The year 2020 has been a year of momentous change for the payments industry not just in APAC but also across the world.

Trends that were identified this time last year as emerging have been hugely accelerated as a result of the pandemic. Rapid growth was predicted, but it was unpredictable on the scale that has happened.

For example, and most notably, we’ve seen cash use decline even further this year amidst revelations that handling cash could spread infection. As the pandemic spread across Asia in the first half of the year, people were quick to reduce contact with physical materials and others, and instead reaching for contactless options to carry out daily tasks.

For retail, this meant a shift toward buying goods and services online, and where necessary, paying in-store by card. In fact, many merchants simply refused cash in a bid to do their part to stop the spread of COVID-19.

In Singapore, this shift was accelerated by the government which encouraged the economy to digitalise quickly to remain competitive and to adapt to the ‘new normal’, even creating payout programmes to incentive local micro business to adopt digital payment forms.

According to McKinsey’s 2020 Global Payments Report, by the end of 2020, we can expect a drop of four to five percentage points in the share of global transactions made with cash, and much more in some regions.

So, after a year of such rapid transformation, what does the (un)predictable future hold for the payments industry in 2021?

Buy now pay later (BNPL) will be a popular payment method

According to Paysafe’s LiT research, 56 per cent of global consumers mentioned that they used a new local payment method in the first month of the pandemic. One of these new popular payment methods is ‘Buy Now Pay Later’ (BNPL).

BNPL schemes, popularised by larger companies like Afterpay and Klarna, were this year named as the fastest growing online payment method worldwide.

While relatively new to Singapore, local fintech like hoolah, Rely and Atome, are taking advantage of the trend and stealing market share from the traditional credit card services with their interest free offerings.

Predominantly an online payment option allowing consumers to pay in instalments for goods and services, some have even made their way in-store to capture audiences as they slowly return to preferred retail outlets offering on-the-spot credit for purchases and they’re proving popular.

Research from Kaleido predicts that BNPL value will reach over 12 per cent of total global e-commerce spend on physical goods by 2025. What’s more, Europe will be responsible for US$347 billion of e-commerce spend via BNPL mechanisms by 2025, representing 30 per cent of total e-commerce spend in that year.

Also read: 4 ways digital payments are helping businesses thrive amid a global recession

With the economy not expected to recover to pre-COVID-19 levels for some time, cautious consumer spending is a trend we see continuing into 2021. As such, this is certainly a payment method online merchants need to strongly consider offering consumers in 2021 and beyond.

Staying competitive will be harder

It’s no surprise that the figures from 2020 reflect a massive boom for global e-commerce. The ‘quickening’ effect, as coined by McKinsey, describes a 10-year shift in e-commerce experienced in just 90 days.

During the month of June 2020, amidst the height of the strictest lockdowns in many countries, e-commerce sales grew 34 per cent year-on-year — the highest growth rate reported since March 2008.

Interestingly, many consumers were not turning to their trusted brands during this critical period. Many shoppers branched out to new retailers with the ‘support local’ movement growing in popularity as people rallied to ensure the survival of local merchants who were forced to close physical outlets during the pandemic

Disruptions in brand loyalty have created a wealth of opportunities for businesses big and small, pushing them to take their operations online and across borders. Facebook even launched its own shopping feature to enable growing businesses to sell to customers on its owned platforms like Instagram and WhatsApp.

According to PPRO’s own research, one of the most-common reasons for cart abandonment at the checkout is that a customers’ preferred payment method was not available.

In fact, recent research has revealed that the global average rate of cart abandonment is as high as 75.6 per cent — causing brands to lose up to US$18 million a year in revenue. We expect this demand to continue, putting pressure on retailers to expand current payment offerings.

Seamless payments have to meet stricter security standards

As digital payments head toward a global tipping point, the need for greater regulation and security will only continue to grow.

Globally, two-factor authentication is growing in popularity. In 2019, Australia released the Card-Not-Present (CNP) Fraud Mitigation Framework, requiring Strong Customer Authentication (SCA) when a merchant’s fraud rate is above the recommended rate for two consecutive quarters. India requires two-factor authentication for all domestic debit and credit card transactions over INR 2,000.

