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Merchantrade Asia Sdn Bhd is a Malaysian-based company founded in 1996. Since its inception, Merchantrade has evolved from a telecommunications equipment supplier to today’s mobile virtual network operator (MVNO), money services business (MSB) provider and e-money issuer. Following its recent acquisition of another player in the industry, Merchantrade has solidified its position as the undisputed leader in the remittance industry in Malaysia.

Quah Mei Lee, an associate director at Frost & Sullivan, talked to Ramasamy K. Veeran to learn more about Merchantrade. Rama is a seasoned entrepreneur who has led Merchantrade through various business transformations. Currently, Rama serves as Merchantrade’s founder and group managing director and wants to help the company reach new heights.

QML: Please provide our readers with a brief overview of Merchantrade and its current role in the market.

RKV: We are a comprehensive money services business player and e-money issuer, offering remittance, wholesale, retail and digital currencies as well as e-wallet with a prepaid card. To truly serve the migrant worker segment, we are building an ecosystem of relevant new services through industry partnerships. For example, we have worked with AXA and MCIS to offer affordable micro-insurance products. We have plans to add more financial services to build a complete ecosystem solution for the unbanked and underserved segments, including B40 and migrant workers, to ultimately enable a truly borderless experience regionally. From where we started with brick and mortar, we have progressed in moving the business into digital over the last three years. We think that digital will take off and have started expanding in that area abroad, leveraging on the exportability of strong fundamentals. For example, we have already built a platform that connects most of our regional partner banks and have established payout mechanisms worldwide. We have also, over the years, invested substantially to develop our digital capabilities and channels, both online and app-based. Our Merchantrade Money e-wallet comes with a prepaid VISA card in collaboration with VISA and has the largest wallet size of RM20,000 (approximately US$4,800) and is especially popular amongst Malaysians, who use it to purchase up to 20 foreign currencies to spend overseas when on travels or to make purchases online.

QML: What was your motivation in starting Merchantrade?

RKV: When I started the business, I just wanted something that was my own, so I started with VoIP-based telephony services, including calling card. Although it was a small scale, it enabled us to enter into the migrant worker segment market. Once in, we noticed that this market was not serviced well by telecommunications companies. The next thing that we did was to move from offering VoIP services to being an MVNO that offers mobile services. Next, we thought it made sense to offer them remittance services. Today, where we are, we think it makes sense to offer them an e-wallet with prepaid card and micro-insurance. Maybe one day we will also offer them more financial services. As it happened, it has been a constant evolution since we entered the market and identified need. After years of improving our service offerings, we understand the behavior of the customers in the market better than others.

QML: What keeps you up at night?

RKV: What keeps me up at night is the fact that a lot of new competitors, including Fintech companies, are entering the market. They think that the market provides great opportunity to profit. But for us, we think differently from others. We want to provide services for the long run so that customers would be loyal to us. As Fintech companies would raise money and enter the market with better technologies, such as blockchain and new innovative solutions, we are constantly faced with the need to keep up and stay ahead of competition. I am up most nights these days thinking about tactical strategies.

QML: What do you think are the factors that affect customer loyalty amongst Merchantrade customers?

RKV: This is a trust business. Today, if you look closely at the remittance, currency and e-wallet business, you will find that it is transacted purely on trust. Some of the customers have low literacy levels. For them to believe in you, you must be able to deliver on your promises. If you say you can deliver in one hour, you must ensure that you deliver in one hour. If you say you’re the best service provider, you must make sure that you deliver the best service. Delivering on promises is very important in a trust business. Succeeding in this business is not easy because there are many companies that make similar claims. As long as we maintain our service standards and build trust with the customers, we have what we need to keep us going. We have built the business for migrants and expatriates over a long period of time so we are confident that we are able to deliver on our promises.

