Grab's prepaid cards goes up against payment giants Tencent and Alibaba

But its link with MasterCard would be its boon in the field, analysts said.

Grab previously announced that it will partner with MasterCard to issue prepaid cards to its users, with a limited roll-out in Singapore and the Philippines beginning in 2019. According to Fitch Solutions, this highlights Grab’s desire to solidify its presence as the dominant mobile financial services (MFS) player in the Southeast Asian region.

Surely, this foray into financial services will be met with intense competition. AirAsia’s BigPay provides a similar prepaid card offering, for instance. “We believe Grab has a far larger formalised customer base compared to the low-cost airline which will enable it to boost adoption,” Fitch Solutions said.

Tencent and Alibaba are also continuous threats. However, Fitch Solutions argued Mastercard’s global acceptance will be a boon to Grab.

“We expect Grab to continue its strategy of rolling-out QR codes for smaller merchants that do not accept cards. It will also intensify its strategy of partnering with banks and other start-ups to boost adoption of its mobile payments service,” the firm concluded.

“Widespread adoption of its GrabPay platform will also enable it to increase use of its various services and allow for more effective monetisation,” the firm said. Grab will be able to increase utilisation of its services and its GrabPay platform via the issuance of the prepaid cards.

The defining feature is that users will be able to top-up the cards at any retail outlet that currently accepts GrabPay, and also via passing cash to drivers of Grab’s ride-hailing service. “We believe Grab will link the prepaid card virtually to GrabPay and incentivise users to pay for services with the card by awarding loyalty points for each transaction,” Fitch Solutions said.

The current iteration of GrabPay already awards loyalty points which can be exchanged for discounts on ride hailing and for retail, and this has motivated its strong uptake, although deposits are currently only accepted via debit/credit card, AliPay, and PayPal.

“Getting more users to transact digitally rather in cash will also be positive for Grab as it expands its portfolio of services,” Fitch Solutions said. The firm noted that in line with the launch of its delivery service and the focus on its food and grocery delivery, transacting digitally will mitigate the risk of non-payment for its services, which will also reduce the cost for Grab to handle cash related disputes.

This will allow Grab to monetise its virtual services, such as the artificial intelligence (AI) assisted online medical consultations it is preparing to offer with Chinese healthcare services platform Ping An Good Doctor.

As the penetration of financial services in Southeast Asia is relatively low, Fitch Solutions argued that the partnership could also boost this figure. The MasterCard-issued prepaid cards will enable its users to shop online or at any of the 3 million retail points which accept MasterCard, as well as enable overseas withdrawals of cash.

“This will provide a further boost to e-commerce sales in the SEA region, which we currently forecast to grow at a compound annual growth rate of 14.2% from 2018 to 2022 to reach US$54.8b,” Fitch Solutions added.