Ridehailing app Grab on Tuesday launched GrabPay Credits, a new stored-value option within the Grab app, that will allow "everyone in South-east Asia" to make cashless payments for rides taken via Grab.
This will potentially expand Grab's market to students, the unbanked, and people unfamiliar with cashless payments or simply cautious of sharing credit card details.
It's a move observers described as yet another instance of Grab catering to local market needs, compared to Uber.
With GrabPay Credits, riders can now top up their balance using their credit or debit cards, and at local banks, ATMs or convenience stores.
Grab said that parents, for instance, can buy top-ups for their children to take cashless Grab rides.
Riders can also better manage their finances by choosing to top up a fixed amount every week or month, for Grab rides.
GrabPay Credits will first roll out in Singapore and Indonesia - and in the coming weeks, across the rest of Grab's markets in South-east Asia, including the Philippines, Malaysia, Thailand and Vietnam.
Tan Hooi Ling, co-founder of Grab, said: "We believe mastering cashless payments is critical to our mission of 'driving South-east Asia forward' to improve people's well-being and accelerate the move to an increasingly cashless society".
South-east Asia is still largely a cash-based transaction economy. A huge proportion of the region's 620 million people remain unbanked: only 27 per cent of adults have a bank account and nine per cent a credit card, according to the World Bank.
Yang Nan, assistant professor at the National University of Singapore (NUS), said that while Singapore makes a good launchpad, GrabPay Credits will have a larger impact in countries such as Indonesia and Thailand, where credit card penetration rates are still quite low.
He told The Business Times: "Uber perhaps isn't thinking about this, as its major markets are developed countries, where the position of credit and debit cards as the predominant payment method is not quite shakable."
Lee Der-Horng, director of the NUS-LTA Transport Research Centre, said that GrabPay Credits will give Grab an edge over other players.
"E-hailing will become a real success if apps embed a cashless payment mechanism. Given what Grab is doing, their ambitions can be seen."
Prof Yang agreed that developing a proprietary payment method is an expensive project that will pay off if it succeeds.
"China's Alipay is a great example. Apart from the convenience that it brings to customers, which will benefit the product in return, it boosts the company's cheap cash holdings and will be quite valuable in cash-hungry, developing countries."
A Grab spokeswoman told BT that Grab will steadily expand the variety of payment methods available on the app - currently credit cards, debit cards, GrabPay Credits, mobile money, AliPay, Mandiri e-Cash and Android Pay - while continuing to accept payments in physical cash.
Uber - which earlier this month launched the option to let riders pay for rides using Apple Pay, and in April allowed riders to pay their fares in cash - declined to comment.
This article was first published on November 30, 2016.
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