PayJoy is a global provider of smartphone locking and smartphone scoring technologies that are used to reduce the risk of non-payment and enable smartphone financing and lending in emerging markets. In this exclusive interview with Jumoke Lawanson, Gib Lopez, the co-founder and chief operating officer of Payjoy talks about the need to use technology to increase access to finance, its partnership with leading original equipment manufacturers, technology regulation, expansion plans and other issues. Excerpts.
What is Payjoy and what are your plans for the Nigerian telecommunications sector?
Payjoy was founded in 2015 with the mission of delivering access to smartphone financing technology to people in emerging markets worldwide. We are the leading enabler of pay-as-you-go smartphone financing. Payjoy enables consumers with no bank accounts or formal credit history to purchase smartphones in instalment payments. It does so by turning the smartphone into collateral through software technology that locks the phone when payments have not been made. We are active in over twelve countries including all four major regions; America, Asia, Africa, South East Asia.
What informed PayJoy’s decision to bring the smartphone locking technology solution to Nigeria in order to aid device financing?
When we look at the globe, we think that most countries outside of the largest developed countries have a credit system that doesn’t function very well. There is very low credit penetration because there’s not much information on people. A lot of information that is out there isn’t very useful and may not be accessible. We think that with our technology, we can help reduce that barrier and help people get access to finance. Nigeria is a big, exciting country. It is a developing economy with a lot of potential and so when we looked at the African market, Nigeria was on the top of our list of countries to go into. We started in a couple of other African countries like Kenya, Zambia, Senegal and Cote D’Ivoire first and then expanded into Nigeria.
How important do you think smartphone phone financing/loan facilities are today, especially with the availability of very low budget smartphones?
I think there are two major things. One is the importance of access to finance to buy technology and the other is the cost and capability of smartphones. People value the power and capability of high technology devices which usually cost more. Things like sound quality, camera quality, battery capacity, ability to run all apps etc. are what people value. The reason why some people buy the cheaper mobile phones that cost about $60 or less is not because that’s what they desire, but because that’s what they can afford to buy at the time. What we do is that we can turn that $60 upfront purchase into a down payment, smooth out the rest of the payments and let them pay over time for the device they really want and need. When we see statistics on the changing nature of these prices, I think it’s born out of a constraint and not desire. People want the higher devices that are critically important for their lives and we enable that for them through our partners. On the importance of the loan, we typically find that in countries like Mexico, Kenya and Indonesia, people have a small amount of money every month but can’t come up with a huge sum of money in one month. If someone can come in and offer credit, they can afford to pay in bits to get something that’s really important to them. But because credit lenders don’t have the confidence that they’ll get repaid, because people can’t promise collateral and there isn’t a credit score, they don’t lend, so that market doesn’t move. When we come in, we enable them to virtually collect these devices as collateral so that the lenders can feel more comfortable lending. With this technology, they can actually lend meaningful amounts and totally transform the market.
How secure and reliable is your technology and how do you ensure that borrowers pay as at when due and stay within the terms and conditions of the contract for securing a loan?
Making sure that our technology is strong and secure enough to motivate repayment is our core business. When we started, people said this wouldn’t work in San Francisco, Los Angeles and Mexico because very smart tech gurus will look for ways to break into the system, but over the years, our lock has been very resilient. We have tested it at very large scale with hundreds of thousands of devices all over the world in countries like Indonesia, Nigeria and India and our lock has held up. We have an amazing technical team coming from Google, Facebook, leading original equipment manufacturers (OEMs) and chipset manufacturers. For us, that security is our number one priority. We have also spent a lot of time monitoring ways that people can break down the phone and sell off the parts. When we see things like that we can either fix them or reduce the ability for people to make profit off stealing the phones. We have partnerships with companies like Qualcom – the world’s leading chipset manufacturer and we have license agreement partnerships with major OEMs, so people can see that the smartphone locking technology is working and that builds our credibility.
Considering that there is already lending for smartphone available in the country, how do you intend to make sure that Payjoy is successful in this market?
Lending for smartphone purchase tends to only be available to the top 5-10% of the population. People that already have plenty of money, documented income, credit history are the ones that the system already works for. Payjoy is aiming to solve it for the other 90-95% of the population that do not have any formal income or credit. We can make this a profitable business for the banks, fintech companies, microfinance institutions to reach the low income segment of the population because we reduce the risk with our locking technology which will cut the default rate. I know in Nigeria, financial inclusion is a major topic, and we see ourselves as being a necessary ingredient for people to really reach to the 80% percent of the population otherwise it’s incredibly difficult to lend money when you know nothing about people without collateral or address verification.
With technologies like this, people are usually concerned about the security of information on their smartphone devices. How secure is data on the device with Payjoy?
This is something we take very seriously. We play in an ecosystem with Google, Android, leading OEMs and we have very close relationships with them and we rely on their security, so they enforce certain things. We just touch a different part of the phone and we do not touch information on the phone. When we lock your phone, we don’t have the capability to access personal information. The partners we work with are the only ones that can see your information.
How have you been able to deal with the strict regulation of technology in Nigeria to ensure that you wouldn’t have a hurdle in future?
Every country is unique and has its own challenges. One of the reasons why we are very happy to be a technology provider in Nigeria is because it allows us to be more scalable, and so, we purposely go for fairly minimal level of integration and that’s why we don’t touch personal identifiable information. We adhere to all local regulatory and tax compliance which is necessary. But we are not licensing ourselves as a lender, we are not providing capital and that makes it much easier for us to expand across the globe.
Seeing that technology is indeed very dynamic, are there any plans for Payjoy to expand into other services apart from smartphone locking technology?
Our goal is to unlock access to finance for people around the world by reducing risk. The first technology we developed was a smartphone locking technology which is the collateral and collection piece. The next technology we are developing is a smartphone scoring technology which will be made available to any company that would want to use for data. Initially, we had thought of looking to develop locking technology for other devices such as TVs, laptops, PCs, etc. but what we realised is that if we expand from smartphones, the best next step was cash loans to buy anything else, which is more useful than locking other devices.
Payjoy raised $40million from top venture capital firms, how do you plan to keep raising capital and what do you intend to use the funds for?
Our most recent raise was $20million series B equity raise from Greylock Partners with participation from Union Square Ventures, EchoVC and Core Innovation Capital. The two things we are doing with this money is that we are continuing to invest in our technology to remain the global leader in smartphone locking technology and the second thing is hiring more people as we expand to help build our relationship with local partners.
Is there a limit to the amount borrowed and are there specific devices for Payjoy services?
We focus on Android devices which are the most common and the most in-demand smartphones worldwide. We are compatible with many of the leading OEMs but in general, our technology can work across any Android device. We are not the finance provider, what we do is that we lower the risk, so we look at the providers that are already in the market and when they start to see repayments improve as a result of the locking technology, they either lower their interest rates or increase their accessibility and bring in more customers.
