Southeast Asian ride-hailing company Grab on Wednesday said users can now pay for goods and services in shops and restaurants using GrabPay, the company's mobile wallet.
The option is currently available in Singapore, but the company's co-founder, Tan Hooi Ling, told CNBC it will be rolled out simultaneously across Southeast Asia by 2018 if the company gets regulatory approvals.
At the moment, Grab has 25 restaurants and food stalls in Singapore that signed up to accept cashless payments using GrabPay — and the long-term focus for the company is to target the 20,000 odd merchants in Singapore, as well as businesses across Southeast Asia, who still prefer to use cash.
There's no dearth of digital-payment options in Asia due to a pickup in smartphone ownership and the widespread penetration of the internet. But in August, a PayPal study found that cash is still king in many major markets, including those in Southeast Asia. For example, more than 70 percent of the respondents to the PayPal study in the Philippines and Indonesia said they used cash most often.
Cash can be hard to keep track of, can be easily misplaced and is inefficient, according to Tan. Still, merchants have not yet moved to cashless payment options "because it's difficult and it's expensive," she said.
She pointed to the various points of sales that are accepted in large supermarkets as an example: Setting up those payment options take time and it's also expensive because there is a need to put in the right hardware and to train people.
"What we're providing is the complete opposite of that: something that is super easy to install, easy to use and something that's going to be affordable for the merchants, as well as the customers," Tan said.
Moreover, Tan said, many businesses face high merchant discount rates (MDRs) — the transaction fee that is deducted by the payments processor from the total amount received — for accepting cashless payments. That, she added, is likely due to costly hardware and sales processes that make the technology inefficient and "more expensive than it needs to be." MDRs are a common way for many digital payments platforms to make money.