Building the size of the Digital Goods Company in Asia Challenges, Opportunities and insights --

If your company is within the APAC region, and are thinking of expanding into new areas, you'll face numerous common problems to face and queries that need to be addressed regarding the best method for tackling it.

This episode on Growth Stage, we interview Jay Jia, Senior Account Executive, on his knowledge on:

• Tips on expanding an online goods business within Asia.
• Current market trends across Asia that can affect expansion as well as the issues related to those developments.
• The current payment landscape and the impact it has on businesses looking to expand their operations to Asia.

If you're not sure what to do to boost development of your software digital product business in Asia take a listen or look today!

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Podcast Audio Interview in Full

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Transcript

Jesse Paliotto (00:04)

Welcome to the Growth Stage, a podcast where we discuss how companies that sell digital products increase profits, produce useful products and increase the profits of their business. I'm your host today, Jesse Paliotto. I am a part of the digital product community by working in the company and want to showcase the very best in the digital product community with listeners through this podcast, the Growth Stage podcast.

We'll be discussing growing a digital goods business in Asia and a few problems, possibilities and experiences. Also, we've got Jay Jia on the show as we'll get Jay's thoughts on expanding a digital goods company in Asia and in particular taking a look at the the current trends in markets and some of the challenges, and the payment landscape and the payment landscape. If you're a business based in the APAC region and you're looking to expand to other regions Are there any typical issues or concerns you might face?

We are delighted to be meeting you. Jay I am really happy to see you today. We look forward to talking with you. Jay Can you please be able to provide us with a concise explanation of the work you do?

Jay Jia (01:06)

Thank you for your time, Jesse. Hi everyone, this is Jay and I'm the caretaker for APAC region at . If you're not sure, be familiar, is a merchant of record platform which brings together the key tools needed to grow the digital company. Our services cover everything from payments to fraud management, to custom help as well as tax compliance to let sellers concentrate on expanding their businesses. Prior to joining, I worked for quite a number of years in the field of payment.

With companies such as GrabPay and companies such as GrabPay and Stripe for helping businesses cope the challenges of international expansion. This morning, I'm delighted to provide more insight into businesses such as GrabPay as well as Stripe to assist businesses in navigating the complexities of expanding into the APAC market, specifically from a digital goods perspective.

Jesse Paliotto (01:48)

That's awesome. It's a pleasure to have been able to collaborate together with you there in your role and to discuss ways we could better serve our customers in the Asia area. I'm interested in what trends you witnessing within China and the entire Asia Pacific region right now?

Jay Jia (02:10)

Everyone knows that it is true this: the APAC region is very diverse and each region has distinct particularities. China is a global economic giant with its innovative e commerce market and its amazing app ecosystems like WeChat as well as Alipay and Southeast Asia with countries like Indonesia, Vietnam and Thailand are rapidly growing due to the growing mobile-first generation and the growing e-commerce market it is, well,

India is a second fast-growing market with a booming tech industry and a growing attention to mobile commerce as well. For Japan and Korea, they're mature markets that are known for their technologically advanced application and the high expectations they have for customers, whereas Australia as well as New Zealand serve a stable developed, well-developed market with significant amounts of digitization. In recent times, we've seen the international e-commerce market in particular China becoming saturated due to fierce competition from large platforms such as Temu .com.

But it's real that Digital Good space, particularly in SaaS and entertainment, in general is a new avenue that could have higher margins as well as enormous greenfield opportunities.

Jesse Paliotto (03:18)

When we consider the development of digital products or the companies that sell digital items that are growing, does it coincide with your previous comments? regions and the growth trends you have observed?

Jay Jia (03:29)

Exactly, exactly. The market for digital goods within APAC is growing extremely rapid, with a particular focus on two key areas. One, in terms of utilities-based software and two, with regard to general entertainment. The utility-based software category includes SaaS businesses that operate on businesses that have recurring models and general entertainment encompasses apps like gaming and social media platforms. IP generated content, for instance, short-form films.

