Grab, the Singapore-based ride hailing company, announced today the ability for customers and merchants to buy and sell goods using its GrabPay service.
Starting today, Grab users will be able to visit participating merchants and use QR-code technology to pay for offline items like food.
The announcement is an important milestone in the history of Grab because it marks the transition of the company from a ride-hailing service into a full-suite mobile wallet.
As reported by e27 last week, Grab is kicking off the next — and arguably most important — phase of its payment services.
“Over the last five years we have become the leading transport player in Southeast Asia. And now the question is, what are we doing with that? What are we doing with that consumer base? What are we doing with that trust?” said Grab Co-founder Tan Hooi Ling at a press event.
Tan said her company is rapidly evolving past a ride-hailing service and is growing into a full-suite platform for consumers:
“Financial payments mean so much for us because we are already the life support for millions of people.”
In late August, when Grab launched its P2P payment service, GrabPay Managing Director Jason Thompson mentioned that this merchant payments roll-out was part of the plan. Today is the fruition of that goal.
“Today is a really important phase. We bring a whole new population to the grab ecosystem. We bring in merchants,” he said.
For now, the merchants will not have to pay a transaction fee — a decision that was necessary to get merchants on-board in cash-heavy Southeast Asia. Thompson told e27 that in the future they will look at strategies for revenue, but it is not the focus at the moment.
The goal is to have 1,000 merchants using GrabPay by the end of the year.
How it works
(Photos at the end of this article)
GrabPay leverages QR-code technology to pay for goods, which e27 readers will find similar to WeChat Pay. Users either upload money straight from their card, or they top up their credits via P2P transfer.
The stalls that accept GrabPay have a sign next to them with a QR-code. People scan the code, type in the amount — say S$3.00 (US$2.20) for chicken-rice — and click send. The merchant receives the money almost instantaneously.
Nizam, the owner of an Indonesian food stall named Rayyan’s Waroeng Penyet, told e27 he receives the money in his bank account at the end of every day.
Thompson said this feature is extremely important, because if the money gets stuck for any reason, merchants simply won’t use the product. Small businesses need to be able to reconcile their cashflow daily.
Nizam said he had never done the cashless thing and got to the system out of a mix of curiosity and hope that it will help him handle payments during busy periods.
His stall is situated in a particularly interesting location — in the heart of Singapore’s finance district, which means his company spends most of its day without many customers before dealing with an extreme rush for 2-3 hours around lunchtime. Then, it sees a fairly extreme drop-off.
He hopes the GrabPay service can help him nab more customers without being overly difficult in terms of managing the fact that the bulk of his revenue comes at him in one burst.
Nizam says he gets about 200 customers a day and estimated 15-20 of them used GrabPay to pay for a meal. (Keep in mind the service just started.)
The on-boarding process took Nizam about one day.
He needed to create an account and provide Grab with an account number. He also needed to upload his Unique Entity Number (an identification system for organisations in Singapore), and verify the bank account associated with his company.
After that, Nizam was good to go.
Pitching the audience, and space
While the Singapore government makes a push to integrate cashless payments into the day-to-day life of its citizenry, the core problem the city faces now is a fractured industry with dozens of potential payment options.
What GrabPay is pitching is its user base. The company does not need to work to get users.
“Organisations spend a lot of money releasing a wallet with no audience. What we have is that huge audience,” said Thompson.
According to Tan, Grab is already on the phones of 4 million people in Singapore and none of them need to do anything to use the product.
Thompson added, “The barrier to entry [for adoption] is really low. There is no cost, no physical space is needed.”
There are 20,000 merchants in Singapore that are either cash-first or cash-only, according to Grab internal data.
A lot of these people own hawker centres, small shops, or micro-SME companies — a group that is unwilling to put the resources into building a vibrant cashless payment system. It makes sense too:
“They are restricted on space. So are they really going to have three terminals? A hardwired connection? Find space on a table that is crammed with food? That’s never going to happen,” said Thompson.
With GrabPay, shop owners really just need to set up a plug to make sure their phone never dies.
Photos to visualise the service
Here is the UI for GrabPay. Note the Grab credits in the top right-hand corner, that is $10 worth of Grab credits I can use to buy food.
When we were walking into the Hawker Centre, we were greeted by advertising to let people know they could use GrabPay at this facility.
Meet Nizam, his stall is the type of company being targetted by Grab. His restaurant is an SME that, until now, had been a cash-only option.
On his phone are a list of the transactions he received today. He can see everything on the app. When we tested out the service, our payment was received in a matter of seconds.
If we zoom up, this is what Nizam sees when a transaction goes through.