As we head into 2021, payment providers and merchants worldwide must collaborate to ensure they’re prepared to adapt digital shops to these new requirements, while also ensuring the payments process they offer is seamless for the customer.

Also read: Lessons from the buy-now-pay-later boom

2021 will be the year for action — ensuring customers are adequately protected in an increasingly cyber world.

Payments should prepare for hyper growth

More and more customers are now online, some for the first time, and they’re looking for products or services that suit their very specific needs and they don’t really mind where they find them.

While the pandemic has meant countries are less physically connected than ever, in the online sphere, all borders have been eliminated: a shopper will look across borders (they might not even realise they’re doing it) in search of better-quality products, more payment options, preferred brands and more.

For merchants, this is a huge opportunity and one that could enable them to reach untapped markets if they are able to offer the right mix of goods, user experience (UX), local payment methods and delivery options.

With over 500 significant local payment methods across the globe, every consumer will have different payment preferences. To be able to scale up and succeed in the new normal, merchants must work with payment service providers to activate as many payment methods as possible at the checkout page.

While 2021 might be another challenging year for the global economy and people as they struggle through further restrictions and lockdowns the future for local payment methods (and savvy retailers who offer them) will certainly be very bright.

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As an HR consultant for startups, I’m often asked this question by founders.

In the early stages of their startup journeys, founders typically spend the majority of their focus on product development or sales and marketing, with recruiting often left as an afterthought.

At some point, however, they always arrive back at the classic chicken and egg problem: in order to grow, they need the right talent, but in order to attract and retain the right talent, they need to grow.

To get out of that cycle, I usually advise founders to bulk up their startup’s HR muscle.

There’s certainly no hard and fast rule on when to hire an in-house HR, but generally after achieving product-market fit, there are some rules of thumb around team sizes founders can first take into consideration.

10-15 team members: Resources can be quite limited at this stage. As a founder, you probably didn’t have many issues recruiting the first few employees on your own, but as the business starts to scale and accelerate, the team will also need to expand accordingly. Bringing on outside talent to manage the hiring and onboarding process internally will be critical in preventing HR matters from occupying valuable mindshare. 

15-30 team members: So you managed to get to this stage without hiring any dedicated person to handle recruiting. It still might be wise to bring in someone, as HR expands beyond just recruiting to also include retention. While attrition is quite normal in any startup, retaining an employee (granted they’re performing well) is significantly cheaper than hiring a replacement, which can often waste valuable time and resources. 

30+ team members: If the startup has more than 30 employees and doesn’t have an HR yet, you may need to consider hiring for this role as soon as possible. At this size, sourcing job boards, editing job descriptions, facilitating interview and onboarding logistics will likely distract you from more mission critical things, such as fundraising, product, or business development. 

HR pains of a scaling startup

Many early-stage founders refuse to hire an HR because they view it as an unnecessary expense, and one that’s more suitable for large enterprises. In reality, many founders are unaware of or substantially underestimate the HR problems and needs they’ll encounter as a startup scales and the team sizes grow: 

Recruit specialists vs. generalists

In earlier stages of your startup, you’re likely hiring more generalists that can wear multiple hats due to limited resources. Once your company starts to scale, however, you’ll usually need to divide and conquer, that is recruiting more specialists that can significantly amplify the efforts of each function.

For example, full-stack engineers might be more commonplace in fresh startups, who would then gradually be replaced by separate front-end and back-end engineers as the organisation grows.                                                                                                  

Attracting and retaining talents

This includes everything from building the employer brand and marketing specific job openings to sourcing better quality candidates to adjusting compensation/benefits and work-life balance policies to optimise retention.

Also read: What will the next wave of VC investment in HR tech look like?

Regulatory and compliance requirements

Labour laws can be quite complex from country to country. Founders need to stay informed on basic hiring and firing legal frameworks to prevent the company from encountering any lawsuits.                                                                                                                                    

Company culture, mission, vision, and values development

Setting the vision, mission and values is extremely important, as these help create the company’s culture and establish objectives and goals that help employees navigate the organisation. Unfortunately, many companies lack these core components in the early-stages as the founding team is usually too occupied with other things.               

