Posts Tagged ‘credit cards’

Now a GrabPay user, the promo will lead to inflated metrics

There are so many e-wallets in Malaysia now, it sure feels like I’ve got e-wallet fatigue and I don’t even spend much time in KL or use most of these wallets. I am more a fan of the AMEX, followed by Visa or MasterCard. Eventually e-wallets are going to have to implement merchant fees that seem closer to these credit card networks (your rewards have to be paid somehow…).

I have tried GrabPay before in Singapore where I loaded SGD$20 into my wallet from my credit card. I never did get to spend it. This balance sticks around for when I am next in Singapore. You have a separate e-wallet for Malaysia. I tried to set this up a few days ago, and they require a photo of your passport or IC to verify your ID (unlike Singapore). I seem to have failed this verification (it looks like an actual human does it, but when you fail it, they don’t tell you why; not that it matters, it seems you can still use it just fine). Also, Grab is now holding photos of the front of Malaysian’s Identity Cards… let’s hope they never have a data breach.

Today as I was trying to get a ride, a pop-up (potentially the first useful ad I’ve seen in the adware that is Grab…) said I could get RM5 off 2 Grab rides if I use GrabPay credits. So I promptly topped up my GrabPay wallet with RM20 (which came from my credit card), and then paid for a ride with GrabPay credits.

I see absolutely no difference with paying via a credit card. I believe you can use your debit card to pay for your Grab rides as well. There is an argument that cards are unpopular in South East Asia as evidenced by this Twitter thread, but if you have a bank account in Malaysia, you get a debit card by default that you can use for Grab. Maybe the play is that people will use it for peer-to-peer payments, like when you need to pay a friend for splitting the bill (like Venmo? Maybe I have a generation gap)?

However from a metrics standpoint, my desire to save RM5 off two rides (a total of RM10), has made me an active user of GrabPay. I loaded up a balance of RM20. Will I be able to bring that balance to zero or does Grab earn interest on my money (like they do for my Singaporean balance)? Will future promotions only apply to GrabPay payments that aren’t via credit card, but via this e-wallet service?

Yes, we Malaysians, and Singaporeans and probably most South East Asians love a good deal. One of the reasons that Grab probably won before Uber exited the South East Asian market was GrabRewards. If you could expense your Grab rides, participate in the loyalty program, and naturally keep the rebates, why would you ever use Uber?

Measure what matters. Anyway, back to e-wallets. The banks will wake up. The VC money will run out. Economics will eventually meet reality.

Taxi prefers Square over regular credit card terminal

As I was getting from the airport to my hotel in Columbus, Ohio, I took a taxi. Upon disembarking, it was time to pay and I noticed a credit card device hanging at the back of the passenger seat (this seems to be more common in the USA these days thankfully). 

However, the driver told me not to swipe it there. He’d prefer to use Square as he would save on fees. So he plugged the Square dongle into his phone, swiped my card, I gave him his tip via the app, signed virtually, and the receipt automatically arrived via email.

A much better workflow for me (since I don’t have to deal with a paper receipt). But it got me thinking. Square charges a 2.75% fee up-front. This is by no means cheap. However it does guarantee the money in your bank account within a day or two.

I’m willing to bet that the device tethered to his cab might charge less (or close to equivalent?), but pay-out over a longer period of time. For whomever installed that device, they’re going to presume that no one uses the credit card terminal. This is the bonus of competition – the consumer isn’t affected (arguably, the consumer experience improved – it wasn’t too long ago that all taxis were cash-only affairs) and the driver wins.

AppStore/PlayStore helps bridge the gap to using credit card transactions online

My RM10 latte @ Artisan Roast. I can safely say that it's great coffee. Place a little too hip for meDoes your mother have an iPad? Know people in their 40’s playing games on their smartphones or tablets?

I’m starting to see iPad’s transcend ages. People are using their tablets from the time they are a year old to the time they are in their 70’s (yes, personally seen these age ranges).

The touch interface is amazing. A handheld computer without a keyboard – who’d have thought this would work?

Buying an application from the App Store convinces you that its a good idea to use your credit card over the Internet.

When I read A Generation Gap? Not on This Website I was quite convinced that there’s more to Halsbrook than meets the eye.

E-commerce in Malaysia is growing. People are getting used to buying things online. A lot still happens via bank transfers (which suck for e-commerce unless you use a capable payment gateway). Getting convinced that its a good idea to use your credit card online is an important first step. The App Stores (or google Play Store) bridges this gap. 

