Grab seizes big deals ahead of Go-Jek's arrival

Grab is putting the pedal to the metal to become South-east Asia's prodigious Super App, unveiling two partnerships with two leading global companies in just one week.

The first is with global payments processor Mastercard to issue prepaid cards tailored to South-east Asian consumers.

The second is with global accommodation booking platform to integrate the latter's accommodation inventory into the Grab app.

Both developments are significant in that they feature services not directly related to ride-hailing - Grab's original and core service - but in payments and digital services, which are integral to building an all-round Super App today.

The timing of the announcements is also significant. Both developments will materialise only in 2019 but Grab is shouting about them now in what could be a show of muscle before Go-Jek, said to be Grab's most credible competitor in South-east Asia, reportedly launches in Singapore this month.

Grab's tie-up with Mastercard is a genius idea, and an astute business strategy for a company that wants to be taken seriously as a fintech player.

Under the partnership announced on Oct 24, Mastercard's prepaid card will be integrated with Grab's mobile wallet, GrabPay. This enables all Grab users - including the unbanked - to make payment at any of Mastercard's three million online and offline merchants globally.

The idea is brilliant as it allows GrabPay to proliferate its merchant acceptance points in one fell swoop and become one of the first e-wallets from South-east Asia to be accepted worldwide.

It is a savvy business move for any player in the e-wallet space where the key to success is merchant acceptance. By partnering Mastercard, Grab briskly expands GrabPay's global reach without having to do the legwork of acquiring merchants one at a time.

However, as genius as the idea sounds, its benefits to Grab users may be limited. For instance, the more than 400 million unbanked people - three out of four South-east Asians - may not embrace or consistently utilise this new prepaid card, simply because they cannot afford to.

Even if consumers in, say, Cambodia where banked penetration is 22 per cent or the Philippines (34 per cent) can now use this card to buy goods and services online - an activity previously limited to the less than 10 per cent of South-east Asians with a credit card - or overseas, just how many of the unbanked in these countries can truly afford to shop on Amazon, or travel?

Moreover, Grab users in Singapore will stand to benefit the least. The country has a banked penetration of 98 per cent, the highest in South-east Asia. Many Singaporeans already own a Mastercard credit or debit card, which allows them to pay for goods and services overseas and online. Therefore, this new prepaid card will have little value-add to Grab users here.

In response, a Grab spokesman said that Singapore Grab users can now pay online and in-store at all Mastercard merchants without the need to own a bank-issued credit card or debit Mastercard.

Singaporean travellers can also use the prepaid card as a travel card, which can be topped up with different currencies without incurring transaction or exchange fees.

Grab's alliance with, announced on Oct 29, is impressive - and also far-reaching if executed well.

To Grab users, it marks an additional task they can perform on the Grab app. Come next year, they will be able to access Booking's 28 million accommodation options worldwide on Grab's app, pay for their bookings using GrabPay, and earn GrabRewards points in the process. It marks the first time Grab users can book travel-related services through the app.

To Grab, it is more consequential, marking at least four milestones.

First, the partnership adds one more piece to Grab's Super App puzzle, allowing Grab to introduce a new service - in the form of accommodation booking - to its multi-functional platform.

Second, it validates and provides one more "use case" for GrabPay, by extending its application to online travel in addition to ride-hailing, retail, food and peer-to-peer fund transfer.

Third, it positions Grab as a key ride-hailing player and node in the global hospitality sector. Under the partnership, Booking's brands around the world will be able to offer on-demand transport services that are powered by Grab, through their apps.

Finally, the alliance helps Grab secure a new, noteworthy investor. Booking, said to be the global leader in accommodation booking, has committed to invest US$200 million as part of Grab's Series H round.

However, this partnership will only succeed if executed well. Grab must ensure a user interface and experience that is superior or at least comparable to that of Booking after integrating Booking's platform onto its own. If Grab users do not enjoy the experience of browsing Booking's many hotels on the Grab app, this new service may become redundant.

Furthermore, Grab may find it challenging to get users to pay for hotels using GrabPay, as users will first need to top up hundreds of dollars into the e-wallet, an amount that is more than what they will usually top up for everyday small-ticket items such as rides or food. The onus is thus on Grab to ensure a superb user experience and service.

There seems to be no stopping Grab ahead of Jakarta-based rival Go-Jek's arrival .

The Republic is set to be the newest battleground for the two South-east Asian ride-hailing giants, unicorns and Super Apps.

For the sake of users and competition, may neither player step on the brakes.

This article was first published in The Business Times. Permission required for reproduction.