Performance/OKR/KPI appraisal and compensation structure

Compensation and performance reviews are resource-intensive but nonetheless critical components of any growing startup.                          

Design effective training and development programmes

At a certain scale, a startup doesn’t necessarily need to go outside to seek out talents. Instead, it could facilitate internal training to upskill existing talents and cultivate leaders from within.

However, many founders are not experienced in properly assessing employee capabilities and designing training programmes for them.                               

The different types of HRs

So, you’ve started to face some HR issues as your company has grown bigger and have decided to hire a professional to give you some peace of mind. Actually, there are two types of HR professionals that you most often see in early-stage startups.

HR co-ordinator

This role takes on broader duties and responsibilities, generally encompassing the recruitment, retention, training, management and development of employees; legal issues concerning employment; and salaries and benefits design. 

Recruiter

Given the critical nature and time-intensive nature of talent sourcing, recruiters are often brought in separately to specialise in building a strong pool of candidates for hiring managers to choose from. The scope of their responsibilities include understanding the organisation’s recruitment needs, creating accurate job descriptions, posting job descriptions in different channels, and even attending career fairs or recruiting events to source for candidates.

They also conduct the initial screening interviews before passing the candidate along to the hiring manager, while also managing the job offer process and on boarding.

Also read: 4 rising HR tech startups to watch out for in Singapore

There’s no doubt you will need an HR professional in your organisation at some point. If you have strong hiring needs, and if budget allows, it is best to have at least one HR and one recruiter in an ideal HR team.

But if the budget only allows the organisation to hire one, then you should try to look for a candidate with a multi-tasking gene — that is an HR co-ordinator with a knack for marketing and sales, which are critical for acquiring talent in a competitive industry, or a recruiter with solid interpersonal communication skills, which will often be used internally for talent management and development. 

Choosing one or the other is contingent upon the individual needs of each startup. Nevertheless, no founder wants to be brought down by back office operations.

Although certainly an investment upfront, hiring a high quality HR professional can actually save a founder a lot of time, resources and headaches, particularly those on a hyper-growth trajectory.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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With the Grab-gojek merger talks hitting a roadblock over Grab CEO Antony Tan’s refusal to cede control of the combined entity, the focus has shifted to the merger discussions between Tokopedia and gojek, which have also been in the works for long.

While conversations between these three firms have happened on and off in the past, they have taken a more serious tone recently.

As per the latest report by Bloomberg, Tokopedia is in advanced talks with gojek for a US$18-billion merger deal and that the two tech giants have signed a detailed term-sheet to conduct due diligence of each other’s business.

The report suggests that Masayoshi Son, Chairman of SoftBank, which is an investor in both Grab and gojek, was forcing the two to come together but he failed to convince Tan on the benefits, which in turn is paving the way for a potential marriage between Tokopedia and gojek, Indonesia’s two most valuable startups.

Indeed, Tokopedia and gojek have been engaged in merger talks since 2018, but they gained momentum after the conversations between gojek and Grab reached an impasse.

Also Read: gojek in advanced talks with Tokopedia for a US$18B merger

While a union is still a work in progress and we don’t know yet which two entities will eventually come together, it would be interesting to examine which merger will make better business sense — Grab and gojek or Tokopedia and gojek.

First off, let’s look at the investments raised and valuation being commanded by Tokopedia and Grab.

If we look at Grab and Tokopedia from an investment and strategic points of view, both have surpassed the Series H stage. It means there is no room for the next round of funding, other than an IPO. Plus, neither is profitable as both keep investing money back into the business to further grow, expand and increase customer base.

“However, when compared to the whopping US$10.1 billion raised by Grab to date, Tokopedia’s ‘paltry’ US$2.8 billion looks way more nimble and leaves enough room for a higher valuation at IPO stage,” observed Sergei Filippov, Managing Partner of Singapore-based Morphosis Capital Partners.