Square helping the everyday entrepreneur

I arrived in San Francisco yesterday (Easter Sunday) and my usual shuttle service to Santa Clara had some issues fulfilling my journey (some 1h45m wait). So I took a taxi. As soon as I arrived at my destination, and he knew I was a techie, he said: “Look, a San Francisco startup has this cool device that helps independent entrepreneurs like me accept payments by all kinds of credit cards.”

He didn’t know what the device was called, but I immediately recognised it as the Square app (I’ve recently written about this space). On an Android phone. Found it interesting during tipping: 15%, 20%, or 25%. No option to enter your own choice. Enter your email address for a receipt (there’s also a phone number option, which I am sure I can’t use). Then the taxi driver writes one physically for you as well. I presume the driver gets money in his bank account in a rather short period of time.

How did it use to work? A manual scan on carbon paper with a device the credit card company provided. Probably submit the receipt and get paid within a much longer period of time. Or it used to be plain old cash — most drivers would never accept a card, preferring only cash.

Square uses: CentOS, Puppet, Ruby, Graphite, MySQL, PostgreSQL, Redis. They also build the service on the JVM orchestrating Ruby on Rails, Sinatra, JRuby, MRI and Java. Incidentally, love the way they hire people — tell them what is required of them, then ask them to complete a task/programming example.

Square-like payment devices in Asia

Ever since I heard about Square, I was impressed. I was wowed when they used Square to accept payments at WordCampSF 2010 (May 2010). It all just felt right. Swipe the card, email the receipt. The experience felt like making a purchase at an Apple Store with their handheld point-of-sale systems. Square sadly never made it out of the USA and there were rumours that VeriFone and others were going to do similar things. Naysayers claimed security problems (square is magnetic stripe based, rather than chip-based last I used it). Alas, its 2012 and I’ve still not seen anything usable.

So it pleases me to see Swiff in Singapore and the fact that PayPal Here (product page) will also launch in Singapore. Malaysia seems to have SoftSpace. However its April 2012 now and the first reliably available service is Swiff.

Square is upfront with their costs – it basically takes 2.75% of the transaction. That’s considerably higher than the 1.8% charged by Malaysian banks. However it takes away the burden of renting a terminal which can set you back RM130-150/month, with the only option of a refund on that exceeding RM10,000 of transactions per month. And the chances that the terminal accepts “everything” tends to be slim (its usually just Visa/MasterCard). Swiff lacks fixed rates at the moment, and SoftSpace claims to be inundated with queries (but will support more security and have a chip reader).

PayPal might crack this though. They have experience with dealing with banks and banking regulations (Malaysia famously has BAFIA as law). Many tech-savvy people already tend to have a PayPal account (and if they don’t, maybe they’ll start one). They’ve also gone out with a flat 2.7% transaction fee.

I’m looking forward to more competition in this space. It can only lead to lower rates. And with bazaars, conferences, etc. this sort of thing can be very useful.

Credit Cards and Malaysia’s recent budget 2010

Dear current ruling government of Malaysia,

I see you’ve decided that it would be wise to charge a RM50/year credit card tax, on a per card basis, while charging the supplementary users RM25/year. Your opposition says that you will thus make RM400 million a year in revenue, just from these fees alone.

credit cardSome are however convinced, that though you slap a tax on us credit card users, most banks will probably absorb the charges to hold on to customers. But you don’t like it, because the tax, is meant to promote prudent spending.

Now, let me tell you my opinion, as a person who liberally uses his credit card for every purchase he can use it for, because he’s kiasu to get rewards points. To boot, I also settle all my bills on time, in full. And I also have business interests, in where credit card transactions are crucial. </disclosures>

First up, the rakyat aren’t stupid. Please do not think you’re smarter than them. Telling the rakyat for example, that the EPF is the be all and end all, is just silly. Telling them that they need at most “two cards”, is no better, my friend.

Promoting the online economy
Limiting credit card transactions, harm the economy. As more and more people are getting broadband Internet access, more and more people are choosing to purchase online. Today, you can buy air tickets, groceries, cameras, services and clothes online, all thanks to a credit card. By imposing a fee, you are potentially harming the online economy, and this is not in tandem with the MSC, at all.

Discounts galore
Credit card companies like to reward their cardholders. HSBC for example, regularly rewards you in the MidValley and Gardens shopping malls. CIMB is currently rewarding shoppers at Pavillion. American Express regularly has some dining places on its rewards list. These lists go on for many banks, including Citibank, UOB, etc. These are 10-20% discounts, which mean a lot to the average Malaysian.

