Cover Story: Asia’s Digital Merchant

Merchantrade Asia Sdn Bhd Transforms the money services business sector with its digital strategy

Geographical boundaries are becoming blurred, thanks to globalisation and the hyper-connectivity of the virtual world. The average Malaysian spends more than five hours a day on the internet, which can be attributed to the country’s household broadband penetration of nearly 78% and internet mobile penetration of 65%.

According to the Malaysian Prime Minister, Dato’ Sri Mohd Najib Tun Abdul Razak, digital technology will play an even larger role in the country’s economy. It is undeniable that Malaysians are increasingly participating in the digital economy.

Moreover, Malaysia is a strong player in eCommerce – a sector that generates a revenue of US$2.3 billion (bn) in 2015, says Najib. As Malaysia pushes its digital economy agenda, which accounts for 17.8% Gross Domestic Product (GDP) in 2015, homegrown businesses and companies are following suit as well.

What started out as a small sunset business, Merchantrade Asia Sdn Bhd (Merchantrade) is now a leading homegrown Money Services Business (MSB) player, providing a full spectrum of offerings including remittance, money exchange and wholesale currency services.

Its established branch network and online platforms provide consumers with easy access to a secure, reliable and fast channel for currency exchange, money transfers and payments across borders. In partnership with international wire transfer operators, foreign banks and other established payment centres, Merchantrade’s remittance network comprises 234,000 pay-out points in 200 territories worldwide.

In 2016, Merchantrade total turnover of outward remittance transaction value was slightly above RM5bn.

The company boasts of a solid track record in the MSB segment with innovative product offerings. With a brand promise of ‘Enriching Lives’, Merchantrade earns the title of being a true visionary as it aims to provide its customers and clients more MSB solutions. But how, you may ask?

Its affable Managing Director Ramasamy K Veeran shares with Business Today of Merchantrade’s investments in the digital space, and its strategy to remain ahead of the curve in both the MSB and Fintech ecosystems.

Breaking Traditions

Not one to wait for change, Merchantrade – under the leadership of Ramasamy – is changing the game of the MSB industry. It aspires to offer various MSB solutions digitally, while growing the Merchantrade brand as a regional digital player.

The company hopes that its digital offerings, namely eRemit and eForex, can enhance its current customers’ MSB experience, while garnering interest from new customers as well.

Through its transformative business strategy, one that moves away from traditional MSB, the company is steadfastly contributing to the digital space in order to support the flourishing digital platforms across the region.

Going digital may sound like an easy task, when in actuality, it is a very tough process especially if you’re new to the MSB segment. Ramasamy explains: “Many people come into business and think that within six months they can achieve what we have now. It has taken years for us to develop Merchantrade to be what it is today.”

Its recipe for success is the company’s ability to understand that digital finance is really about trust and context. Trust allows transactions to happen and context allows the company to audit to transactions by knowing their customers, preventing fraud and complying with regulations.

“It is all about building trust; your customers and partners must be able to trust you. We have built a rapport with them over the years, in addition to creating relationships and having the right infrastructure and because of that, we are able to move into a digital ecosystem seamlessly.”

Changing the Norm

The idea of Merchantrade’s first digital platform was conceived in 2010, where the company started developing its online remittance platform. The company also boasts to be the first MSB company in Malaysia focusing on digital remittance.

The eRemit platform was officially launched two years later in 2012 and had introduced its mobile app last year. The app, available on both Android and iOS devices, allows for cashless and seamless money transfers to selected countries at any time and any day throughout the year.

This makes it convenient for customers, including expatriates, employers, parents with children studying overseas, domestic helpers and migrant workers, to remit money to their loved ones.

So far, its eRemit platform has a recorded close to RM650 million (mn) in transactions, and it aims to achieve RM800mn this year with more than 40,000 registered users since its inception.

The last five years has been a learning curve for Merchantrade as the company seeks to learn about its customers’ usage patterns, in addition to catering to their remittance needs.

“We are currently exploring Artificial Intelligence in our products to bring it to a whole new level of customer experience,” he shares.

As a testament to its success in the digital remittance space, the company took home the Florin Awards Asia 2016 for Community Votes in the Best Remittance Breakthrough Transfers category, beating renowned remittance companies from other countries in the region.

“It is already an honour for us to be nominated for such a prestigious award, but to win the award through Community Votes, that’s something else. It is a testament of the trust and confidence the public has in eRemit and Merchantrade,” says Ramasamy.

The award was also in recognition of the collective effort of all Merchantrade employees and sent a strong message that Malaysian companies are on par with, if not better, than other companies from around the world.