So one of the most fascinating trends is the increasing popularity of AIGC which is AI generated content, particularly when it comes to Chinese businesses that lead the world in technological revolution, don't you believe? AIGC has created brand-new opportunities in creation of images, text and video production and audio and music which are increasing at a rate that is unparalleled. However, this growth actually isn't without challenges, specifically regarding compliance with the regulations on content.

and be able to ensure a steady payment channel, that is which can provide a vital for support. Due to the lack of clarity in rules governing this new set of technologies stabilization becomes a huge challenge and a major concern in the case of AIGC sellers, especially when they are involved in image or video-based generative content. It is due to the possibility that the software and the technology they employ can be misused by users for uncompliant content. So without the right security and controls implemented,

AIGC sellers often encounter an unavoidable situation where payment accounts could be shut down by their service providers. This is why having a knowledgeable MOR like us becomes essential because we're not just able to provide a stable and reliable payment processing service however, more importantly we'll offer guidance and support regarding the most recent regulatory frameworks, and our determination to move toward sustainable and eco-friendly businesses.

Jesse Paliotto (05:22)

Yeah, that's interesting. That's why the AI created content business faces as essentially more risky companies, in a sense. Therefore, having a trustworthy MoR with the ability to represent them in the markets could help them to lessen the chance of being a victim. A good way to go about this is to inform them that we're working with somebody who will be handling transactions for us, and who will handle every interaction and payment option for our customers. The best method to mitigate that risk is choosing a partner who is reputable, which is what you're doing.

Jay Jia (05:51)

Exactly, exactly.

Jesse Paliotto (05:53)

Do you have a chance to chat about the payments scene in Asia Pacific area?

Jay Jia (06:00)

For sure. The payment landscape of APAC is as varied like the entire continent. For markets that have matured, such as Singapore and Malaysia Credit and debit cards are the most popular choice for transactions across Southeast Asia, for example electronic wallets like GoPay and Ovo are exploding within the marketplace due to the huge number of people inaccessible to banking and. insufficiently banked populace.

Jesse Paliotto (06:06)

Yeah.

Jay Jia (06:24)

Bank transfers that are real-time are also popular in other countries like Thailand and Malaysia through PromPay or FBX and Purchase Now, Pay Later BNPL options are becoming more sought-after by young purchasers. Thus, every form of payment has been customized to the needs of the local market, which is the reason why it's vital for global sellers to adopt multi-channel payments. The key to success in APAC is being aware of and accommodate these different payment preferences.

Jesse Paliotto (06:50)

Yeah, I know we've discussed this, and been discussing it with the business that.

Serving, as you're aware, one of the, among the value that we provide is that when you visit certain areas that you must provide the local payment method that your audience would like and wants to utilize. The first thing you mentioned will be a huge hit for me because it's an extremely diverse group of nations in terms of payment methods, currency in general, as well as all the other kinds of stuff. That's why there's so much to manage and you're doing this on your own, as a smaller business trying to expand. What can you do?

Jay Jia (07:27)

If you are selling products into APAC it is essential to have the understanding and localization of every market that has their own unique challenges. In the case of Japan, Japan is famous for the widespread use of Konbini payments, through which customers can buy goods via the internet and visit a convenience shop for payment by cash or cards in person. cash.

And this showcases a unique combination of multichannel payments. The flipside is that in India the process of recurring payments can be more difficult by the e-mandate mechanism that requires customers to sign-in every payment. This is essential for SaaS firms that believe in optimizing for recurring revenues. The majority of the population in Southeast Asia who are not banked, it will require specific strategies, particularly with regard to mobiles and the regional payment system perspective.

One excellent example of successful localization is that Grab and Didi which are kind like Uber's localized versions Uber are able to outdo Uber in a significant way in Southeast Asia and China respectively. The two companies have adapted their strategy in response to the specific needs of local communities as well as the regulatory environment and cultural nuances eventually which led to their success in these areas I'm sure you're thinking of it. For Grab such as. Grab is adjusting to local needs in allowing the use of cash for payments and also launching Grab Pay which aimed at the people who aren't banked in the region. Additionally, Grab has launched particular services like Grab Bike for Vietnam as and Grab Tribe.

in the Philippines in order to cater to the needs of the Filipino market. Additionally, Didi partnered with Chinese tech giants such as Tencent and Alibaba making use of their platforms to reach millions of people in a short amount of time. In summary, in order to succeed in APAC it's essential for marketers to be aware of the distinctive and unique characteristics of every market.

