Possibly, say two industry veterans, but don’t expect QR-codes in the region to follow the China-model

In China, it is difficult to overstate how dramatically QR-codes have transformed society. People in tier-1 cities like Shanghai can go for long periods  without using cash. Even in less developed parts of the country, QR-codes have become ubiquitous across even the most traditional of businesses.

When it comes to QR-Codes, some say the Chinese tech ecosystem is 5-10 years ahead of Southeast Asia and predict QR-codes will follow a similar path in this part of the world.

But is that actually true?

According to Jocelyn Ang, the COO of NETS and Jeremy Tan, the CEO of Liquid Pay, the answer is, “Sort of”. The two were speaking at ORIGIN by TechNode at SWITCH 2018.

NETS stands for Network for Electronic Transfers and it is the primary cashless payment option in Singapore. Most debit cards work via NETS. Liquid Pay is a QR-code based payment system operating in the Lion City.

The debate about QR-codes is particularly prescient today because Singapore announced the launch of a unified QR-code system that it hopes will help consolidate a fragmented market.

This fragmentation is a core reason why Southeast Asia will follow a different path than China.

“There is a proliferation and fragmentation [of e-payment solutions], but we are not seeing consolidation of these e-wallets,” said Ang.

Also Read: Unified QR code for payment is Singapore’s latest drive towards a cashless society

China, as one country, has about three times the population of Southeast Asia’s 11 countries, but even within individual nations the use cases for QR-codes differ dramatically.

For example, in Indonesia, the region’s largest country, QR-codes might be more useful in rural areas, where there are more unbanked and infrastructure is less developed. In hubs like Jakarta, the proliferation of credit/debit cards means the user experience of QR-codes may not stand out enough to result in fast-paced proliferation.

Jeremy Tan reminded people that the QR-code explosion in China was driven by WeChat and Alipay, two services that already had a massive user base for different services (messaging and merchants). This allowed them to leverage the network effect for their payment services.

“That consolidator, a common use case across 10 different languages and currencies is harder to come by…

It is going to take awhile. It serves a different purpose in different areas of Southeast Asia,” said Tan.

China ten years ago? Not really

A fairly common narrative is that Southeast Asia’s tech industry is similar to China ten years ago. Both Ang and Tan pushed back against this idea.

They agreed that QR-code payments will eventually become popular in the region, but that the path to get there will look very different than our neighbours to the north.

For example, Tan brought up the fact that Alipay and WeChat have built one of the world’s most innovative business models inside China, and struggled to expand it internationally.

“They are catered to how Chinese cities are organised. If you translate it to Southeast Asia, they face a difficulty to localise,” he said.

At the moment, Alipay is largely used by Chinese tourists while WeChat launched its first payment system in Southeast Asia with the recently launched its mobile wallet in Malaysia.

Also Read: I tried out JDVirtual for grocery shopping. Fun and convenient, but is it worth the price?

Both Tan and Ang welcomed Alipay and WeChat in Southeast Asia, but there was not a sense the companies had grown into a significant threat.

Ang highlighted that Alipay helps economies in Southeast Asia as local merchants have started to onboard the service to help make it easier for Chinese tourists to buy things.

Tan pointed to their ability to help Southeast Asians get over the mental block of using QR-codes as a payment option. Seeing other people use the codes as a secure and viable way to pay for things will help the region use the system more often.

In conclusion, while QR-codes may very well be the future of Southeast Asian payments, it will look a lot different than China and follow a unique path towards proliferation.

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