“This award will serve as a motivation for us to continue pushing the limits of innovation to bring our customers greater solutions and services,” he adds.

In further expanding its digital offerings, the company introduced its online money exchange eForex platform in 2016. Developed to offer convenience and flexibility to anyone travelling abroad, eForex is a convenient and easy platform for anyone to get the most competitive rates. Since its introduction, the app has recorded more than 12,000 downloads with close to 3,500 registered users.

The eForex platform also offers customers peace of mind as it ensures secure online transaction from the comfort of your own home or office. “There will be customers who want to do things traditionally, like going to the physical store to see the daily rates and exchanging their money then and there,” he explains.

Ramasamy adds that the eForex platform is for more adventurous customers, who are IT-savvy and open to trying new platforms. It is also a great solution for those who want the convenience of having their money exchange delivered to their doorstep through the Premium Delivery Service.

Expanding Network

For many, money changing instantly means going to the physical store to do so. Prior to acquiring Vital Rate Sdn Bhd (VR), money exchange pick-up points were an issue for Merchantrade as a lot of its outlets are not in shopping malls.

From a branding perspective, it provides Merchantrade with an increased brand presence in strategic locations such as KLCC, KL Sentral and Pavillion. Through this branding exercise, the company is now able to provide further convenience for this retail segment as they can now shop and change currencies at competitive rates.“It was harder to attract urban customers to change their money with us. The acquisition plays a big role in our eForex platform. We want to be a game changer from the current set up to a more lifestyle oriented business where we bring people together, providing end-to-end lifestyle value chain where our customers can also purchase currencies through our eForex online money exchange available on mobile app, and they can later collect their currencies at any pick-up points according to their preferred locations,” he shares.

With the acquisition, Merchantrade is gearing to capture 10% market share of the retail market capitalising on the robust growth of inbound tourists as well as Malaysians travelling abroad. The money changing and wholesale industry volume for 2016 is recorded at RM84.1bn.

Ramasamy adds: “Tourism Malaysia’s vision is to achieve 36 million tourist arrivals with RM168bn tourist receipts by 2020. In 2015 alone, there was 25.7 million tourist arrivals with RM69.1bn receipts. This motivates us to quickly move into this segment due to its dynamics and the fact that the tourism industry is a key economic sector for the country. We aim to build a strong brand in this retail market.”

After spending years building the brand and the trust of its customers, there is no doubt that Merchantrade has made a name in being a reliable MSB player, which now extends to its digital ecosystem.

Ramasamy shares that there are competitors in the segment who have come out with their own online remittance and money exchange platforms, but are not as focused as Merchantrade. He is confident that Merchantrade can provide the best customer experience – one that is end-to-end.

Merchantrade is also looking towards expanding its eForex reach out of Klang Valley. On this end, its acquisition of VR will allow the company to pursue other retail locations across Malaysia.

“There are two phases involved after the acquisition, which is to offer eForex services outside of Klang Valley, as well as open it up to our existing agents across the country. We aim to complete both phases by end of 2018,” Ramasamy shares.

Taking it a Step Further

Given its success with its consumer-centric digital platforms, Merchantrade is not resting on its laurels when it comes to innovating new products. It is currently looking into offering a digital money transfer service for business to business (B2B) segment.

“We have built a portal that’s an off-shoot of our eRemit platform; the eBiz portal is catered to Small Medium Enterprises (SMEs). We have done a soft launch and we are currently testing it with the market. The transactions involved within the eBiz portal are big ticket transactions of up to RM2mn, and we want to make sure everything is in place,” shares Ramasamy.

Traditionally, B2B transactions are often handled by the banks. On this front, Merchantrade is working together with a handful of clients to better understand the SMEs’ needs when it comes to cross-border B2B remittance – be it speed of delivery, security or simply providing better rates.

“We are just beginning to invest in our B2B remittance platform and it is a journey. You are not going to see immediate results and we hope that it will mature within two to three years. You will have to take care of the burning rate,” he adds.

The digital journey is one that requires continues investment, both in time and infrastructure. Ramasamy says: “It is hard to put a number for how much we have invested, even more so in what we plan to invest. It is more important for us to continuously look at the market needs as the digital space moves very fast.”

Factors like globalisation also play a part in dictating what happens in the market environment. For instance, if any of Merchantrade global partners require for it to change, the company would have to be ready to invest to meet their standard.

“The MSB market is changing very fast from traditional to digital. If something happens globally, it does impact us as a business. If you don’t change, you’ll be wiped out of the game. It is a continuous investment,” he concludes.

This article was originally published in Business Today April 2017.

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