Posts

Financial technology is always evolving in Asia-Pacific Region.

Banks, local telcos, payment solutions providers alike are pushing to increase cashless payment acceptance and integration (e.g. credit cards, mobile wallets, and/or variations of online and offline).

However, a common roadblock faced by most payment systems is that they are often siloed and cannot interact across organizations (e.g. companies or brands) or jurisdictions (e.g. cross-border).

To break to silo? Payment providers across the region are looking to various types of solutions, including blockchain, a decentralized technology, as means to disperse functions and expand global market reach.

1[decentralized technology]: Cryptocurrency is a digital medium of exchange not controlled by any one group or agency and secured by cryptography. Block chains are politically decentralized (no one controls them) and architecturally decentralized (no infrastructural central point of failure) but they are logically centralized.

eIQ sits down with Vansa Chatikavanij, Managing Director of OmiseGO Pte. Ltd., an Omise subsidiary blockchain company, to learn more about the upcoming product, a recent $25 million ICO, and how companies can benefit from this new technology.

What is OmiseGO?

“To put it simply, OmiseGO is a decentralized payment and exchange network designed to disrupt the current payment landscape,” says Vansa.

“The idea is to enable users connected to the OmiseGO network to trade any value (e.g. currencies, store loyalty points, rewards, in-game points etc.) efficiently, securely and at low cost across the internet.”

To allow users to interact with the OmiseGO blockchain, the company will be making its first user interface application, the white-label wallet software development kit (SDK), available towards the end of 2017.

The SDK allows third party programmers to develop a wallet application for its own brand or integrated existing wallets onto the OmiseGO blockchain.

What functions could be possible for a wallet running on the OmiseGO platform?

The simplest application of the decentralized payments network would be transfer of funds between peers without the need of a bank account and/or incurring high third-party fees.

But peer-to-peer payments are only the beginning. The main use cases of OmiseGO appear to be:

1. Remittances
2. Loyalty points
3. Mobile banking
4. Asset tracking
5. Digital gift cards
6. Tokenized fiat

OmiseGO, ecommerceIQ, eIQ Insider

OmiseGO was designed with flexibility in mind.

Take for example two retailers each with a loyalty program. If both are operating on OmiseGO, their users could potentially cash in their rewards points interchangeable at either establishment; creating their own trading market.

Cross-platform transactions means grocery points could one day be exchanged for air miles.

One of the largest markets that OmiseGO will facilitate is cross-border remittance. The World Bank predicts remittances to low and middle income countries are expected to increase 0.8 percent to $442 billion.

“Through OmiseGO, senders and receivers will be able to safely transfer money locally and cross-border to their families, regardless of whichever wallet or payment platform they are on,” says Vansa.

“There is so much opportunity for companies to customize their target users and customers experience and reward online financial transactions,” says Jun Hasegawa, Omise Holdings Pte. Ltd. Group CEO.

“With addition of OmiseGO, we are taking concrete leaps towards realizing the Omise group’s mission of Online Payment for Everyone.”

“Through OmiseGO, senders and receivers can safely go cross-wallet and transfer money locally and cross-border to their families, regardless of whichever account or platform they are on,” says Vansa.

Use of ethereum blockchain makes exchanging digital currency easy and secure as each user has access to their own private keys, making it impossible to manipulate the data.

1[ethereum blockchain]: focuses on running the programming code of any decentralized application.

A $25 million boost for OmiseGO

The company recently made headlines after a successful ICO (initial coin offering) that raised $25 million by selling its OmiseGO network token – OMG tokens.

Similar to kickstarter crowdfunding, a piece of code is granted to contributors that gives them rights to earn fees by helping run the OmiseGO network.

The product sounds promising but having strong backing is useless without educating its users.

“The exciting challenge with OmiseGO is the newness of the technology. Majority of people have heard of blockchain but are either unsure how it can be used to their benefit,” says Vansa.

“Similar to when the internet first started, not many people could have imagined where it would be today.”

The long term goal for OmiseGO is to “Unbank the Banked”; become a new global tool to enable financial inclusion for both the banked and the unbanked.

Its success would be a milestone for financial technology in Southeast Asia but we will have to wait and see as OmiseGO network is slated to officially launch towards the end of 2018.

Here’s what you should know today.

1.  Thailand’s Omise acquires Paysbuy payments business, raises $25m in token sale

Thailand’s Omise announced today that it will acquire the online payments business of Paysbuy from local telco Total Access Communication (DTAC). The value of the deal was not disclosed.

