Tue, Jun 29, 2021 page8

• EDITORIAL: Banks must brace for retail challenge

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  Electronic payment service providers should brace for a major change in the competitive landscape with new threats not from the banking sector, but from the retail sector. With massive customer bases, retail heavyweights Px Mart Co and Taiwan FamilyMart Co are set to grab a slice of the pie after they were granted entry into the electronic payment market.

  The approval conjured up memories from about a decade ago, when the nation’s traditional banks struggled to turn a profit in an overbanked market following excessive issuance of credit cards. The difference this time is that competitors are coming from multiple directions, not just from within the banking sector.

  Market competition is also heating up, and recent sharp growth in online shopping and electronic payments might not subside after the local COVID-19 outbreak subsides. The Financial Supervisory Commission’s (FSC) latest tally shows that users of electronic payment services have rapidly increased in numbers, to 13.15 million as of April, compared with 8.29 million in the same month last year.

  To strengthen its position in the online payment market, PX Mart, one of the nation’s largest supermarket operators, plans to introduce electronic payment services via PXPay by the end of this year, after receiving approval from the FSC on Thursday.

  The approval means that PX Mart can offer transactions between different payment platforms, rather than being limited to PXPay. That also paves the way for PX Mart to widen its offerings to other online banking services, such as foreign currency accounts and vouchers, transforming the supermarket chain into a micro-banking service provider.

  With more than 7.2 million registered members, PX Mart has an advantage in potentially challenging electronic payment services providers led by Jko Fintech Co’s JkoPay, which had 4.43 million members as of April, making it the nation’s biggest electronic payment services provider.

  Additionally, PX Mart has built a strong non-cash transaction base, with one-third of its revenue generated through its online payment platform, PXPay, the company told Chinese-language weekly Business Next. The supermarket operator’s goal is to boost its share to 40 percent this year in preparation for a strong start during the launch of its new electronic payment services at the end of this year.

  FamilyMart shares the same ambition. The convenience store chain aims to debut its electronic payment service in the fourth quarter of this year via All Win Co in collaboration with E.Sun Commercial Bank and Pi Mobile Technology Inc. With paid-in capital of NT$760 million (US$27.23 million), All Win is a three-way venture, 67 percent owned by FamilyMart, 18 percent by E.Sun and 15 percent by Pi Mobile.

  All Win could also emerge as a major rival to existing electronic payment service providers, given FamilyMart’s large membership base of 13 million customers and 3,800 outlets nationwide.

  The convenience store operator said it saw a surge in online payments as customers shun in-person shopping to avoid COVID-19. Contactless payment increased quickly this year and accounts for half of its revenue, FamilyMart said. It offers contactless payment via FamilyPay and the Fami e-wallet, which combined have more than 1 million members.

  As the line between retailing and banking blurs, local banks and electronic payment service providers need to explore new user scenarios and re-examine their core values to avoid a recurrence of price wars. Market share and membership numbers might not be as important as they once were.
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