Tokopedia, an e-commerce giant, has raised US$2.8 billion over multiple rounds and is currently valued at around US$7-8 billion. This means that the investors’ investments value have more than doubled (2.5-2.75x).

In comparison, Grab, which has raised US$10.1 billion till date, is valued only US$15 billion, meaning the value of the investment has increased only 1.48x.

“This is why I believe a Tokopedia-gojek potential merger holds way more business sense and provides better market value,” added Filippov, who has been closely watching the industry for long.

Incidentally, Grab Financial Group has just raised US$300 million in a funding round led by South Korea’s Hanwha Asset Management, as per a report by The Information. This could signal that the Grab’s financial arm, with all its fintech projects, may go to the IPO separately, which indicates that a Grab has no reason to merge with gojek.

“We should remember that financial services were one of the primary reasons why Grab’s valuation rose from US$3 billion in 2016 (when it was just a ride-hailing service) to US$15 billion in 2020 (when it started to offer wealth management services and insurance plans),” he shared.

Now, in terms of synergy, there is more synergy between Tokopedia’s C2C e-commerce marketplace and gojek’s ride-hailing/delivery/fintech units than between two gojek and Grab, who are direct competitors to each other.

Besides, gojek is already delivering tens of thousands of orders per day for Tokopedia, and there is a lot of on-demand products existing on both platforms; for example, one can buy gold in both gojek and Tokopedia.

“Combining e-commerce and unrivalled logistics network, the potential tech behemoth can play the role of Alibaba or Amazon for Indonesia and other Southeast Asian countries,” commented Filippov.

A Tokopedia-gojek deal will also make better sense from a market point of view, as a Grab-gojek deal will only lead to a super monopoly, which will affect end-customers.

“Since SoftBank is a key shareholder in both Grab and Tokopedia, different merger talks are all about making more business sense, please investors and pose more value at a potential IPO to be a success,” according to Filippov. “We shouldn’t forget that all these different merger combinations are also there to test public opinion to estimate potential interest at the IPO stage.”

Unicorn dilemma?

Certainly, Grab, gojek and Tokopedia — all unicorns — make an interesting triangle. But, according to industry watchers, the talks among them indicate that there is a need to address the inevitable question for every tech business at this juncture of its lifecycle: where do you go from here after being coined a unicorn?

In fact, Grab, Tokopedia and gojek are from a similar cohort as Razer and Sea Group — the batch of tech startups founded from the late 2000s to early 2010s. Both Sea and Razer have graduated to the public market and demonstrated admirable success.

“Hence, many will ask whether the likes of Grab, gojek, Tokopedia and even Traveloka could follow suit, and if so, ‘when’,” said Dave Ng, General Partner of Altara Ventures.

In his view, Tokopedia and gojek could be complementary as their businesses have less competitive dynamics. They also operate in the same key market, which makes it potentially appealing to merge and create a national tech champion.

Also Read: Traveloka considers SPAC option as it plans to go public

Secondly, the marriage could create an overall business which now spans across multi-product and services categories, giving more legs to the aspiration of being a true super app.

Thirdly, from a culture and people perspectives, both companies grew up in an “Indonesian tech for Indonesia” environment, and the management of both sides haven’t really crossed swords.

“You can imagine it is likely easier to come to the table vs with someone whom you have tried to eliminate throughout your business life,” Ng opined. “However, this doesn’t automatically translate to more synergy or merit vs the case of a gojek-Grab merger. Otherwise, gojek wouldn’t have explored the option with Grab in the first place.”

Having said that, both these deals have their pros and cons. With the Grab-gojek union, there could be meaningful consolidation of market coverage, better efficiency on the costs side of equation, a combination of the strong regional talent pool and creation of an undisputed dominant player. However, these would only be achieved after considerable rationalisation across leadership, people, operations and processes.

“On the other hand, a Tokopedia-gojek combination may look appealing for various reasons. However, both companies are presumably not profitable yet. At such scale once combined and with multiple business offerings, they would need to figure out how to fund such significantly expanded operations going forward. That is not trivial,” Ng concluded.

