The arrival of mobile payments in Asia has become a springboard for digital insurance. Although the technology was originally developed in Japan, the lack of credit card usage and a centralised e-commerce market in China enabled mobile payments to quickly take root there, with a staggering 86% of Chinese smartphone users now using mobile payments on a weekly basis.
In this article we are going to look at the leading mobile payment platforms in China and then take a look at some of the key developments in the Asia Pacific region.
However, before we do that let’s remind ourselves of the impact that mobile payments may have on the insurance industry. We see three key benefits of mobile payments:
- Experiences in China and India have proven that mobile payments can catalyse the distribution of life and health insurance by acting as a gateway for people unaccustomed or unwilling to buy life/health insurance. It simply makes it easier for customers to buy – and to continue to pay on renewal automatically. In a business used to cash payments in many markets this is a crucial change.
- The mobile payment providers themselves can become fulfillment platforms allowing the promotion and purchase of insurance products. WeChat is the global leader of the mobile + social + marketing + fulfillment type of platform – and is able to enable other insurers whilst also pursuing its own insurance distribution strategy.
- Mobile payment platforms also have a key role to play in making claims payments easy and also, via identity and KYC measures, ensuring insurers are dealing with honest customers and hospitals by reducing fraud and abuse.
Let’s take a closer look at mobile payments in China before looking at developments in the rest of the region.
Mobile Payments in China
Launched in 2004, Alipay started life as an escrow account for buyers and sellers on Alibaba. Since then, it has pioneered credit ratings, wealth management services, SME lending, and several digital insurance initiatives that include aggregation and direct cross selling in partnership with 80 insurers. Recently, Alipay has moved deeper to address systemic issues within the Chinese insurance industry including claims processing, new product development and evangelising the benefits of life/health insurance within China’s smaller second tier cities. These initiatives include:
Xianghubao is Alipay’s ‘mutual aid’ program, designed to introduce China’s smaller cities to the concept of health insurance through low price/low limit coverage. The program, through which users contribute 1rmb on a monthly basis, represents an acceptable price point for many Alipay users.
Interestingly, almost half of Xianghubao’s members come from rural areas and 47% are migrant workers and Alipay is hoping to eventually convert these members to long term health insurance.
Other efforts at Alipay include an international expansion into South East Asia e.g. through its Lazada acquisition and investment in Tokopedia and Grab. In Europe there are close to 200,000 merchants now accepting Alipay across the EU, largely catering to Chinese travelling overseas.
Considering Alipay’s ongoing efforts to bring digital insurance to mobile payments, the opportunity for insurers to work with Alibaba as it tries to appeal to specific user segments and globalise is clear.
Launched in 2014, WeChat Pay rose to prominence among WeChat users gifting each other cash during national holidays. Since then, WeChat Pay has played host to a range of digital insurance campaigns including a viral life insurance campaign by Taikang Life in 2015, and more recently the establishment of WeSure formalised Tencent’s involvement in digital insurance.
Importantly, WeChat Pay has also integrated with health portal WeDoctor, bringing together access to China’s largest public hospital network with the WeChat ecosystem. This combination of WeChat’s user base, WeChat Pay’s offline payment terminals, and WeDoctor represents a triumvirate of assets, which Tencent can use to evolve health insurance in China.
Ping An Pay
As the undisputed leader of digital insurance, Ping An recognised the importance of mobile payments early. However, instead of partnering with mobile payment providers, Ping An has plotted its own course by establishing a mobile payment service. Although most insurers are not in a position to develop a stand-alone mobile payments service, several of the use cases introduced by Ping An Pay are broadly applicable, particularly within bancassurance and claims processing. Ping An Pay has also moved aggressively into processing public health insurance claims. For example, the AI component in the claims processing software can recognise instances of overcharging and over utilisation of treatments across public and private hospital networks.
Mobile Payments across the rest of Asia
This is not an exhaustive review and we have focused on a couple of initiatives of interest:
PayTM is India’s largest mobile payment platform and has created several new categories of digital insurance. India’s embrace of mobile payments is bolstered by its 1.3bn population of which 610 million are smartphone users and which is expected to reach 1.25 billion by 20122. Considering this, and India’s sprawling public healthcare system, PayTM’s offline payment terminals have been embraced by hundreds of pathology labs, diagnostic centers, pharmacies and hospitals as a preferred payment method. This has given PayTM access to data on treatment patterns, utilisation, and pricing from more than 75,000 transactions a day, all of which can be used to assist insurers with product development for new market segments.
