This article first appeared in The Edge Malaysia Weekly on October 29, 2018 - November 4, 2018

IT has only been a year since Boost commenced operations but the homegrown e-wallet player has already seen huge growth in its user base and merchant accounts. Developed by Axiata Digital Services Sdn Bhd, Boost is currently the largest e-wallet player in Malaysia.

Year to date, its user base has surged 300% to 3.2 million while its merchant touchpoints have grown almost eightfold to 43,000. According to CEO Chris Tiffin, the company has set aggressive growth targets, hoping to have five million customers and 100,000 merchant touchpoints “as soon as possible”.

He tells The Edge that growing the user base was no mean feat, given the lack of understanding and awareness of e-wallets and quick response (QR) codes in general, which meant that the company had to burn cash to build its network.

Without revealing the specifics, Tiffin says the company has spent a “fair amount” on creating awareness and driving adoption. He believes it will be a few years before the company makes any profit, which should come as no surprise to those in the technology startup space.

“In any startup, there is an initial period when there is a need to invest to create a sustainable business model. We are still in the investing stage and it is still very early days for us. It has only been a year, after all,” he says.

However, he adds, Boost has a clear roadmap in place, which means it will not take as long as other well-known tech companies to become profitable. “For example, companies like Uber and Grab have been around for about six years but they are still burning cash. There’s no way Boost is going to take six years to move into positive territory.”

To attract new users, Boost experimented with a combination of approaches, including providing upfront incentives when people register, which could be in the form of rewards or discount vouchers.

Boost is known for its “shake rewards”, where consumers can shake their mobile phones, after using the e-wallet for prepaid top-up, bill payments or scan-and-pay transactions, to receive cash-back rewards.

Other incentives include product giveaways, discounts and cash-back when consumers use Boost to pay for in-app purchases from some of its partners, including online shopping platform 11Street and KLIA Ekspres.

Although some of Boost’s users are value seekers who register just to get the free rewards and vouchers and do not come back, Tiffin says the e-wallet player is focused on the repeat users through the use of deep analytics and data science.

As Boost has gathered a large enough user base, he believes the network is growing organically as well through referral adoption as existing users get their friends and family members to start using the e-wallet.
 

Getting merchants on board

Another way for Boost to increase its user base has been through partnerships with big brands, Tiffin says, adding that this has helped the e-wallet win the trust of its users, especially since it is fairly new to the scene.

The partners include established brands such as Nando’s, Tealive, Chicken Rice Shop and Borders.

“We realised that having these brands on board increased the level of trust in us, which is critical to us. Brand affinity really helped in building the ecosystem. Actually, the acceleration came in the last six months. There was rapid growth and we didn’t need to create as much awareness,” Tiffin says.

However, these brands do not account for all of Boost’s 43,000 touchpoints, only half. Cash merchants — individuals like those operating pasar malam or hawker stalls — make up the other half.

Tiffin says it was quite a challenge for Boost to win over the cash merchants. A lot of ground work was required to educate them as they were reliant on cash for their operations.

Most of the pasar malam and hawker stalls are also not registered businesses. But with Boost, they can participate in the merchant ecosystem and operate as merchants and not individuals.

“They were cash-driven in everything they did. But now, they can use Boost and they can have the merchant app on their phone, which gives them an overview of their transactions for the day, the week and the month.

“If they have three stalls, they can set up a master account and have the three stalls sit in it, thus giving them a consolidated view of their operations,” Tiffin explains.
 

The road ahead

While Boost’s journey has revolved around payments thus far, the e-wallet player has plans to move into the digital financial services space, taking the same path as established players in other countries, such as Alipay, which also provide micro-lending services.

“We are looking at providing extended digital services, leveraging the experiences and behaviour data of our consumers on a day-to-day basis. We are looking at things like micro or nano lending and micro or nano insurance, not just for consumers but also the SMEs (small and medium enterprises).

“We are not saying that we will become a bank or insurance company but we will work with partners to offer these products and services,” Tiffin says.

Boost is already experimenting with a micro-insurance product, offering premium customers that have spent a certain amount using the app free life and disability insurance of up to RM5,000 for three months.

Tiffin opines that a standardised QR code framework is important to drive Malaysia’s cashless shift, which Bank Negara Malaysia is working on.

Another important component, he says, is an interoperable platform for real-time retail payments, which will allow seamless interaction between different e-wallets as well as between e-wallets and bank accounts. This is expected to materialise by the end of the year.

However, Tiffin adds, the presence of these standards will give rise to greater competition between the slew of digital money and e-wallet players. As it is, there are now more than 40 approved licensees, which means there will be a flurry of activity in the market and eventually consolidation among the players in the next 18 to 24 months.

“A bit of dust will be kicked up initially but it will settle. In our view, there will maybe be three or five key e-wallet players and there are potentially a couple of niche players in certain segments or verticals,” Tiffin concludes. 
 

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