Under the terms of the agreement, Paysbuy’s payments facility will be merged into Omise’s. The rest of Paysbuy’s assets will remain with DTAC.

One year ago, Omise closed a $17.5 million series B round – led by Japanese venture capital firm SBI Investment – to take its payments gateway beyond Thailand to neighboring markets. More recently, the company has turned to crowdfunding in the form of a digital token sale in order to raise more capital.

The acquisition of Paysbuy’s payments business will make the company’s existing services accessible to a greater number of Thai consumers, while also laying the groundwork for the introduction of new products such as its OmiseGO ewallet, slated for launch later this year.

Read the rest of the story here.

 

2. Chinese bike-sharing startup Ofo raises $700M led by Alibaba

Ofo, one of China’s two billion-dollar-valued bike-sharing companies, has announced that it raised a $700 million Series E funding round which is led by Alibaba.

This is the first time Alibaba has officially thrown its lot into China’s fast-growing bike sharing space, has risen to replace replace taxis, ride-hailing apps and other transportation options for many people taking short journeys across China.

Users simply scan the QR code on a bicycle to start their ride and, with each bike carrying a GPS chip, they can be left anywhere when finished.

 This new round is the largest that the bike-sharing industry has seen to date, just edging ahead of the $600 million round that Ofo’s close rival Mobike raised last month. Notably, Mobike counts Alibaba’s arch enemy Tencent among its financial backers.

Going forward, the company said it plans to grow its fleet to over 20 million bikes. It recently expanded overseas into the UK, having already added the U.S. and Singapore, and it plans to grow to cover 200 cities before the end of 2017.

Read the rest of the story here.

 

3. Analyst: Amazon poised to enter drugstore market

Amazon already sells medical devices and employs executives to deal with health care-related regulatory issues, and is said to be exploring how to ramp up its efforts in the pharmacy space. Walgreens Boots Alliance’s CEO Stefano Pessina on Thursday shrugged off the idea that Amazon might get into the drugstore business, saying the ecommerce giant was more likely to focus on less complicated retail areas.

Despite reservations, Pessina did say that Walgreens would be open to partnering with Amazon if it came to that.

It’s not just Walgreens, Rite Aid or CVS that would be challenged by such a move; Amazon in the pharmacy space would also challenge Walmart, a major pharmacy player with the advantage of a huge physical store fleet that is increasingly willing to go head-to-head with Amazon in ecommerce.

Watch this space.

Read the rest of the story here

Here’s what you should know before the weekend starts.

1. Thai payments startup Omise to raise funding using digital coins

Thai payments startup Omise plans to raise up to US$16 million by allowing investors to use ether, the digital currency of blockchain technology Ethereum.

Investors will be able to use or buy tokens, which will give them a share of transaction revenue generated by their upcoming blockchain-based payments platform Omise Go.

Read the rest of the story here.

 

2. CIMB-Alipay mobile wallet partnership to benefit Chinese tourists

The two parties announced a collaboration to enable the Alipay mobile wallet in Malaysia as an alternative cashless payment for Chinese tourists.

Alipay merchants in Malaysia will have the opportunity to deepen their wallet share from Chinese travellers, by providing an alternative payment channel to current cash or dual-currency credit card facilities.

Read the rest of the story here.

 

3. H&M Invests in supply chain as fashion rivalry with Zara intensifies

H&M, the world’s second-biggest fashion company, said conditions remained very tough in key European markets and in the United States, with shopping behaviour and expectations changing rapidly.

H&M has been investing heavily in IT investments to integrate its stores and ecommerce and make its supply chain faster and more flexible, but detail on progress has been scant.

H&M is also branching out into new concepts to reach a broader customer base and reduce exposure to the increasingly crowded budget segment. It announced a new chain of stores, ARKET, with a slightly higher price range than its core budget H&M brand.

Read the rest of the story here.

Thailand’s startup media outlet Techsauce published two detailed reports this month; Investor Guide Q1 2017: Thailand Tech Startup Report and its annual Southeast Asia’s Top 75 Fintech Startups Report. What were the key takeaways to know about Thailand’s startup ecosystem and Southeast Asia’s tech investment landscape? We take a look at both reports:

How did Thailand startups do in terms of funding?

An introduction to Thailand

Total funding figure in Thailand is getting bigger – no less than $85.2 million as seen in the chart below. The exact number can’t be pinpointed as there were several undisclosed Series B investments.