Second, PayTM is facilitating recurring premium payments and minimising lapsed policies by working with the Indian insurance regulator to extend the window for the renewal of lapsed polices. By doing so, PayTM has demonstrated the unique ability of mobile payments to both educate and enable recurring premium payments for life insurance.
Finally, doctors in India currently grapple with health records from multiple hospitals and according to PayTM’s founder Vijay Shekhar Sharma, “there is no reconciliation method for all the payments” from different hospitals. With its new set of QR codes that can be used at multiple places, PayTM is aiming to bring consistency and a common standard to Indian hospitals.
PayTM has taken some initial steps to directly distribute and has a life and general agency distribution license and an early stage online platform.
PayFazz is a mobile payments startup in Indonesia. Despite the fact that 65% of Indonesia’s population are unbanked, half of these people own a smartphone, making Indonesia a market ripe for both internet banking and digital insurance.
PayFazz was founded to facilitate money transfers, phone credit, electricity bills, e-commerce, and merchant payments for this segment through a network of offline agents. Although Indonesia has 40 other mobile payments companies, PayFazz’s offline army of agents, one that resembles the tied agency force of life insurers, will serve as a template for other life/health insurers that are considering mobile payment-based initiatives across South East Asia.
GoPay is the payments arm of Gojek with 100 million registered users accounting for 30% of the total electronic money transactions in Indonesia. As part of the Gojek’s entrance into financial services, its digital insurance arm, GoSure, offers travel insurance to Gojek users whilst GoProteksi is providing cover Gojek driver-partners against third party liability.
GoPay, Coins.ph and Pasar Polis and are all part of the Gojek and are actively digital insurance offerings.
Gojek has also expanded across SEA with the acquisition of Coins.ph in the Philippines and a close partnership with Pasar Polis to provide short term insurance products to G0jek users in Singapore, Thailand and Vietnam.
Grab is the ride-hailing app of choice across much of South East Asia and is embracing mobile payments incorporating mobile payments in partnership with several banks across Singapore and Thailand as entry markets. Grab is following the trajectory of several other ride hailing apps by offering personal accident insurance and disability cover to its drivers in addition to an expanding array of digital insurance efforts in partnership with Chubb and ZhongAn International.
GrabPay is broadening its digital insurance efforts with a range of distribution orientated partnerships that are tailored both to its drivers and end users.
Finally, another Indonesian mobile payments service of note is Ovo, a subsidiary of Indonesian conglomerate Lippo Group and as such benefits from Lippo’s customer reach. Although Ovo’s digital insurance offerings are still early stage, it has cited device, travel insurance ranging, and motorcycle insurance as three business lines that it is interested in.
Ovo has amassed 120 million registered users across Indonesia and it’s mobile payments service is enabled by Bank Nobu which also part of LippoGroup
Tcash is a part of Indonesia’s largest telco; Telkomsel and is using Telkomsel’s state owned telecom kiosks to build its user base in addition to accessing its 178 million existing subscribers. A recent partnership with Sun Life has seen Tcash begin to utilize data analytics to determine which insurance products to cross sell to users. It is currently focused on micro-insurance products including Proteksi Mikro Aktif (Active Micro Protection) a personal accident product, and Proteksi Mikro DBD, a Dengue virus protection product.
Elsewhere, although Thailand remains an early stage market, a joint venture between Line – Japan’s biggest messenger app, and BSS Hldings – provider of Rabbit smart cards for mass transit systems and offline e-payment at retail in Thailand, has attracted 6 million users in since its launch in 2018. Although Line Pay operates its service independently within each country, it is also trying to make them interoperable and more accessible across SEA.
GoPay, Coins.ph and Pasar Polis and are all part of the Gojek and are actively digital insurance offerings.
Although there are dozens of other mobile payment providers competing for dominance acoss Asia, including Grab (Kudo), True Money e-Wallet, and PayPro, the use examples above demonstrate how insurers are variously competing with different products and user experiences within this new frontier.
The application of digital insurance within mobile payments will continue to evolve beyond a pure payment convenience perspective. As the boundaries between the physical and digital world continue to blur, the opportunities for insurers to develop scenario-based cover for outbound tourists, credit insurance to offline merchants, and most importantly – claims processing that can bring transparency to Asia’s public hospitals, diagnostic centres and pharmacies, will grow. Ultimately, the use cases emerging from mobile payments and the capabilities required from insurers to realise them will become increasingly important as Asia moves away from mass market products and into market segments. By doing so, insurers will be able to capitalise on the convergence of mobile payments and digital insurance. Insurers with a mobile payments partner will be stronger – but insurers can and will choose to simply use the platforms for payments only.