Grab and payments

Just a follow up to my post on payments earlier this week. It looks like consolidation is the name of the game. Two points:

1) MY FAVORITE TYPE OF BATH: A BLOODBATH!!! A like-minded analyst at ITR thinks that it will be (or already is) a “bloodbath.” That should be fun. Other metaphor: It’s a gold rush. He believes there will be just one winner or maybe two, max. I think we could see more, but depends on a lot of things, including regulation. Interoperability will be super important.

This brings me to my bigger issue with all of these “winner takes all” views on IT these days. Yes, lots of markets seem like they are winner-take-all, but that doesn’t have the be the case. Regulations could prevent that. And interoperability will be essential. If you have your payment account, but it is accepted everywhere, and you can also transfer it to someone else’s payment account, then couldn’t we see many of these? We see lots of mobile phone companies mainly because the government requires that for competitive reasons.

If it is winner-take-all, then the government really needs to start regulating price and/or profit, like they do for utilities. Seems pretty clear to me. It would be a mistake to allow a monopoly for a service that is essential. If you do, then that company is going to be noncompetitive, unresponsive and expensive. Like telephone companies were back in the day.

2) Grab is definitely getting in on this payments game. They tried to buy 2C2P but were unable - their offer of $200 million (!!) was rejected. Good for 2C2P. Let’s hope it is like Snap deciding not to sell to Facebook for $3bn. Then it IPOs for more than $30 billion (sadly now back to $19.5bn).

I am skeptical of the ride hailing business. I just don’t see it ever being profitable. And the shift to autonomous vehicles is going to cost so much capital that I don’t really see it working. Because of that, all of these moves by Grab away from ride hailing into more profitable businesses seem great to me.

Plus, Vietnam needs more payment options and needs to move away from cash, as I talked about previously. So this is all good, in my mind.