Tie-up holds potential to introduce more value-added services in the coming years as high technology takes over from hard cash
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As announced this week, Smart Axiata Co Ltd’s subsidiary SmartLuy will soon be merging with the country’s leading payment platform, Pi Pay Plc, according to a joint statement by both Smart and Pi Pay. The link is expected to strengthen Pi Pay’s operations with SmartLuy’s strong agent network and complemented by Smart’s subscriber portfolio and analytics capabilities. This is expected to go hand in hand with the digital payment platform’s tremendous traction with merchants, which is already showcasing future potential for more value-added services.
Both companies had opted for an early voluntary disclosure in order to provide transparency because several matters, including the integration of both companies, are in the process of being finalised. This decision was made following an “Approval of Principle” from the National Bank of Cambodia (NBC).
According to a joint statement by both companies, the merger is in line with both companies’ strategy to strengthen their digital businesses as well as to rationalise their market structure for sustainable growth. Both Smart and Pi Pay believe that the proposed transaction will lead the digital payment platform to have new service opportunities as well as revenue upsides through data monetisation as well as strong combined funding in a very competitive environment.
Pi Pay is also expected to be equipped with promising resources to become more efficient as well more innovative in order to face both current and future challenges in the payments space when the merger completes at a date to be disclosed.
One of the advisers on the transaction, Mekong Strategic Partners, an investment management firm estimates that the total cashless digital payment market in the Kingdom will reach $2.21 billion in 2019, which is a 38 percent rise from the year prior. The figure is expected to double in 2020 as more users conduct transactions using financial technology.
As a result of the merger, Smart will be a strong minority shareholder of Pi Pay. The announcement will be publicly made known once all final government approvals are obtained from relevant authorities including the NBC.
Pi Pay as a cashless payment platform has been pushing for better financial inclusion in society and the progress of cashless payments through partnering with other authorities in the banking and insurance sector, allowing users to easily access services. The mobile payment platform had also signed a memorandum of understanding with Micro Insurer BIMA last year to increase access to affordable insurance products to underserved communities pushing for progress for cashless payments in the country.
2019 saw the Pi Pay team up with RHB Indochina Bank allowing RHB account holders to instantly transfer funds from a mobile banking account to a Pi Pay wallet. This move is in accordance to Pi Pay’s aim to be the leading cashless payment provider in the Kingdom since their launch three years ago. Other merchants that have partnered with Pi Pay payment services to their business in order to support customer needs and demands have been the likes of ABA Bank, Sathapana and AMK.
In a news report, Pokorny was quoted saying Pi Pay’s vision is to allow everyone in the country to access secure and convenient cashless payments to boost financial inclusion in Cambodia.
Pi Pay has more than 250,000 active users who collectively have transferred more than $140 million using the app. Smart Axiata on the other hand has been actively involved in broadening telecom access in 2019, which saw the announcement of a $1.4 billion capital investment to expand its Cambodian operations and had plans to introduce more advanced technologies to its Cambodian subscribers. The telecoms company is also known to invest in Cambodian-based startups, investing up to $1.2 million as well as more than $600,000 in the country’s tech ecosystem.
To date, Smart Axiata has contributed nearly $374 million to the economy accounting for some 1.5 percent of the country’s gross domestic product.