How AirPay Built a Payments Ecosystem to Empower the Millennial

Written by: Cynthia Luo on July 20, 2017

Thailand has been one of the countries that continues to reduce its dependency with cash. The government has been keen on driving the country towards a cashless society, from launching nationwide e-payment scheme PromptPay to recently announcing a campaign that offers a reward up to 1 million THB ($29,463) for users who adopt cashless transactions.

It may seem like a lot of money to reward people to try more convenient methods of payment but the Thai Bankers’ Association predicted that commercial banks could save $2.18 billion in the next 10 years with a digital payments system as the cost of transportation and insurance that came with the use of cash transactions lowered.

Market value for digital transactions is also expected to reach $23 billion in 2021, up from $11 billion this year so it’s no wonder fintech has become so popular.

A company that was an early adopter and saw Thailand’s potential for digital payments is AirPay, the pre-payments platform by Garena (now Sea), Southeast Asia’s most valuable internet company to date.

Serving the unbanked one internet cafe at a time

AirPay was initially launched in 2014 as an e-wallet to facilitate online transactions for users of Garena’s gaming service and since been downloaded 3.2 million times.

As one of the biggest market for Garena in the region, Thailand was chosen as the product’s launch pad. AirPay Thailand’s Country Product Manager, Supphavit Hongamornsin, shares another reason with eIQ.

“Compared to the other markets in emerging Southeast Asia, we find that Thai people are more open to trying new forms of payment,” said Hongamornsin.

To ensure AirPay was user friendly for the roughly 18.3 million gamers in Thailand – where 26% of are below the age of 20 and have low bank account ownership – the company ended up creating two platforms to complement one another, AirPay Counter and the AirPay app.

AirPay digital payments
Thai gamer demographic shows a population of digitally savvy young people. Source: Newzoo

“An app was created because urban millennials with digital nativity are used to completing all types of transactions directly through their phones,” explained Hongamornsin.

The AirPay Counter, on the other hand, is a more traditional payments option that allow users to top up their AirPay e-wallet through cash payment at an internet cafe, convenience store or regular  mom and pop shop.

“We started the counter service at internet cafes because of their wide network and familiarity – there are around 40,000 of them in Thailand,” said Hongamornsin. “They’ve been highly helpful for residents in rural regions without access to smartphones or bank accounts.”

To date, AirPay has around 100,000 AirPay Counters nationwide in every sub-district of Thailand and partnered with local chain stores like Supercheap and IT Shops like IT City to expand its reach.

“Only 10% of our counters are actually in Bangkok,” said Hongamornsin.

AirPay digital payments
Internet cafe with AirPay Counter facility

Supporting the country’s cashless agenda

Since its inception in 2014, AirPay has evolved from simply facilitating online transactions for the Garena gaming community to providing a wider range of payment services for both physical and digital goods including utility bills, phone credit, movie tickets, and ecommerce.

Hongamornsin said AirPay wants to empower people, especially the younger generation, through better financial capabilities and provide a solution to siloed bank accounts.  

“Right now, there is actually very little that you can do with your bank account. In Thailand, for example, not all debit cards can be used for online payments.”

To combat this, one of the new services provided in the AirPay app is a virtual prepaid card called AirPay Card in partnership with MasterCard.

AirPay digital payments
Setting up an AirPay Card in the AirPay App

“There’s a large population in Thailand that’s still underserved by traditional financial services and unable to complete online transactions. With the AirPay Card, customers can purchase from any merchant in the world that accepts MasterCard,” comments Hongamornsin.

AirPay’s foreseeable future

In 2016, AirPay reported an annualized gross transaction value of $510 million. Although gaming services contributed heavily to the company’s revenue, AirPay is expecting the tide to shift to ecommerce with a goal of one million AirPay Card owners in Thailand by the end of this year.

Hongamornsin, however, admits that there’s still a long way to go before the country can achieve a “majorly cashless” status.

“I think it would take at least five years for Thailand to reach this milestone [80% cashless],” said Hongamornsin.

And unlike Shopee and Garena that have made their marks at a regional level, AirPay’s story is still pretty localized to Thailand.

In other countries like Indonesia and Vietnam where AirPay is present, Hongamornsin says the population is much more underdeveloped when it comes to digital payments creating new challenges.

These markets have complex banking landscapes that make it difficult for AirPay to integrate.

“In Vietnam, there are more than 50 small banks used by the population. Compared to Thailand’s roughly 20 banks, we still need to understand how to connect them all through AirPay.”

“Expansion to another country is definitely in the pipeline, but we want to make sure we are strong in our existing markets first,” said Hongamornsin.

With the pace that fintech is growing in Thailand thanks to the efforts by companies like AirPay, it won’t be long before the millennial becomes well accustomed to plastic over paper.

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