Imagine being able to pay cashless for taxi rides, the handyman that comes to your house, or at the market. The merchant swipes your card, you sign or enter a PIN, that’s it. In Southeast Asia, we’re far from such a scene though. Cash payments are the norm for these types of transactions.
Mobile point of sales (mPoS) solutions are trying to solve this problem by bringing card payments to the street. Customers obviously benefit from cashless payment – not having to worry about correct change is one thing. But mPos are even more valuable to the merchant. All transactions are logged and the system usually comes with additional software that helps individual entrepreneurs and businesses analyze and manage sales.
In the US, Square is surely the biggest, and most-talked about mPoS player. Square’s success seems to rest on the shoulders of small businesses, who see the system as a way to take their endeavour to more professional heights.
From Russia to Asia
Small businesses are a key driver of Southeast Asia’s economy. At the same time, mobile phone penetration in the region is already high and rapidly growing. This makes Southeast Asia an attractive market for mPoS startups. There are some established players, for example Malaysia’s SoftSpace, and Singapore’s GoSwiff. In Indonesia, a startup called Moka is testing the waters.
While local companies are breaking ground by forging partnerships with banks and merchants, slowly increasing their footprint, they’re now confronted with a new ambitious competitor in the region: Ibox.
The startup is originally from Russia. Since 2014, it’s pursuing the ambitious goal to become a big fish in Southeast Asia’s mobile payments pond. Its holding company sits in Hong Kong, it has an office and regional CEO in Vietnam. Ibox founder Pavel Sadovnikov says the company is now spreading to the Philippines, Thailand, Indonesia, and other countries in the region.
Ibox is well-funded too. According to the company, it raised a US$3.5 million seed round in 2012, and an additional US$1.3 million in 2015. That same year, Ibox fused with Pavel’s former payments company, which had also raised a considerable amount. Since the merger, the total funds raised amount to US$12.1 million. Among its investors are InVenture Partners, Almaz Capital, and ENS Group.
What exactly is Ibox’s product? The startup bundles its mPoS system into three packages, depending on the use case.
The first, called IboxRegister, targets small businesses such as shopkeepers. It allows them to turn their tablets or Android smartphones into a smart registrar to keep tabs on their income, goods, and expenses. The setup requires hardware components, such as the small Ibox card reader, and a receipt printer. Customers pay a monthly subscription fee and get access to corresponding apps.
IboxPro is the company’s enterprise solution. Pavel says it was originally designed for insurance companies, but can work for any type of enterprise that sends out sales agents. Equipped with a mobile phone and card reader, agents can accept cashless payment on the go. On the software side, the app offers customizable forms through which agents can document purchases and report them to their head office. This helps companies keep detailed and accurate sales data.
The latest, and newest addition is IboxStart. It’s a package that contains everything micro-merchants need to turn their smartphones into a mPoS: a clip-on card reader, and a card for the merchant. The key here is that IboxStart merchants don’t even need a bank account. The income they generate through the mPoS is immediately stored on the card, which they can use to cash out at an ATM.
“This is a unique product,” Pavel says. The starter package costs about US$40 and will be sold through retail partners such as at gas stations, or small shops and retail outlets. The product was recently rolled out in Vietnam, in collaboration with Vietnamese payments company TrustPay.
“Since mid-October more than 200 merchants have bought this product,” Pavel said when Tech in Asia interviewed him a week ago. Pavel believes the IboxStart solution is the one that will catch on in Southeast Asia, where merchants want a quick, easy way without having to go to a bank and fill out forms to register an account.
Should local players tremble?
It’s clear that Ibox is pushing hard to become a force in Southeast Asia, sensing that the market for mPoS products is still open, especially in Southeast Asia’s largest economy Indonesia. Of course, more established mPoS firms like SoftSpace and GoSwiff are also going regional, since markets like Malaysia or Singapore alone are too small. At home in the region, these companies might have an easier play at forging partnerships and winning clients.
Pavel doesn’t see that as much of a problem. “I’ve been coming to Southeast Asia regularly for the past 15 years,” he says. “Five to ten times a year.”
Curiously, it’s not purely business that draws Pavel to this part of the world. It’s a passion for martial arts, he somewhat reluctantly admits. This hobby has allowed him to build up a large network of influential contacts in Southeast Asia. Unfortunately, he wouldn’t divulge more than that.
What’s for sure is that all mPoS competitors will have to fight the uphill battle of building trust with banks, partners, and users for a system which is still unfamiliar in Southeast Asia. They will also have to stay nimble, as mobile payments continue to evolve. A few years on, card readers may become obsolete if entirely virtual payment systems take over.
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