Apart from building trust, maintaining trust through understanding the differences in mentality of customers and being able to manage service levels is also very important. In this business, customer expectations can be quite diverse. The expatriates will think differently. The migrant workers will think differently. Malaysians sending money across borders on behalf of their maids/domestic helpers will think differently. Whether it is before transacting with us or post-transaction, our customers will choose to reach out, engage and connect with us in different ways, e.g., social media, phone calls, emails, walking into our branch, etc. We strive to maintain transparency and openness in communication while leveraging on technology and the appropriate process and procedures to ensure our customers are not impacted by even one transaction, regardless of which customer segment they belong to. We take customer satisfaction seriously, and we will go the extra mile to listen and attend to their feedback. Of course, in this regard, we operate differently compared to how banks engage and build trust with their customer. As part of being in this service-oriented industry, we have to be more customer-centric and take an active approach to servicing our customers to succeed.

QML: What is the unique value proposition of Merchantrade, and what are your key competitive differentiators?

RKV: Some money services companies focus on digital and online, while some of the others focus on building branches and agent networks. Some of them focus on merchant networks and some focus on e-wallet. Merchantrade is the only company in the market that consolidates each of these pillars into one. You can see that Merchantrade has branches, agents, online platforms, e-wallet and, now with the recent acquisition, we will acquire capabilities on the merchant network side. If another company wanted to replicate the entire ecosystem that we have built, it will either take them years to do so or a lot of money to build everything in a short span of time at the risk of their reputation. Furthermore, with scale come larger partners, better customer experience and better funding. This advantage, when paired with our 20+ years of industry experience and what we have built and accomplished so far, gives us a solid competitive advantage over competitors in the market. We are the only Malaysian homegrown money services business operator that has successfully built an extensive IMTO network that can rival large, established international players. We want to send the message to the market that we are there for them, we are strong enough, we are able to deliver and we are a trusted partner.

QML: What trends are on the horizon that will affect how Merchantrade conducts business? How do you plan to use these trends to your advantage?

RKV: Companies like us are very agile and able to move fast. We adopt what we can adopt, what is the latest and what is accessible. We are not technology followers because we have to consider the end-to-end approach covering the adoption, the delivery, the compliance and the partners. For compliance and implication on trust reasons, we cannot afford to undertake a trial-and-error approach to innovating. That is why we have invested in and own a 75% stake in an IT company, which helps speed up deployment time for products in order for us to quickly transform our ideas and innovations into reality. With technology moving at blinding speed, we have to constantly offer new products and services relevant to our target markets, either built in-house or through leveraging on the capabilities of our partners. Hence, it is important that we stay open to partnerships with other Fintech, banks and technology companies to offer the leading-edge solutions to our customers.

QML: How do you see the demand for money services evolving as a result of the COVID-19 pandemic? Do you think customer behavior will change post-COVID-19?

RKV: Certainly, we expect a lot of changes to happen post-COVID-19 because we are experiencing heavy take up on the digital side as a result of the pandemic. In July, Merchantrade recorded a 100% increase in registrations and transactions of its digital remittance service over the three months during the COVID-19 pandemic lockdown in Malaysia. I can see COVID-19 definitely changing the behavior of customers and encouraging the adoption of digital products, especially for Malaysians and expatriates. Even migrant workers have started to become more aware of digital. However, the shift for them may be slightly slower as the trust element is very important for them. We need to educate and promote awareness of how digital will be easier for them. It will take time to convince them, but we need to reassure them that if they encounter any problems, we will guide them through it and show them how to reach out to us for help. This is a flow that we are building right now as we plan to tap on the opportunity to build on the momentum in the market. Meanwhile, our brick and mortar branches will continue to serve as customer support centers to support and ease their transition to digital channels.

QML: Do you see a need to continue digitalizing your service offerings?

RKV: Yes, the direction for Merchantrade is to undertake more digitalizing to enhance the customer experience to make it easier to use and understand. Our customer base is not only migrant workers; we need to understand the Malaysians and expatriates as well. Every month, we upload new features and new experiences for the customers. Through our many channels, we are maximizing our touchpoints and leveraging on our omnichannel model to create awareness. We drive word of mouth marketing, not only in Malaysia, but also in the customer’s home country. From there, we just let our customers speak openly to us and about us. We use open engagement to show customers how well we understand them to build trust. At the end of the day, it is whether our customers will say that we are trusted that will drive repeat business and referrals. Since in the money services business decisions are not made on the spot, to influence the decision to buy, we ensure that Merchantrade is top of mind, whichever angle is taken to arrive at a decision. Going to this extent is our duty and how we can stay ahead of competitors as we see increasing competition from international players in the market.