Jesse Paliotto (09:15)

It's funny from a marketing perspective, and I'm from an industry background specifically marketing to people that don't know my name from the show. I am a marketing manager at the company we work for, and"omni-channel" is a long time used phrase within the realm of marketing. You're interacting with the audience with a myriad of different ways as well as coordinating these interactions to form a brand and a coherent experience. I love your use of this however in omni-channel payments which customers use to pay for services.

in a physical store as well as on the phone, as well as dealing with cash. It's a dual channel approach that you have to master to successfully sell into that market or for this specific group of customers. It's incredibly insightful. Can I turn it around slightly? If your business is situated within the Asia Pacific area, in China or in the Asia Pacific region, and you're looking to expand outside the local market

Do you have any ideas regarding challenges or potential opportunities a business in the same position ought to be looking at?

Jay Jia (10:20)

Hmm, definitely. So, expanding to the world from APAC comes with particular issues, with particular emphasis with regard to compliance. Like taxes for example compliance, data security as well as the management of fraud and dealing with fraud and the management of it. As we all know, each market has an individual tax law. The United States .S. Every state has its own policy and a different threshold. It is a challenge managing transactions between many countries.

Jesse Paliotto (10:32)

Thank You!

Jay Jia (10:49)

having to figure out the cost, pay, and then pay taxes to the local tax authorities. This is a typical scenario we see due to the fact that many online goods sellers, like SaaS firms, are globally based immediately and do not limit them to one particular region. Compliance violations could cause severe fines ranging from huge fines and penalties to hinder fundraising in the longer period for companies with high growth when they fail to comply. And similarly,

Jesse Paliotto (11:05)

Mm

Jay Jia (11:18)

Data protection legislation like GDPR Europe is not easy as it requires companies to navigate complicated region-specific laws to protect personal data. This requires substantial changes to the way data is handled and processes to prevent huge fines and reputational damage. On the other hand the biggest challenge is preventing the fraud of credit card transactions that may consume resources and reduce the income.

In 2024, global losses due to fraud on credit cards are predicted to continue with a rapid increase, with loss of thirty billion dollars by 2022, and projected to reach 43 billion by 2028. The rise in fraud largely driven by C &P or card not present transactions, which make an enormous portion of cases of fraud on the web and also for digital transactions.

Jesse Paliotto (12:02)

Mm

Jay Jia (12:15)

In addition, emerging security threats such as identity theft as and the use of AI generative to spot deep fake frauds are causing an abundance of confusion that can make it difficult for companies to safeguard their businesses from sophisticated scams. That's the reason why Fastbring's MoR model is so effective, since we're able to provide an efficient localized payment processing system which makes it simpler to access certain markets.

However, on the top we've made a significant investment in our infrastructure in order to guarantee that we are in compliance with the most stringent standards such a taxation and data viewpoint, to ensure that sellers have the ability to leverage on our already optimized rules that are customized, based on various industries in order to combat fraud, reducing on fraudulent transactions, while still allowing authentic transactions go through and thereby increasing revenue for our sellers.

Jesse Paliotto (13:10)

That's interesting. It's not just one, let me be sure that I'm taking note of capture, because I thought there were two distinct aspects to what you mentioned. One is that the more companies enter these markets, ensuring compliance to regulations within these local markets gets more complicated.

So the necessity to handle all the demands that I just, particularly with companies that sell digital products as well as what you were about to say only a couple of minutes ago about are the patterns of growth that are emerging in Asia Pacific. Asia Pacific region include a number of regions that are increasing sales of digital goods. Digital products can be easily transferred across the border, as you only need to click to the site or the application. Then you buy the product and be in Korea You could also be inside Japan or within Vietnam. The risk that comes directly to the business is

Do I comply when selling my products in Vietnam? Do I meet any tax requirements to sell my products in Japan? To offset these problem, there was the first thing you were able to claim. A different one was simply fraud. There is a rise in fraud across all these locations. And so rather than handle the issue as a business as a direct hit and responsibility to pay for it, let an official retailer like a merchant act as an middleman...

