Exciting articles several times a month
22 September 2017
Fintech sector is rather diverse and multifaced featuring a great variety of financial products offered to suit any individual or business seeking to better manage their finances and transactions. Today we have a great story from an African fintech company solving the problem of cash dependence and financial inclusiveness for the underbanked and unbanked customers. This story was kindly provided by Henry Obinugwu, a founder of VoucherPay.
Could you make a brief introduction of what VoucherPay is all about? How did you start? Why vouchers and not a payment system, for instance?
VoucherPay is a cash alternative for the banked and unbanked that converts money from your bank account or cash received using the cash-in service into digital tokens holding the corresponding amount that can be sent instantly for spending in whole or in part at participating merchant locations. This is used for exchange of value between P2P, C2B and B2C through smart or feature phones.
It solves the problems of Cash dependence, Financial Exclusion, Multi-dependent and Insufficient Payment Infrastructure coverage & Instant exchange of digital value between the Banked & Unbanked.
There are no other means of accessing and spending money in real time except by going to the bank, the ATM or using a POS. This excludes the unbanked from accessing a wide range of financial services.
Current payment infrastructure in the African continent is unreliable in less commercial areas due to constant network/service downtime or reach in local communities.
You have several application options, such as corporate gifts, staff bonuses, lunch vouchers etc. Could you provide expanded explanation of the products you offer in fact?
Generate Vouchers: Users convert funds from their Bank accounts to “Value” held by corresponding alphanumeric tokens eg: X1B8-7AH9. This feature generates tokens for self-spending at participating merchant locations in full or in part, either by inputting it, QR Code or USSD service.
Send Vouchers to Recipients: This is a way to send value/cash to anyone anywhere in the world and the recipient can spend it immediately upon receipt at participating merchant locations.
Merchant Settlement: Cheaper than working with POS machines/Card transactions. Our platform is easily configurable to allow for swift responses to price change requests either individually or collectively.
As a merchant, there are equally different options for getting settled into their bank accounts per transaction upon checkout. You can be settled Instantly or at Close of Business Day.
Merchants can request thresholds for getting settled into their bank accounts, their total voucher balance can be re-spent upon the purchase of goods, cashed out at cashout locations, or settled into the merchant’s Bank account. 100% Transaction Success is guaranteed.
How does your voucher system work? How money is redeemed?
Money is obtained from the sender’s card through a payment processor, directly from a bank account or by cash-in feature. The app runs and generates a dynamic, heterogeneous secure code stored in the sender’s VoucherPay app or using their Mobile Number as a unique ID until that sender spends it or sends it to a recipient. The cash value code can be merged into larger values.
E.g: If you received a N5,000 Naira Token but need to buy something worth N10,000. You can generate an extra N7,500 and merge those two to produce a different token holding N12,500. Once you spend N10,000, it returns N2,487.50 value with a new token for you.
Vouchers can either be spent or redeemed for cash value at participating merchant locations using the customer app, merchant app or USSD functionality. Network downtime or bank processing delays do not affect this because the value consumed is moving from the spender to the recipients’ position on the same platform. The digital tokens can also be used to fund digital banks, used for cash-in & cash-out services.
Could you elaborate on your pricing model? What is your fee structure and what does it mean?
Each time a voucher is generated, we charge a percentage commission per transaction depending on the class of customers (individual or corporate) capped at a certain amount. Equally when a Voucher is spent, the platform re-calculates the remaining value returning a new code. 0.5% of remaining amount is retained for platform support and is capped at N50. Merchants are equally charged a capped percentage on the aggregate sum of tokens received, which is cheaper than POS transactions and is capped at a certain amount.
What is your target audience and how do you reach them?
All individuals who are registered Mobile Subscribers, both banked and unbanked – TAM: 142.65m. There is strong emphasis on the unbanked, especially those who live outside Lagos, Abuja and Port Harcourt – basically people who live in less commercially developed regions, reason being that they are heavily dependent on cash and with proper sensitization in local dialects, so they will adopt this digital form of value exchange.
Corporate organizations, Merchants in Restaurants, Clubs, Bars and Supermarkets/Retail. VoucherPay has the capacity to evolve depending on use, hence, more target audiences will be ‘unlocked’ as we scale.
Strategy (Nigeria) To Reach Target Audience: SMS delivery to recipients who don’t have the App & Push Notifications by those who do. Word of Mouth, Local radio, Trade Unions, Loyalty Campaigns. Individual contract marketers to facilitate app downloads, merchant signups and registrations, and they will be compensated per account opened. Massive campaigns.
Channels: SMS, Email, Direct Marketing, Digital Marketing, Media Ads, Corporate visits.
What do your potential clients need to work with you? Do they need any special hardware or software?
All they need is a Smartphone for starters. Users with feature phones will receive Vouchers/Alerts via SMS after a USSD application runs. We plan to launch a POS for High-Value Merchants, but for now Merchants can use the VoucherPay Merchant via their smartphones to perform transactions.
How do you ensure security and fraud protection?
Upon spending/checkout each voucher is authenticated with the recipient’s 4-Digit PIN Code before it moves from that position to the Merchant’s or Receiver’s. We also use real-time state-of-the-art security measures on the platform to ensure transactional data, and user information remains secure.
What do you think about blockchain technology? Could you potentially use it for your business?
We see the tokenization process in our business evolving to allow a feature where cryptocurrency can be purchased by users on the platform to hold for future appreciation, to spend or trade. This is a rapid way of sending value across borders and enabling payments across the globe. Of course, this will be within permitted regulations.
What is your long-term vision of your company? Where do you see your business in next several years?
A system whereby digital value can be exchanged for goods, services or cash and vice versa at merchant and agent locations. Beyond payments and banking, lifestyle will be incorporated into how people transact. E.g: making it possible for users to see bill updates as they add to their orders, close their orders and pay while still enjoying their time with friends and family.
Short-term goals are to keep evolving, including features based on feedback from customers and rapid onboarding of users/merchants unto the platform and engagement for active usage and growth. Our long-term goal is getting the user to imbibe the culture of caring less about cash entirely and deciding to spend digital value instead.
Our vision is one where in the African continent, tokenized digital value consumption revolves around our payment solution and the planned features, which we will continue to build into our robust ecosystem.
Exciting articles several times a month