It’s All About Image

About a month ago one of the Bistrot’s customers decided to pay their bill using GrabPay. The process was exceedingly simple. We keyed in the bill amount, chose the GrabPay option and the customer than scanned the QR code and hey presto the bill was paid.

This was an amazing experience. It was watching the “reality” of a “cashless” transaction in action using what we now consider standard technology. One should have had a moment of clarity and a delirious feeling that you were witnessing the future.

It wasn’t. Watching someone use “mobile technology” to pay a bill didn’t feel special and it seems to be the case for quite a few people. In the few months that we’ve installed the option to use “GrabPay,” I’ve witnessed a grand total of two transactions using GrabPay.

By contrast, most of our transactions in the entire restaurant come from credit cards and one of the things that most of us do notice is the type of credit card, especially the shiny metallic ones, which offered to the banks higher end customers. Apparently, you need a couple of million dollars’ worth of assets under management (“AUM” in technical jargon). When someone hands you a shiny card, it’s a sign that you’re in the presence of someone who’s made it.

 
That last sentence is a problem or rather an opportunity, depending on which side of the table you’re on. For the banks, the credit card has been one of the greatest money spinners ever invented. It allows us to borrow money from the bank without having to fill out lots of paper work or put down any collateral. Interest rates on credit cards are high, in fact interest on credit cards are probably the highest legal interest rates available anywhere in the world. On top of that, the credit card issuer takes a fraction of a percentage on every transaction from the merchant (this is what you call being the ideal middle man). 
 

By contrast, GrabPay does not charge the merchant on a transactional basis (every penny charged by the merchant is for him or her to keep) and the system is based on actual money as opposed to borrowings as in the case of the credit card, so using GrabPay or any similar system doesn’t get you into unnecessarily legal issues (I must disclose that I have credit card debt, which while under control, does take a hefty chunk of my salary.) 

If you look at the basics, GrabPay and other similar systems are a better payment system for both business and consumer. The only beneficiary in a credit card transaction is the issuer of the credit card. So, why do we in the so called “Developed” world not rushing to adapt systems like “GrabPay” and sticking stubbornly to old fashioned systems like cheques and most of all credit cards.

I believe that the answer lies in marketing and the way in which old fashioned products like the credit card are marketed. There’s something “magical” about writing a cheque and receiving a cheque and it’s even truer of the credit card. 

The marketing of the credit card has been first rate. That piece of plastic isn’t just a means of making a transaction. It is a symbol of who you are and it announces to people that you have access to the lifestyle that most can only dream off (this is especially true when it comes to air miles promotions – think of Amex Krisflyer – swish credit card that helps you fly on a swish airline).  

I think the metallic credit cards like Citibank’s Ultima, American Express’s Centurion Card or United Overseas Bank (UOB) Reserve Card. Apparently these are “invitation only” and in technical jargon you need to have a few million AUM (assets under management) with the issuing bank. The people who hand me these cards are people who can “Afford it.” 

I must confess that I am very guilty of being a “star-fucker” in this respect. In my casual surfing habits, I like to surf the net for information on what having these credit cards will get me. The thought of “wow, won’t this be nice if I could pull out this card” and “wow, this will help me fly in the new first class cabins” does cross my mind whenever I see these things. 

That’s precisely what the banks are counting on. As long as I’m working, I’m in a position to pay down bills. As long as there are merchants that accept cards, they earn decent fees. By comparison, there’s nothing particularly cool or glamorous about scanning a QR code – doesn’t say very much about me when I scan a code does it?

The only place where mobile payments have really taken off is China, where, as one PRC customer of the Bistrot explains – “Not even the beggars use money – they scan a code from WeChat or AliPay.” Why have these systems worked so well in China but less well elsewhere.

Perhaps the answer lies in necessity. China’s banking system is notoriously slow and SME unfriendly but at the same time there is plenty of technology talent in China. So, for Chinese consumers and businesses find a way to work round officialdom. This isn’t the case in America or dare I say Singapore.

Marketing investment works and over the long run it creates an emotional attachment to doing certain things. Perhaps it’s time for the likes of GrabPay and other systems to start working on branding themselves well.