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Wednesday, July 17, 2024

Fintech firm helps MSMEs traverse Internet economy

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Financial inclusion among micro, small and medium entrepreneurs is driving fintech startup Paymongo Philippines Inc. to aggressively onboard more merchants to its network.

PayMongo CEO Jojo Manzanero Malolos said the company aims to end the year with 5,000 to 6,000 active merchants. Right now, among 16,000 merchants who onboarded with the fintech firm, 4,000 can be considered actively transacting businesses.

“Our mission is to be able to bring technology to small and medium entrepreneurs and allow them to play in the e-commerce and the internet economy. What differentiates PayMongo from other gateway facilities is our ability to serve not only the big retailers but also the small and medium-sized companies. We measure ourselves on our ability to get these merchants,” he said.

PayMongo is a payment gateway—the backend link that bring consumers and merchants to financing providers and simplify the process by connecting the merchants to a whole suite of payment options.

“Merchants need not negotiate with payment channels individually or separately. We do that for them. It’s less hassle for them and we, as a payment gateway, allow them to focus on more important aspects of the business. We expand their customer base,” Malolos said.

Value-added services

PayMongo gives the necessary support to micro, small and medium enterprises (MSMEs) by hooking them up to relevant website that can carry their products and services and create an ecosystem that is specifically helpful to those who are having difficulty setting up and transacting with payment channels.

The fintech firm connects sari-sari stores to community online selling platforms like Pedllr, GrowSari and SariSuki that help these micro-entrepreneurs track their inventory and performance,

PayMongo is also an e-money issuer (EMI) which helps small business create e-wallet, especially for the unbanked, like most sari-sari stores or nano retailers who are selling everyday items. The e-wallet can be used to receive and release funds and allows them access to loans.

“Currently a lot of the small businesses have GCash or Maya wallet. But it’s very singular in terms of purpose since the consumer base they are able to tap is limited to e-wallet. Having a payment gateway will help increase transactions by exposing them to more channels especially for MSMEs who sell on social media platforms. We also give them the opportunity to advertise on our Instagram account,” Malolos said.

PayMongo allows merchants to cast a bigger net to capture more consumers by linking them not only to GCash and Maya but also to other payment options like credit card, direct bank payment and to buy now, pay later (BNPL) providers, among others.

While the company is quite small compared to competitors like DragonPay, PesoPay, PayMaya and Paynamics, who are in the market long enough to dominate the industry, Malolos said the retail industry is growing by leaps and bounds and will soon demand more payment facilitators like PayMongo.

Raising capital

Of the four founding members, only one was left to carry on the business, heralding the rebirth of PayMongo as a fintech startup. Established in 2019, PayMongo, a Delaware company, has capital infusions from venture capitalists in the US and from local investors.

Backed by payment giant Stripe, PayMongo has the financial support of major investors after it registered with the Bangko Sentral ng Pilipinas.

“We aligned ourself with projections and predictions of the government. Our objective is to help the government realize its target to increase digital payment to 50 percent of total transactions. We can contribute to that. The industry is now at 42 percent. It won’t be that difficult to hit 50 percent by yearend,” the CEO said.

With an ecosystem of players that supports the industry—payment facilitators, savings and commercial banks, digital banks, BNPL—the industry is capable of driving the growth as projected by the BSP, and maybe even surpass the target.

One of the strengths of PayMongo is its anti-fraud system, said Malolos. About 99 percent of transactions powered by facility usually goes through, making it easier to consummate a sale.

As a fintech startup, PayMongo has had at least four capital raising activities, with the recent Series B funding raising as much as $31 million. Venture capitalists JAM Fund, Kaya Founders and ICCP-SBI Venture Partners joined the latest round of fund-raising. All the proceeds went to expanding the business, with plans to extend services on a regional scale.

To date, the fintech startup has raised nearly $46 million after it launched Series A that raised $12 million and several small funding events before that.

Man at the helm

As a fintech veteran, Malolos has worked with several multinational companies. He was responsible for setting up their digital financial systems and growing them to the fintech giants they are now.

A civil engineer turned fintech expert, Malolos contributed to the construction of Ayala Corp.’s Tower One, one of the tallest buildings in Makati, when the height limit in the city could not go beyond nine levels.

After getting his MBA, he shifted careers to be a financial strategist, working at first for Price Waterhouse Copper as a consultant for six years before moving on to IBM where he stayed for four years. He spent the next eight years building the SmartMoney system as a value-added service for PLDT. SmartMoney is the precursor of PayMaya which is now called Maya.

A stint in Mastercard brought him to New York and South America building digital payment systems similar to SmartMoney in countries like Argentina, Brazil, Colombia, Mexico and Peru. Next stop was in Kenya where he worked on telco data to educate farmers on the benefits of being banked. Before going back to the Philippines to head GoTyme Bank, Malolos worked in a digital bank in Cambodia where he learned the tenets of financial inclusion.

“This is where I realized what SmartMoney was striving to do in the Philippines. With over 8,000 small stores connected to the digital bank system, the network tripled in just 3 1/2 years. We made that bank a dominant player in the digital space. Then I got a call from the Gokongwei Group asking me to help create a digital bank in the Philippines. So I went back home to help them set-up,” he said.

A former CEO at GoTyme, Malolos remains a shareholder in the bank while leading PayMongo as the new CEO since February 2023.

“This could very well be my retirement post. I’m 60 this year, but I’m loving every single bit of what I am doing right now. I think the company is true to its objective to bring MSMEs into the Internet economy. We are eager to help more small business grow and succeed,” he said.

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