It is possible to detect and get rid of it, or take action if fraud has been detected. Would you say it is possible to detect this?

Jay Jia (14:35)

Exactly, exactly. Like markets are extremely varied and you know, every market comes with its own sort of laws for example, from the taxation or information perspective. Many of the payment providers available are, in fact, have a lot of experience from the perspective of optimizing payments. However, from a compliance perspective the issue is one that vendors must learn about or overcome.

With the kind of MOR structure, it's built specifically for businesses that are growing rapidly and still need to direct their resources and attention to the things that matter the most and this is, development of products as well as increasing revenue. By joining up with an MOR it lets the MOR to assist them in solving the issues by providing a solid infrastructure which is already providing solutions to the issues.

Jesse Paliotto (15:30)

Are you able to clarify? I believe you mentioned the phrase a few minutes ago, but can you repeat it one more time? What exactly does the merchant record actually perform on behalf of the seller

Jay Jia (15:38)

Yes, absolutely. One of the biggest distinctions between the merchant of record model and the payment gateway model PSP model is the fact that an individual merchant isn't exactly the same as the payment gateway. rather it is a platform that connects to several payment gateways via the backend. The MIDs we generate are merchant IDs across different platforms using our own businesses. In addition, we are the primary seller of the transaction. Right?

The essence is that MOR is the only official organization that is legally liable to manage the refund process, dispute resolution, compliance with data, as well as tax-compliant. As the official seller is in fact the sole person who is responsible for the transaction which is why sellers that adopt MOR technology don't need to manage the transaction. The reason is that the MOR entity will actually basically manage the entire process from the -end part of it.

Jesse Paliotto (16:32)

It was clear that you've been talking about payment and its different areas. Do you see any issues or potential issues with the fact that you're entering different countries that have a diverse currency? What is the most effective way to tackle this issue on your own, with no one to be similar to them ? What are the best ways to resolve the issue for them?

Jay Jia (16:46)

Mm

In general, it varies between countries. However, the majority of companies that offer payment services don't provide local currency exchange, or perhaps it's limited to only a handful of the most well-known currencies, like, USD, Euro, example.

The main issue in this regard is that you're not using an localized pricing system. In other words, there are several ways to achieve MWR configuration. MWR configuration.

One way of doing this is by choosing a universal pricing with USD and have the price automatically convert into the local currency. This is something can be done in a similar manner, as with. Sellers often want to determine a specific price for every market, due to the various prices they are willing to pay and also the buying power.

It's also crucial in the development of the best pricing strategies for international firms. In this instance, there's one size that will work for everyone. But, the answer is dependent on the stage of business, of the targeted market, and whether they're price sensitive or what are their top priority in the current. Do they wish to look through every market they come across either from a marketing or sales viewpoint?

Or they need to expand quickly due to the fact that demand is there and they're operating more of like a self -serve model. It's my opinion that the answer is that it is really dependent on. It all boils down to how the buyer and the payment platform. A seasoned payment processor will not just offer payment call processing and also provide information regarding the best way to grow your business, whether in terms of currency or a pricing strategy viewpoint or perhaps the most efficient method to establish the most effective way to set up...

Recurring payments, ways to boost conversion rates and the most effective method to fight fraud as well as the rest of it.

Jesse Paliotto (18:46)

Yeah, that's very cool. And I can see both paths that you could select to permit someone to change the base currency to the prices of all local currencies. It's automatic. It's kept up with a continuous pace. It's extremely beneficial. It's a great idea to alter it manually since you know that you require a specific price specific to a certain region. Yeah, that totally makes sense. Perhaps it's an idea as well as a way to fine-tune your business to be able to serve customers in the most effective way.

Jay Jia (19:05)

Exactly.

Absolutely absolutely not.

Jesse Paliotto (19:17)

Before we wrap up, any final ideas and thoughts that you weren't able to discuss with Jay, or anything which triggered you that we didn't get to yet before wrapping up this time?