QML: What are the key initiatives currently executed by Merchantrade that you think will drive future business growth?

RKV: We are collaborating extensively with Malaysian corporates to get migrant workers onboarded to our mobile app and use the digital remittance functions. We will soon be launching our collaboration with a leading local investment bank to launch Malaysia’s first card-based stockbroking e-wallet with a VISA co-brand card. The recent acquisition of Valyou Sdn Bhd, another money services business player and e-money issuer in the market, represents a major milestone and a key initiative in escalating the company’s digital aspiration. With the acquisition, we can focus more on customer growth as we will have more touchpoints, online and offline, to reach out to more customers. Other initiatives that we want to embark on include our plans to go regional through leveraging on our digital platform and some other services that we are looking into providing through regional partnerships and collaborations. We fully intend to leverage on the in-depth insights of the local and international remittance and forex [foreign exchange] business that is inherent to quickly position our businesses to offer the most competitive service offerings regionally. In our efforts to go regional, we had acquired a stake in Kliq in Singapore in 2017 and have recently increased our stake from 49% to 70% in 2020. With Kliq acting as the license holder in Singapore, we have taken our well-known brand for digital remittance in Malaysia called eRemit into Singapore to serve the substantial expatriate and migrant worker segment there.

QML: What do you want Merchantrade to accomplish in the next few years, and what are major challenges in achieving this vision?

RKV: Expanding our business into Asia and slightly beyond Asia is something that I would love to do over the next two to three years. Previously, we were very sceptical and wanted to keep a low profile in Malaysia. Now, I think the time has come for us to venture out. In terms of competition, we think many companies will adopt the conservative approach and will not want to expand their businesses at this time. Furthermore, catching up with us end to end will also be hard for them. So for us, this is the time to move on and take the market faster. Right now, we have the infrastructure, technology, the people and the readiness. For us, there won’t be any better time in terms of pushing the numbers because we are seeing the growth coming in all the areas. We do not expect it to be easy. We need the best resources. Every country has their own rules and regulations. Languages are different. Partners are different. However, as we have, over the years, built Merchantrade as a trusted and reliable brand, I think we have a strong IMTO platform with close to 100 partners that are already working with us, of which more than 40 are banks, which creates a complete end-to-end ecosystem of send-and-receive partners worldwide. Additionally, if we can bring more liquidity to the business, we can also expand into the B2B business, not necessarily just within Malaysia but also abroad.

QML: What about risks and limitations to growth?

RKV: The most important thing is that you have to be very successful in one or two countries first before undertaking geographical expansion. I have spent a lot of time and effort to make sure that our IT infrastructure is built very carefully in Malaysia and to ensure our understanding of the market is robust. I am confident that we have already surpassed rivalry in Malaysia, so the next step for us is to expand outside of Malaysia. Definitely there will be some complications with venturing abroad, but I am certain that we can manage these risks. Our concept, our system and our processess are all on par regionally, so formation of partnerships with others in the region can be straightforward. We collaborate with a lot of banks, including in Bangladesh, Pakistan, Myanmar, Nepal, India, and sending partners who have a very strong hold within Asia, including in Japan, South Korea, Singapore, Thailand and New Zealand, UK and in the US. Rather than setting up our operations in these countries, we prefer to collaborate and provide our partners with open APIs for payout. Throughout the years of working together, our partners know us and they trust us. We are aligned on wanting to help the customers and enrich their lives. We believe the collaboration model can work very well for us going into the future and welcome future partnership opportunities.

About Quah Mei Lee

Quah Mei LeeQuah Mei Lee is an Associate Director with Frost & Sullivan’s ICT practice where she leads Mobile & Wireless Research for Asia-Pacific. Her area of expertise lies in telecoms and payments strategy with a specific interest in 5G and payments.

Quah Mei LeeQuah Mei Lee

Quah Mei Lee is an Associate Director with Frost & Sullivan’s ICT practice where she leads Mobile & Wireless Research for Asia-Pacific. Her area of expertise lies in telecoms and payments strategy with a specific interest in 5G and payments.

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