‘We want telecom companies to continue investing in infrastructure’

Infrastructure has been a major challenge in the e-payment industry, Jay Alabraba, co-founder, Paga, in this interview with Hope Moses-Ashike, explains that Paga is built to work in inadequate infrastructure environment, as he x-rays other issues in the sector. Excerpt:

What has been the main challenge to the mobile payment industry in Nigeria?

There are multiples of mobile lines in the country. I don’t think it is necessarily useful to do a direct comparism between the number of mobile lines and the number of users of mobile payment, because there are some users that have multiple lines. The primary challenge we are having will be awareness. What we are doing to address this is that we have a focus on rural and semi urban. Today, about 18 percent of our agents are in places that are considered rural and semi urban, which is a very big focus for the Central Bank of Nigeria (CBN), in terms of financial inclusion. We want to reach those places and we look for products and services that will meet their needs. We will continue to push with our radio programmes, marketing programme and field staffs engaging the people daily.

How are you addressing infrastructural challenge, as it affects the payment industry?

Infrastructure challenge is a subject of concern to any type of business. Recently, we were at an event hosted by one of the large international organisations and infrastructure was the subject and how it affects small and large size businesses, from the stand point of power, cost of connecting telecoms and the reliability of such connection. We build Paga to work in inadequate infrastructure environment. We have taken into account the fluctuations we will have in power, or telecommunication networks or other types of infrastructure challenges. The technology is built to work in emerging markets where technology challenge exists, we use an appropriate technology.

For example, if we lose power in one of our data centres, there are multiple backups to ensure there will not be any loss of data about the transaction. We have designed this to work with the challenges that exist here and exceed expectations as things improve, and things are improving. We are working closely with the telcos and they are investing heavily in improving infrastructures so that SMSs are not delayed.

The banks are offering what you are offering, is that a challenge?

No. There are places where we clearly compete with banks and there are more places where we collaborate with banks to do what we are doing. Certain banks have licences to do mobile payments. There are places you can extend what we are doing beyond, where people do it today.

For example, you don’t find many banks pursuing collections of payment by small or medium businesses the way we do. Banks have branches and large banks can have maximum of a thousand branches. Paga alone has 6500 agents across 32 states in the country. This is a larger service network than all the banks in Nigeria combined together. There is also less than 30 percent of the Nigeria population that can claim to be banked.

Meanwhile, the banks are serving people that are banked. There are People who do business and they may not be necessarily in the rural areas. Because they are not banked, they are not finding the efficient ways to make payments. Somehow, there is a gap and that is the place we play as well. Half of our customers are banked, just that they find Paga to be a lot more efficient, create more options for them to access their services. The need for any business that wants to go online is very different from traditional businesses. Today, we see a gap in that market and we have several businesses that directly address it. In most cases, we are collaborating with banks to improve the services to their customers.

What do you think is needed to realise those things we believe mobile money will do for the economy?

I don’t think it is necessarily money that is the future of mobile banking; I think the future of banking is branchless rather than money. One is the fact that increasingly people are comfortable doing things electronically because they don’t need to go and queue in the bank, waiting hours to deposit or collect money. Branchless in the sense that people can use connected devices to access but even more interestingly is this trend towards true branchless banking but still physical, a situation where the retail shop in your community ends up being your bank.

A Paga agent is a place where you can go, send money, pay bills, buy airtime, deposit money into any bank in Nigeria and receive money from anybody in Nigeria. When you really think about it, it is mini bank, where you go buy breads, soft drinks, the person equipped as a paga agent can do any of those transactions for you. We are collaborating with banks and we are going to see a lot more around banking services being delivered through here and this will be from partners as well. Those who can use our phones to do transactions will do so, but there are going to be a lot more people who will rely on their low paga agent to achieve this goal.

It is here we emphasise that small and medium businesses are the life blood of the economy. It is trusted; they bring good products, give credit to their local communities. That small business is pushing the future of banking and is actually in the position to explain to the local community members what the product is. They are right there to explain the benefits taking insurance, loans, savings.

Are you planning on giving loans?

Today, we have hit on one leg of the financial service, which for us is savings and loans is the next one. We are working with our partners; we will be offering loan products on Paga as well.

Are there areas you want government intervention, or are there policies affecting your business?

We are licensed and regulated by the Central Bank of Nigeria, and the CBN has done a lot in advancing the future of financial services in Nigeria. Two key frameworks CBN has come out with are the mobile payment framework, which came out in 2009, that regulates the core business that we do. More recently, CBN has brought out the agency banking framework that guides how banks and other financial institutions can go branchless.

Those two things cover where we want to be as an industry. We also have the benefit of having a listening CBN that will take feedbacks from its stakeholders, its constituency and make modifications and engage with other parties that are needed. Through CBN intervention, we have much relationship with the NCC, telecoms companies, NDIC, NIBSS. So we have the kind of support that we need from the Central bank. The appeal to the industry is on infrastructure. We want the telecoms companies to continue investing in their infrastructure. The government should continue investing on connectivity across the company so that we can reach those deeper resources of the rural areas. Generally awareness is a challenge; we are working with the CBN to make people know this aspect of the cashless Nigeria initiative. Even our vision 2020 financial inclusion goals as a country, it has to be something that remains front and centre in all the interactions we have as an economy.

Can you elaborate more on the product you just launched?

As a company, we have individuals and businesses as customers. Several of the products we have released could apply to both parties, but we have made the move of further clarifying what we have as a package for businesses. The first one, think of collection of payment, think Paga think payment. Any situation where value is being sent from one party to another, be it a customer or a business, Paga has a role to play and can improve the flow of the value.

Every business needs payment, whether small or big payments. It may be cash or electronics. So, we have products under that collection umbrella that allows businesses of all kinds to collect payment. Like Jumia, online company is able to use cards on Paga mobile payment to collect payment from their customers. The customers may be online or offline and there is opportunity to collect through our agents and it still reaches the same online merchant.

There is also offline payment. You think of the small provision store that is near your house that is a person that wants to collect cash or cards. We have series of products available and more coming that will support that kind of a business. More importantly, like the electronic company, the Ikeja distribution company for example; you can go to any Paga agent or go online to pay that bill. You don’t necessarily have to go the electricity company. So, collection is another thing.

We also have corporate payment tools that are also called bulk payment tools. The company may use either bulk payment to pay all its staff, the payments may go directly to their phones. The same goes to day laborers that may be paid in bulk. So, if there is a 100 people that need to be paid N10,000 each, paga could send the money to all of them and what they need to do when they receive the alert is to cash it in their neighborhood or go to an ATM to cash out. Similar product exists for airtime. As a company that gives 50 of your employees N10,000 airtime, paga makes it easy for you to send to all of them. You don’t need to scratch the airtime, just go on Paga, set it up and send them the value. So, think of collections and payments.

We have several other things coming up the pipe that will help small businesses improve their operations and helping them stay in line with what the government expects them to do.