm is understandable. All this development taking place in the retail space is good news for iPay88 Holding Sdn Bhd, a leading retail payment solutions provider in the region.
Digital payment is expected to grow rapidly as more consumers turn to online shopping. Additionally, the need to adopt new business models will force retailers to look into options such as digital payment methods to reduce cost and offer better user experience to grow.
On the back of that, Chan, executive director of iPay88, is targeting to double transaction volume for this year. That means he is looking at transacting a total of about RM20bil in 2019.
“The growth is tremendous. But I see the readiness of new industries coming into the digital payment platform. So now, the key is solutions. We must continue to create new solutions to cater for the markets,” he says.
In 2018, iPay88 recorded a total of 52.45 million successful payment transactions compared to 28.7 million in 2017. These transactions amounted to sales of RM7bil, a 68% increase from 2017.
The company transacted a total of RM10bil last year, including failed transactions.
Generally, the growth of digital payments has largely been supported by several factors. One of which is Bank Negara’s Reduced Merchant Discount Rate policies.
“They’ve played a significant role in promoting cashless and digital payments. Bank Negara made the card and non-card rate equal. Last time, there was a gap between (the rate charged to a merchant for) online and offline payment. Now the rate is the same,” Chan explains.
Another factor is the change in consumer behaviour. Consumers have shown a willingness to adopt new technology and are certainly more open to using payment methods that do not involve cold, hard cash.
To demonstrate this trend, Chan shares that mobile transactions have been growing tremendously over the last two years. In January 2015, iPay88 recorded 193,000 transactions via mobile phones. By last December, mobile transactions had amounted to 5.1 million in a month. In total, 40.8 million transactions were successfully performed over mobile devices last year.
Mobile phones have been a key catalyst for the exponential growth of e-commerce over the last few years, he says, and businesses should look into enhancing their mobile experience and application performance to woo customers.
And with the imminent deployment of 5G networks, there is an opportunity for retailers to further enhance the user experience.
“The moment any new technology changes consumer behaviour, when there is massive change in their behaviour, there will also be massive opportunities (for business). There will be industries that will go down, and there will be businesses that will rise up due to this change,” notes Chan.
Correspondingly, merchants are looking to get on the digital platform to not only reach a wider base of customers, but also to gather data on consumer behaviour and preferences.
“Everybody wants to double their market share. Then you will see more and more people buying online,” he adds.
To be sure, these trends will not only help digital payment providers and financial technology (fintech) players who are generally startups, they will also be a boost for e-commerce businesses, many of whom are SMEs.
This will, hopefully, push more small businesses to leverage technology to expand their business.
According to the Department of Statistics’ Economic Census 2016, 56.5% used the Internet and only 20.1% had a web presence in their businesses in 2015. Additionally, only 4.8% of 907,065 SMEs were involved in e-commerce transactions.
The government targets to have 50,000 new SMEs this year. With more firms coming into the market, companies will have to look into e-commerce to capture sales outside of the domestic market.