Exciting articles several times a month
11 February 2017
Online payments are exponentially expanding in the East as electronic and mobile commerce takes a dynamic pace across the countries of
South-East Asia with many players coming to the stage and offering their payment processing services for businesses. In this piece we post our interview kindly provided by Thailand-based online payment platform Omise, established in June 2013. With the total funding of USD25 million the company serves ‘big and small’ businesses at several large Asian markets. Led by Jun Hasegawa, CEO & Founder and Ezra Don Harinsut, COO & Co-Founder, Omise has a staff of 70+ employees with its operations present in Thailand and Japan. Here is the full text of our exciting conversation with several representatives of Omise.
Could you tell us a bit about Omise? What business solutions do you offer?
Omise provides the industry’s most intelligent and advanced payment management platform for e-commerce businesses in Asia and global markets. Smart, Simple and Scalable –our solutions are suited for the new venture just getting started and scale to support the most demanding needs of regional and global businesses. Omise is now in full operation in Thailand and Japan. Service will soon be available in Indonesia (within Q1 2017).
What drove your company to develop this kind of financial services?
Prior to building an online payment platform, Omise was working on building an e-commerce marketplace. But we never got to finish it off. The problem was when we were looking for a payment provider, we didn’t find one that could completely fulfill our requirements. When we found an option with all the features we needed, the service availability was not promising. After being stuck in that position for some time, one of our investors suggested that we build our own. That’s where we got started.
We believe that being able to accept online payments is a necessity to develop any kind of business over the internet. Especially in this golden era of ecommerce, choosing the right payment provider can determine a business’s success.
What sets you apart from other payment platforms available on the market? Why a business would choose Omise?
Some of our key differentiators include:
White-labeled. This means that we do not re-direct buyers to a third-party payment page at the critical point of sales. The payment stage is like a bottle neck. It’s very easy for customers to abandon their shopping cart. Payment gateways that redirect users away from the merchant’s website increases the chance of the merchant losing sales from drop-offs. Bad internet connection, ad-blockers etc. may stop the payment gateway from opening, for example.
Localized. We understand that buyer behaviour is different in each country. In Asia, credit card penetration is still rather low. So aside from accepting credit/debit card payments, we have a local team of experts to analyze market needs so that we can cater accordingly. For example in Indonesia, “virtual account” is a popular payment method, and that’s what we have on our roadmap.
Automated Payouts Feature: We experienced first-hand obstacle with online payments when we were building our e-commerce platform. We know the pain point, and that’s one of the first issues we address. We have the “Recipient” feature which helps marketplaces conveniently distribute payouts to sub-merchants. Basically, the marketplace registers a bank account for each of their sub-merchants as a Recipient profile, and whenever they want to transfer earnings it could be done from the Omise dashboard. This takes a lot of the workload from the accounting team as the process can be automated from the dashboard, and is also more accurate.
What are the challenges facing payments providers in Asia? And how does the Asian online payments industry differ from the rest of the world?
Many global players are looking to get a slice of the SEA e-commerce pie but what they overlook is the region’s fragmented nature. Each country brings their own challenges. The key to successfully unlock the untapped opportunity in the region is knowledge; understanding of each country’s pain points, trends and local behaviour.
The key challenges facing payment gateway providers in Asia are the penetration of credit cards within the population. Markets with low % banked populations will find it more difficult transitioning to paperless payment methods. Whilst developed counties in Asia (Singapore, HK and Australasia) typically have over 90% banked population with multiple credit card ownership the developing counties like Vietnam, Philippines, Indonesia, Myanmar and Cambodia etc. struggle to achieve credit card penetration of more than single digit % of the population. The exception to this is Thailand where credit card penetration is around 38%.
This means that any enterprise offering online payments in these developing Asian counties must make allowances for alternative payments (such as pre-paid cards and cash on delivery and e-wallets for example) until such time that the level of credit card payment has caught up with developed countries.
Entering the developing Asian markets where cash is still the primary method of payment presents a higher level of risk for all parties concerned in the payment process. For many online merchants, minimizing fraud is often more challenging in developing markets than it is in established markets. There is less information available and few existing standards to help reduce the level of fraud affecting Card-Not-Present fraud programs.
In addition, limited capacity and resources, absence of accurate computerized auditing systems, and the prevalence of informal economies that often lack design and governance.
What is your target customer base? Will you work with any company applying for your services or maybe you have some ineligible industries?
When we first started off 2 years ago, the majority of our customers were SMEs. But as we gradually expand, we have been trusted by larger businesses. Currently we power payments for “Ascend Group” (part of TRUE, Thailand’s largest telecommunications conglomerate), and Minor International, recently, we on-boarded “The Pizza Company”.
Digital security is a key concern for all companies working in the Fintech industry. What methods does Omise use to detect fraudulent activity?
Speaking of security, we are second to none. Omise payment platform is built to be secure by default with the highest level of encryption and fraud protection methods in place to protect both the buyer and the seller. We are the first payment gateway in Thailand to receive PCI compliance in all 3 scopes, and we recently received compliance for PCI DSS 3.2, which is the latest.
– Machine learning fraud protection models.
– IP Geolocation and proxy detection
– Behaviour analysis
– Customized risk threshold for different types of businesses
What payment options do you currently offer?
Currently credit/debit card (Thailand and Japan). Internet banking (beta testing in Thailand). We plan to launch bill payment (Thailand), Alipay (Thailand) and virtual account (Indonesia) within Q1 of 2017.
What do you foresee as the future of the online payments industry – in Asia specifically?
In the developing counties the take up of online payments will take some time. A vast group of the population still rely heavily on cash. Merchants and other companies selling online must consider and make allowances for a cash on delivery payment process or other methods like wallets and pre-paid bank cards. The take up of credit cards in these developing counties is being slowed by an ageing and slow infrastructure combined with lack of investment and overbearing banking regulation. This is true for countries like Indonesia, the Philippines, Vietnam, Myanmar and Laos. On the other hand, Cambodia has benefitted from huge investment form China and has a growing and developed internet/mobile and banking sector albeit with a relatively low population. Malaysia and Thailand are ahead of the curve in all these respects but still has some way to go to get to the same level as Japan, Singapore, Hong Kong, South Korea and Australasia. Given the above it is clear that there are opportunities within the payments industry in Asia but only where appropriate research and analysis is conducted.
Where do you see Omise in 3-5 years? Do you have any exciting new products or geographies on the horizon?
Within 2017, we project to be in full operation in Indonesia, Singapore and Malaysia. We have the Philippines, Vietnam and Myanmar in the horizon. We are working hard to be the no.1 online payments platform in SEA.
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