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Lazada announced today that it has appointed founding member Magnus Ekbom as the CEO for its Malaysian operations, replacing Leo Chow. This news was first reported by DealStreetAsia.

The company has not disclosed why Chow stepped down from his role and what his new role will look like. However, it states that under Chow’s leadership, “Lazada Malaysia has seen tremendous success with record-breaking growth and achievements year-on-year.”

Nonetheless, Ekbom has been with the e-commerce company since its inception and has served as the CEO of Lazada Indonesia from 2012 until 2015.

In his new position, he will be responsible for further growing Lazada presence in Malaysia and driving its long term strategy as head of the flagship platform of Alibaba Group in Southeast Asia.

Also Read: Consumer satisfaction with Qoo10, Lazada falls on the lower end: Study

Simultaneously, the e-commerce platform has also appointed Jessica Liu as Thailand’s first female country head succeeding Jack Zhang, effective immediately. In her new role, she will continue to serve as the president of Lazada Group and head of LazMall while Zhang will be taking a regional role at the company.

Liu began her career at the publisher China Machine Press, rising to vice president of its economics and management books branch after which she decided to work in Amazon in multiple divisions. She then joined Tmall, a B2C online retail platform operated by Alibaba Group in 2012, initially leading its footwear business. She soon moved to its fast fashion and luxury apparel brands unit.

These appointments come after speculation surfaced around long-running culture clashes between Alibaba and Lazada team in June last year — a claim that was denied by Lazada spokesperson.

Founded in 2012, Lazada is an online shopping and selling e-commerce platform in Southeast Asia which is present in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The company was acquired by Alibaba Group in 2016 after it replaced its CEO with a long-standing Alibaba executive and invested US$2 billion into the business.

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Image Credit: Lazada

 

 

 

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Mynt, a Philippines-based fintech platform offering mobile payments and business loans, announced today it has raised over US$175 million in fresh capital from ASP Philippines.

ASP is a Limited Partnership fund managed by Bow Wave Capital Management, a Private Equity fund with a mandate to invest in strategic partners and investments of Ant Financial and Alibaba Group.

The new funds will go towards growing its product offerings to “further spur” the growth of financial inclusion and digitisation of payments and financial services in the Philippines.

The financing was raised in multiple tranches, with the post-money valuation of the final tranches reaching close to US$1 billion.

Also Read: Top 5 fintech predictions that will take over the world in 2021

Founded in 2015 as a partnership between Philippines’s largest telco Globe Telecom, locally-listed conglomerate Ayala Corporation, and Ant Financial, Mynt operates two fintech companies — GCash, a mobile payments service, and Fuse, a lending platform for Filipinos to get micro and business loans.

“The pandemic has acted as a catalyst in highlighting the importance of digital finance in society today and with this investment from Bow Wave, we look forward to further living out our vision of finance for all, enabling democratised access to payment and financial services to every Filipino,” said Martha Sazon, President and CEO of Mynt.

“Mynt has made great strides in the fintech space in the Philippines. Recognising this fact and our shared values, Bow Wave supports the vision of Mynt to provide finance for all Filipinos,” remarked Itai Lemberger, Founder and Chief Investment Officer of Bow Wave.

As more and more Filipinos turn to digital services, GCash claimed it recorded a gross transaction value of over Php1 trillion (US$20.8 billion) in 2020, spurred by services like online payments, bank cash-in and sending money.

Also Read: GCash and Qwikwire partner to innovate real estate industry in Philippines

GCash shared it has reached over 33 million Filipinos with digital financial tools and services through its mobile wallet, using it for a variety of services including opening deposit accounts and acquiring insurance products.

“We are further encouraged by the fact that Mynt’s momentum has continued, even as the country moved out of quarantine restrictions, suggesting a fundamental shift in our customers’ behaviour towards a cashless lifestyle. We are confident in Mynt’s future prospects as a unicorn in the Philippines,” opined Ernest L. Cu, Chairman of the Board of Mynt.

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Image Credit: Mynt

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