Notable funding mentions: 

  • E-book platform Ookbee raised $19 million from Chinese giant Tencent to create a digital content ecosystem in Thailand
  • Fintech startup Omise raised $17.5 million led by Japanese firm SBI Investment
  • Ecommerce marketplace Orami (now Moxy) raised $15 million from Facebook’s Eduardo Saverin B Capital
  • 3 food tech deals were made in 2016. At the beginning of 2017, B2B food supplier platform Freshket has raised an undisclosed six digit funding round
  • Corporate Venture Capital was a trend in 2016 that saw numerous corporations shift focus to technology and innovation as both direct investors and limited partners. This trend is expected to continue well into 2017 with the emergence of property tech in Thailand, pioneered by real estate giant Sansiri

In the graph below, you can see that the number of funded startups has shot from 3 to 75 in only four years. The number of active angel investors and the number of VCs have also grown in tandem.

Data from the report also shows that ecommerce still remains the top category for investors and increased steadily on a year-to-year basis. The second category is logistics with funding raised by aCommerce, Giztix and more.

 

Only two months into 2017, and already eight startups have already raised funding this year.

The diversity of Thai startups attracting investors show that there is more room for verticals such as education tech (edtech) and travel tech.

The report also predicts that by Q2 2017, there should be more funding given to a variety of startups in different sectors and investment opportunities in Thailand’s ecommerce landscape.

Southeast Asia’s top fintech trends

  • While core technologies such as blockchain and AI have gotten a lot of publicity, startups that can realistically develop it or utilize it are still limited but extremely attractive to investors
  • Each country in this report is making moves to launch regulatory fintech sandboxes to test out financial technology framework – Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.
  • Many fintech firms in the region have mandates to work with banks and regulators, which means expanding beyond their domestic market may be a challenge
  • The entry of Alibaba’s financial arm, Ant Financial, into the region has caused startups that offer similar services to quickly adapt or risk getting squeezed out

Fintech players by country

The image above shows that Singapore is well ahead of other countries in terms of number of fintech companies with 31 players, followed by Thailand with 14 players. More doesn’t necessarily mean better, it will be time until one emerges.

With each country taking initiative to become less cash dependent, for example, Thailand government’s PromptPay initiative, this will be a continued trend into Q2 of 2017.

Insurance technology is still a minority but with Thailand’s Asia Insurance introducing online insurance packages and companies such as AXA and FWD offering online insurance in Singapore, the space is growing.

Financial technology in Southeast Asia is still growing and must in a region where only 27% of the population has a bank account. That leaves around 438 million people unbanked and endless opportunities for fintech firms to bridge the gap that traditional financial institutions are struggling to fill.

2017 is already shaping up to be another year of startup growth in Thailand but investors will be more strategic with their money. As fintech matures, it can only nurture the growth of online transactions.

The original reports from Techsauce can be found here and here.

Omise, a Bangkok-based payment enabler much like Stripe, has raised a $17.5 million Series B round to expand its reach across Southeast Asia, reports TechCrunch.

The company proves a payment gateway system that allows any retailer take credit card payments online. Omise isn’t releasing any figures for its business but Harinsut said the company can reach profitability inside the the next year.

The company offers its service in Thailand and Japan (the birthplace of CEO Jun Hasegawa), but there are plans to expand to Indonesia, Singapore and Malaysia, where it has carried out closed testing.

Omise funding history

This new round, which is one of the largest for a fintech company in Southeast Asia to date, was led by Japan-based SBI Investment, with participation from Sinar Mas Digital Ventures (SMDV) in Indonesia, Thailand’s Ascend Money (affiliated with mobile operator True), and existing backer Golden Gate Ventures. Omise has now raised over $25 million, including a $2.6 million Series A in May 2015 andundisclosed round from Golden Gate Ventures last October, right after the Singapore-based VC firm announced a new $50 million fund.

Competitive e-payment market

There are many rivals, including 2C2P which raised $7 million last year and ispowering a social commerce trial with Facebook. Stripe, meanwhile, is in the region, but it appears to be working on creating demand in the U.S. from overseas via its Atlas project, rather than going for a full-on localization approach.

Unlike its local competitors, Omise is solely focused on digital payments and not cash.

Around 60% of payments online right now in Southeast Asia.

He explained that the challenge is about reaching suitable scale. Omise makes its money by charging 3.65% on transactions, with a one dollar fee for up to $60,000 (1 million THB) withdrawn, but it offers flexible packages for larger customer.

A version of this appeared in TechCrunch on July 21. Find the original version here.