This article is contributed by Zhao Tang, who is currently doing EMBA in Sasin Graduate Institute of Business Administration of Chulalongkorn University
It was pretty rare to see street food vendors in Bangkok to accept payment in other digital forms rather than cash until recently. If you walk closer to the hawker stall, there is a sign for an app called Paotang.
The word Paotang means walllet，Pao means the bag，tang means money. in Thai. So, the name and the purpose of this app is so apparent – being a digital money wallet. And, not difficult to take a further guess, it’s owned by a Thai government-controlled bank, Krungthai, or KTB.
According to a recent report in November, Paotang has over 40 million users since the first launch in January 2018, which is about 57% of Thailand’s 69 million population. As a quick comparison in the similar category, the report mentioned that KTB’s own banking app Krungthai NEXT has about 10 million users, which is similar to that of Siam Commercial Bank’s SCB Easy. But the digital banking market leader KBank has around 14 million users of its K-Plus.
Don’t forget other players from the non-banking industry too. TrueMoney, which is a popular digital wallet affiliated to the leading conglomerate CP Group and Alibaba, has already attracted over 13 million users. The dominant messaging app in Thailand LINE has some 5 million registered users. AirPay, owned by Southeast Asia’s listed gaming and eCommerce group SEA Group, has attracted 7.5 million users in Thailand with a target of 10 million expected by 2020. And the largest Thai retailer Central Group and JD have jointly launched a digital wallet Dolfin, intending to acquire 5 million users by the end of 2020.
So, what’s the secret sauce for Paotang’s success in attracting the most users so far?
The answer is government support. To stimulate the economy, the Thai government has launched a few plans to help the needed people and small business owners. In a stimulus plan named “We Travel Together” which aims to help the heavily hit tourism industry and one of the pillars of the Thai economy, Thai citizens may opt-in a government-subsidized program and apply for a maximum of 40% cash rebates on their flights and hotel bookings.
Once the application is successful, the amount will be credited to the traveler’s Paotang e-wallet account. Another example is a 3,000 Thai baht cash-handout program for the needed. The money is also scheduled to be distributed to the e-wallet in Paotang.
After user acquisition, it’s on the merchant side. Apparently, instead of talking to the large retailers and probably having to spend marketing dollars, convincing the small street food vendors to accept Paotang payment looks more promising. Because with new e-KYC technologies in the Fintech industry, the whole opening process is easy to be completed on a mobile phone.
And the mobile e-wallet payment process across Paotang’s accounts with PromptPay QR code is just like a peer-to-peer account transfer, which the experience is similar to using Alipay, WeChat Pay in China, or PayNow in Singapore.
As the saying goes, “Success is easy to attain but difficult to maintain.” Specifically, in this ongoing battle between mobile wallets in Thailand, the question for Paotang’s owner Krungthai is how to retain users.
So far, the app has six main functions, namely the e-wallet with mobile top-up and utility payment features, government bond purchase, personal health insurance, education loans payback, Krungthai bank account, and donations. However, offers from other competitors, particularly the non-banking players, look more attractive from a consumer’s perspective. Many of them are doing a range of marketing efforts to grow the user base and keep them active.
First, they spend a considerable amount on cash incentives. Many consumers are price sensitive. It’s common to see banners of TrueMoney or Dolfin put side by side, saying 5 or 10 Thai baht rebates at a food court. AirPay, on the other hand, offers a maximum 40% rebates for Shopee coins for eCommerce purchases.
Second, they have introduced new business partners in a bid to bring more convenience to the user’s life. TrueMoney added a new feature ahead of its competitors, mobile top-up for an MRT transport card in the app.
Third, free branding with affiliated businesses. Central Group has put the logo and access link of Dolfin Wallet on their membership card app with over 17 million members, or about 25% of Thailand’s population. As for TrueMoney, the logo appears at the counters in about 12,000 7-Eleven outlets across the country, which are impossible to overlook.
For the government, the priority is to improve the financial inclusion for the underbanked groups. But we all know that at the end of the day, data from these apps is the most valuable asset that everyone wants to collect for their own agenda.
Policymakers want to know the spending data so that they could use them wisely to run the country better. Other enterprises, however, want to be profitable from lending, such as small- and micro-business loans, consumer loans, and cross-platform marketing to generate more revenue in their eCommerce or gaming business.
So, what the future of Paotang would be? Maybe, it’s just going to be as its name suggests, a wallet for pocket money, but every Thai citizen can and will have it.