Jay Jia (19:26)

Yeah. One thing I'd like to emphasize, which also ties in specifically with the APAC market is the existence of the distinctive challenges around accessibility. One of the biggest problems facing APAC is the absence access to the latest payment technologies and solutions. Because of the fact that, unlike EMEA and North America, where global payment companies are established in APAC regions, APAC markets are not able to access those with a long history, such as Singapore and Australia,

Many countries are having difficulty connecting to the worldwide system of payment service providers. Payers in local payment services are likely to achieve success when processing local transactions. However they typically fail to deal with international transactions because of the lack of infrastructure and lack of partnerships. As an example, I had worked with an local Malaysian office under one of the most renowned logistic platforms worldwide which was confronting significant issues regarding the handling of international transactions with one of the leading local PSPs.

They were only achieving only a 40 percent approval rate, crippling their e -commerce operations. To address this issue, numerous businesses across Southeast Asia and China, established entities in more commercially-friendly areas such as Singapore and Hong Kong to facilitate global sales. This approach, however can cause a lot of hassle and lot of cost and also takes resources away from the management of products in addition to production of revenue.

and most effective method and the most effective way for any company seeking to address this complexity is to join an MOR. This way, APAC businesses can basically reduce the scaling gap simply by shifting all of the work on the payment processor.

Jesse Paliotto (21:10)

It's great that I inquired for more information because that's an amazing aspect. One of the challenges any business may face is trying to gain access to, as you said, in Singapore and Australia The companies will have access to the...

full abilities in payment processing and such the like, however there are nations where they aren't able to. Are the obstacles mainly technological or do they stem from restrictions by government agencies, or why companies don't have the ability to utilize their full potential? What is the main reason why they need to be established in a different countries to have access to dependable payment facilities?

Jay Jia (21:37)

Mm

Right.

For sure. Therefore, I believe the primary concern is infrastructure. For instance, in the country in Singapore, Australia, from the perspective of regulation, and in a legal standpoint the system is extremely sophisticated and government adheres to specific rules that are laid out in the black and white that businesses can rely upon. However, in different countries including such as, for instance, Vietnam,

The laws and regulations are changing on like a daily basis. This makes it extremely complicated and risky to develop efficient payment systems in these nations and that's the reason why for the vast majority of the global payment providers they've been waiting long to figure out what's the most efficient method for them to enter these markets. In the meantime it's a simple way to hack it for business or customers is to open a business across different markets. This is the reason I was a child as well as in my present life,

Most of my kind of referrers are business entity establishment agencies that offer you all one assistance, whether from an advice angle, the accounting angle, a legal angle, and even assist clients open accounts for business or bank accounts, which can be a challenge in markets like Hong Kong or Singapore. This is sort of simple to fix. And we don't really have any immediate chance for establishing a payment infrastructure within the emerging market.

Jesse Paliotto (22:55)

Mm

Jay Jia (23:07)

due to the volatility of markets themselves. That's why it is due to the volatility of markets. At least in the next three, five and possibly perhaps even 10 years depending on the direction of the market, an MRO partner is gonna make a massive difference for the sellers.

Jesse Paliotto (23:24)

What else did we know that we didn't know about? It was a pleasure to ask it at the end of last year. I'll ask it once more. What was it that you had in your mind that we weren't capable of reaching?

Jay Jia (23:24)

Absolutely.

Mm-hmm.

We've all the bases and in a way that, for us to be able to expand and out of the APAC region, businesses need to be aware of the local market trends and the preferences of customers. Localization is essential when it comes to selecting the right method for payment, marketing strategies, and even when it comes to customer service.

Here at, we're committed to streamlining the process of paying and ensuring compliance and allowing our sellers to focus on expanding. Instead of handling everything on your own, we hand it over and let you choose your retail partner you prefer. We also let sellers concentrate on things that really matter such as product development or sales growth.

Jesse Paliotto (24:12)

That's excellent. Thanks Jay for sharing these thoughts this morning, Jay. I really enjoy talking with you. If you would be interested in knowing more about the things Jay is doing it is possible to find Jay via LinkedIn or WeChat. Thanks for all of you who joined our Growth Stage podcast. Your host this week is Jesse Paliotto, I support the digital product community within my job as a Managing Director for We are excited to share the best of the community here on the Growth Stage through the podcast. Also, have a fantastic evening or day and I'm looking forward to meeting and interacting with you soon. Thank you for your time.

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