This encourages you to carry more than one credit card. If I may be allowed to put on my kiasu hat again, I’d like to say, this is exactly what I do. I patronise places, where I know I can get a discount. Or where I know, that if I spend RM50 on food, I get a free dessert valued at RM15. I want my ringgit to go further, and I’m sure the rest of my Malaysian friends do, too. Today, I almost always exclusively buy coffee at Starbucks with a credit card, because everything I sign off, is 10% cheaper.

No fees
Credit card companies like Citibank tell me that they’d like to slap me with an RM600 yearly fee for my credit card. I got off a plane, and at about 2.30am, I called their call centre, and told them I’d like a waiver. They did just that. Do you honestly think they’d like to charge me RM50, when they’d just waived RM600?

HSBC tells me I get my Visa Platinum and Gold MasterCard, free for life. I have a hefty limit on the Visa Platinum, and almost never use the Gold MasterCard (not many places today only accept MasterCard, thankfully). Do you think I will be cancelling it if I’m slapped with an RM50 fee for something I almost never use?

Public Bank likes to give me credit cards that are free too. To boot, they give me a 0.7% rebate for every ringgit spent. Now, remember, I am kiasu, and I like seeing my rebates. Would you honestly think I want to spend RM50 of it, on fees? (make that RM100/year, for both Visa and MasterCard).

Quick math tells me that I’ll have to spend nearly RM15,000 just to get my cash back, to pay the government.

Incidentally, a lot of banks throw credit cards against those that hold a loan at their bank. They are free of fees. Should they also now be slapped with an RM50 fee?

Electronic transactions are safer
I lived in Australia for many years. There, you can pay for everything, from a 5-dollar latte to a 100-dollar taxi ride, using your bank card, via EFTPOS (Electronic Funds Transfer at Point Of Sale). There are lofty goals with MEPS in Malaysia, but its just not widely used.

However, credit cards are widely used and available. No, I still can’t pay for a taxi ride, and we’re very far behind in comparison to Australia, or our little neighbour down south, Singapore, but at least, we’re getting there.

Charging fees will probably hamper the use of electronic transactions. I have a dream, that when I go to a mamak stall, and order myself a roti telur (double telur!), and a teh tarik, I can use my credit (or debit) card, and pay for it.

Malaysia has always aimed to be a modern society, and if we can go cashless, we’ll be safer. Crime in Malaysia is already so high, and the last thing we need, is further encouragement from the government, for people to deal in cash transactions. The more we can move to electronic transactions, the better.

Donning my business hat
Today, the average Malaysian probably buys a lot of things on these wonderful “easy payment schemes”. You take the item home, and pay for it, with 0% interest, over a period of 12-24 months. This is how people get a snazzy television, a new laptop, or a massage chair. Having less credit cards in circulation, means people potentially buy less stuff. Are you not hampering the economy, this way, as well?

One more thing…
As a frequent traveller, I can for one tell you, that the Malaysian Ringgit, is not worth very much. 1 Euro is about RM5, and 1 USD is about RM3.50. Visiting Australia, sets it at 1 AUD being about RM3, while just going down south to Singapore, 1 SGD is about RM2.50. We had a 1:1 currency with Singapore, not long ago, but this “basket peg”, has really undervalued our currency.

Travellers need more credit cards, plain and simple. What are the other options? Carry a boat load of cash, and lose it at a tourist spot? Travellers cheques, are going out of fashion, like you wouldn’t believe. And the glorious Malaysian ATM cards stop working from midnight-6am Malaysian time (yes, you have to time your withdrawals overseas). And that 6-digit PIN number, tends to not work, in countries where PINs are 4-digits long.

In conclusion
Don’t assume the rakyat to be dumb. They can plan for themselves.

Start an advertising campaign. A Flickr user, Liyin, can help. That image is off to a good start (not CC licensed unfortunately).

Don’t assume the lenders (banks) to be dumb, either. This isn’t America, and the banking regulations are a lot stricter. Credit cards usually give you a 2-3x salary limit. They ask for papers (salary slips). The banks know how much debt you can handle. Wouldn’t it be better to impose on banks to say, “no to 3x salary, but 2x salary”?

I want to see online transactions take off. And the solution is not online bank transfers (RM2 GIRO fee applies). Its credit cards.

Please don’t hurt the rakyat from spending.

Photo credit: LiewCF on Flickr.