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Leading Southeast Asian ride-hailing service Grab is considering spinning off its financial services unit, Grab Financial Group, which operates its mobile wallet GrabPay and its insurance and loan offering business. Grab has reportedly held preliminary discussions with Ant Financial and PayPal about the possibility of a strategic investment in the unit, per two sources with knowledge of the talks cited by TechCrunch.
Business Insider/Jonathan Loh
However, Ant has told TechCrunch that it’s not involved. The move to spin off Grab Financial Group would enable the unit to operate independently of Grab’s core ride-hailing business.
Here’s what it means: Grab has the most comprehensive digital payment offerings among ride-hailing giants moving into financial services, putting it at the forefront of the space.
- Uber’s been mirroring Grab’s strategy in the US. Uber has ramped up its payment offerings in the last two years through a partnership with Venmo, a cobrand credit card with Barclaycard, a debit card for its drivers, and most recently with the launch of Uber Rewards, a loyalty program for purchases made on Uber services.
- Go-Jek, a regional competitor of Grab’s, has been ramping up its payments offerings. Major Indonesian ride-hailing service Go-Jek, which was recently valued at $10 billion, operates a digital payment service, Go-Pay, which offers money transfers, offline payments, insurance, and microloans and accounts for half of the payments on Go-Jek. And the firm has made several payments and commerce acquisitions over the past two years.
- Meanwhile, Lyft is the most recent player to expand into payments, using financial services to retain its drivers. Lyft launched a no-fee bank account and debit card for drivers last week that offers tiered rewards on spending categories like gas and groceries.
The bigger picture: This move could feed into Grab’s ambitions to build a "super app" that reaches almost all aspects of a user’s life and would provide a promising growth opportunity for whichever payment company partners or invests in the firm.
- Grab’s significant presence across Southeast Asia (SEA) opens a large volume opportunity for a payment firm to invest in Grab Financial Group. GrabPay is currently live in Indonesia, Malaysia, the Philippines, Singapore, and Vietnam, with plans to launch in Thailand. Several countries have initiatives to boost digital payments, which makes it an opportune time to establish a presence as digital payments begin to popularize. The central bank of the Philippines, for example, has a goal of increasing cashless transactions in the country from current figures of 1% up to 20% by 2020. And in Singapore, the country adopted a unified system that allows merchants to display a QR code that can be used for consumers to pay with over 27 mobile wallets. Grab’s market-leading suite of payment offerings among ride-hailers and wide footprint across SEA give it a robust network that could be attractive to payment firms wanting to deepen their presence in SEA or enter it.
- Grab Financial Group would complement Grab’s existing plans to build out its financial services.Grab recently introduced “Grow with Grab," a road map outlining its plans for growth, including introducing small business lending and micro-insurance for drivers in Singapore. Other new services include micro-insurance products, installment payments services, and “Pay with GrabPay,” an online checkout payment method for online sellers. Partnering with a major payments firm can position Grab Financial Group strongly in the region amid incoming competition: Samsung Pay, for example, just began beta testing in Indonesia. Further, Grab could leverage its 95%share of the ride-hailing market in SEA to cement a leading position in both financial services and ride sharing.
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See Also:
- Remitly and Visa are partnering to offer cross-border money transfers
- The companies disrupting the payments industry in major markets through digital
- Lyft can retain drivers with its new driver-focused debit card
SEE ALSO: THE PAYMENTS INDUSTRY ECOSYSTEM: The trend towards digital payments and key players moving markets
Source: Business Insider – feedback@businessinsider.com (Rachel Green)