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Cambodia – On the Cusp of a Paytech Revolution  

Cambodia is a relatively smaller country when compared to its neighbours with only 16.5 million people. However, Cambodia is an attractive destination for Fintech and Paytech companies due to multiple reasons. 

More than half of the population is less than 25-years-old, making it among the youngest in the world; the Kingdom’s 124% mobile penetration is considered among the highest in the world, there are over 11 million active Facebook accounts.

Manu Rajan, CEO of Wing

According to Manu Rajan, CEO of Wing, with 5.5 million e-wallets already existing in the Kingdom, not only is Cambodia’s Paytech industry bustling, it is also on the cusp of a tipping point with a revolution coming. Here he explains why.

2020 – Coming out of the discount trap for digital payment trials

Cash still rules in Cambodia. The majority of payments are still physical transactions. But with the increasing number of mobile wallets in the country it’s just a matter of time before the transition to digital wallets.

Previously, Paytech companies approached customers by trying to lure them by offering exclusive discounts. This reduced the merchant’s profit margin (if funded by the merchants) or acted to the detriment of the firm itself.

The bulk of these standalone discounts were focused on single transaction, small ticket items such as a can of soda; resulting in active transactions without valuable multipliers. Companies saw that when the discounts stopped, the transactions soon followed.

Merchants were also forced to fund promotions in return for foot traffic that would eventually stop when the promotions ended. The merchant lost out on valuable profit, the customer didn’t gain anything meaningful and the economy lost cashflow since the discounts were consumed as ‘goods’ and less currency in circulation.

These low-ticket discounts did not make a difference in the user’s difference in value perception, nor did it retain them in the e-wallet ecosystem.

2020 saw a slow down in such discount-driven trials for digital payments. The pandemic probably drove a market correction when it comes to using blind discounting to drive trials.

The prevalence of mobile wallets

With the pandemic restricting movements and demanding physical distancing, the comfort level regarding ordering food and other items online increased among Cambodians. However, it is still restricted to those with a bank account or a digital wallet. This is the single most important factor that will determine the pace of adoption of Paytech in Cambodia.

With an increasing number of young adults entering the age group requiring formal banking relationships, companies like Wing anticipates a sudden change in the number of PayTech wallet holders in the Kingdom.

The re-emergence of Agro-Commerce

The pandemic also brought the agriculture sector back into the limelight with many countries looking at it as the solution to revive economies that were slowing down and also to aid migrant workers and blue-collar workers who lost jobs. There are active groups across the ASEAN region reevaluating the sector in the wake of the pandemic in the context of digitizing the industry not only in the region but also across the world.

The opportunity to work hand-in-hand with first-time users who may not rely on technology for their financial needs is going to be crucial in deciding the social impact of agricultural commerce and mobile commerce initiatives in Cambodia and countries who are also considered to be ‘underbanked’.

Companies like Wing must lead the change in 2021 and beyond with their strong grassroots presence and existing engagements with customers in the Agro sector.

Creating partnerships for the future

Fostering the right partnerships to meet the needs of people and driving collaborative growth will be a trend in 2021. The old boundaries that defined competition are likely to be blur and new partnerships between brands will be forged to help accelerate the adoption of digital payments being the new normal.

The banked population may seek convenient and safer ways to fulfil needs which may require more than just facilitating digital payments. One can anticipate forward and backward integrations in the market that will be done to fulfil the newfound needs of these customers.

Last-mile fulfilment might just become a normal expectation since digitalization could be expected to bring customers more than just mere convenience.

Creating the ecosystem for the future

Half a million young people are expected to enter the legal age every year and they will largely use their digital wallets to pay for food and beverages, utilities, transportation and entertainment. Those players that create this ecosystem for digital payments are likely to benefit from these youngsters seeking convenient and safe payment methods.

Organisations that focus on trust, consumer confidence and use case will have an edge in driving the digitalization of Cambodia in the years to come.


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