Going Cashless: Startup PayMob Wants To Make Egypt (And MENA) Transact From Their Mobile Phones
According to PayFort's State of Payments 2016 report, 42% of Egyptian consumers shop online, yet 91% of Egyptian shoppers still use cash on delivery as a payment option. It's not surprising, as the country predominantly has cash-driven businesses, with Harvard Business Review citing that only 10% have access to a bank account, and 94% of financial transactions are conducted in cash. In a cash-dominated society, financial inclusion is essential for individuals, enterprises, and economies alike to prevent hurdles to progress- and this is the opportunity that PayMob is trying to tackle.
The startup is an electronics payments solutions provider converting cash payments to electronic, using existing payment channels such as credit card, mobile wallet and cash. Based in Egypt, the fintech startup is co-founded by CEO Islam Shawky, COO Alain El-Hajj, and CTO Mostafa Menessy. Given Egypt's reliance on cash, El-Hajj says that its economy is at risk to lose money through cash-based fraud, theft, costly insurance, as well as from the time-consuming task of counting and reconciling cash balances- and digital payments can definitely help reduce this kind of waste. Shawky also points out that the focus on cash excludes people from the financial system and its benefits, and PayMob can help turn that around, saying, "We're working on empowering the masses with tools to perform digital transactions, and get access to financial services using their mobile phones."
The startup provides solutions for both sides of payment, issuance and acceptance. Menessy explains that from the issuance side, PayMob develops white-labeled mobile wallet products for mobile network operators and banks. He adds that the mobile wallet solutions that they provide allow for interoperability- meaning, "a user from one wallet provider can engage with users from other providers." On the acceptance side, PayMob enables merchants to accept payments from their customers using various payment channels. El-Hajj points out, "You should never miss a transaction, because your customer didn't find a suitable payment method." Working with both the issuance and acceptance sides of payments, the co-founders say they have a distinct perspective to the problems from all angles, thus making it easier to offer solutions to improve the experiences of both end consumers and merchants.
Founded in 2013, the co-founders were originally working on a social e-commerce project, and pivoted when they realized that being in a cash-dominant market will hinder the growth of ecommerce ventures. Bootstrapping funds, they decided to build PayMob to solve the payments problem. Shawky says that as of June this year, PayMob processed over EGP3.8 billion through different products, with the platform today having around 150 merchants using it, including Jumia, The GrEEK Campus, Yashry and Easy Taxi. Currently focusing on Egypt's market (with an eye to enter other markets), the startup received an undisclosed seed funding from Egypt-based A15 a year ago, and with A15's background of investing in digital products, particularly online and mobile solutions, the co-founders count on their support as a strategic move.
As for its business model, PayMob takes, as a commission, a transaction fee for its processing services. The startup has five core services: online payments, mobile wallet payments, in-store payments, standalone checkout to let users pay using credit/debit card, and card on delivery. The card on delivery feature is a patent-pending service, allowing customers to pay with their MasterCard and Visa credit/debit cards from their doorstep. This is an indication to the startup's future outlook- Shawky says they view the cash mentality as their biggest competitor, and so rely on partnerships in the ecosystem to "create the biggest impact."
For instance, PayMob has partnered with MasterCard to launch a mobile wallet solution for Vodafone, and there's also the cash on delivery service with Arab African International Bank (AAIB). These partnerships have been essential in developing new products too- for its new payment acceptance service, Accept, the startup has partnered with AAIB, MasterCard, Egyptian Banks Company and Vodafone too. A product of PayMob, Accept is a payment aggregator providing online and offline businesses with payment acceptance services whether in store, cash on delivery, credit card on delivery, mobile wallets, and online and mobile payments gateway.
A note here: all of this didn't quite come as easy for the co-founders- as young 20-something "treps, Shawky recalls that an early hurdle was convincing partners that they have the know-how and capacity to execute critical systems handling transactions. Though it took time, with their early mentors' support, coupled with their persistence and commitment, the team built and grew their partnerships.
When asked regarding most-oft concerns of MENA consumers on unfamiliarity with online payments, or privacy and security issues, Shawky asserts that it's all about educating users to build trust. As they comply with international standards for payments processing, handling questions is an easy process of discussing with clients, and developing materials to educate them. At the same time, Shawky counters that most concerns are around credit card, and how Egypt is starting to foster a mobile wallet-friendly culture, saying, "Mobile wallets are associated with much higher levels of trust."
Partnering with banks and mobile network operators, plus retail chains, the startup uses the reach and infrastructure in Egypt to educate, onboard and handle inquiries. The startup also works with partners and clients in other sectors wherein mobile wallets can offer a solution to traditional payment processes through a cost-effective payment method. As an example, Shawky says: "For microfinance loan payments, when it's easier and cheaper to use a mobile wallet, rather than make a long journey to make a cash payment in person, it becomes an easy decision for users to use mobile wallets."
So, is going entirely cashless really possible for the region? While it continues to gain traction, the CEO admits that they are just at the tip. Cash is still dominant, but Shawky notes the growth rate of users joining cashless initiatives. "Even developed markets aren't 100% cashless, and though, yes, we're at an early-stage, it's a process that has started, [and it] can't be stopped."
With the startup's vision to "never miss a transaction," in the next few months, besides continuously catering to their clients' needs, the co-founders plan to form further strategic partnerships to develop new solutions and services regionally. "What we envision in the foreseeable future is a cashless society where users rely on the mobile devices to perform all financial services. We want to make sending a payment as easy as sending an SMS or a Whatsapp message."
Related: Banking At Your Fingertips: The Rise And Rise Of Mobile Payments Technology
What drives you forward as an entrepreneur?
Islam Shawky, co-founder and CEO, PayMob: "A grand vision that sometimes can't be articulated, and a team that fully believes in the vision and their willingness to sacrifice to reach it. The scale that we are dealing with, the opportunity of being able to touch millions of people's lives and trying to make them easier, is very exciting. I believe this love and passion that comes from being totally invested in the vision is what drives the team to spend sleepless nights in the office and work on holidays."
What are some of the current trends you see in the fintech sector?
Alain El-Hajj, co-founder and COO, PayMob: "We believe the attention and support that the Central Bank of Egypt is giving to financial inclusion is extremely important and beneficial to all stakeholders of the ecosystem. There have been nationally-run TV ads from the Central Bank showcasing mobile wallets, which is unprecedented in terms of national support for a financial initiative."
How do you see Egypt's fintech ecosystem progressing in the future?
Mostafa Menessy co-founder and CTO, PayMob: "We believe the infrastructure we helped building along with our partners is at a very mature stage. What is missing now are campaigns to spread awareness. It is very challenging to change what people have been used to doing for hundreds of years, i.e. paying in cash for goods or services. But we're working with all types of organization and from all angles to make mobile wallet technology ubiquitous. As Alain mentioned, we're now starting to see national campaigns for mobile wallets, so the puzzle is almost complete."