We want to use mobile money to help small businesses —Alabraba

By Babajide Komolafe

Pagatech is one of the first set of firms licensed to provide mobile payment services in the country. Recently, in addition to attaining the milestone of two million users on its platform, the company introduced a suite of mobile payment services for businesses.
In this interview, Co-founder, Head of Sales and Distribution for Pagatech, Mr. Jay Alabraba speaks on the challenges confronting the industry, Pagatech’s effort to overcome these challenges, and the future of the company. Excerpt.
Why is mobile money not growing rapidly considering the fact that we have over 100 million mobile telephone lines in the country?

First of all, there are multiples of mobile lines in the country. I don’t think it is necessary to do a direct comparison between number of mobile lines and the number of users of mobile payment, mainly because there are some users that have multiple lines.

But to answer the question directly, I will say the primary challenge that we have in growing the number of users participating in this aspect of the cashless Nigeria drive would be awareness. What you find, especially when you consider semi-urban and rural locations is that there is less penetration and you will find that the user base, as far as density is, is a bit lower.

On the Paga side, what we are doing to address that is that we do focus on rural and semi-urban areas. In fact, about 18 per cent of our agents are in areas that we consider rural and semi-urban which is a very big focus for the CBN when you talk about financial inclusion. We want to reach those places and we look for products and services that can meet their needs so that there is a gradual introduction into the system.

When you said the focus of Paga is rural areas, what is your definition of rural areas because many people outside Lagos don’t know about mobile money?

I think you will admit that Lagos, compared to other states has less geographical space that will be considered rural, even though there are some rural local government areas in Lagos. When I say rural focus, yes beyond Lagos, there are local governments where there are mobile networks.

While you will not see the big billboards of Paga in those areas, pay close attention to how they use these services. Typically, we would have one or two agents that are there doing transactions.

This is an important point because as you talk about Paga as a business, we don’t only focus on the person picking up their phone to do a transaction, there are multiple ways you can use Paga.

There is another set of customers that don’t even interact with Paga via their phone. They go to our agent who is their service point in their community and they can do any transaction that they want to do. If they want to transfer money to someone else, they basically take their cash to the agent and send the money and the person gets the money.

In that case, all they have done is to use the phone to receive the alert, but the transaction has been done by the agent. The most important thing is that as long as there is an agent point in that place, we can serve the customers. Agent network is a very big part of what we are working on.

Banks are also offering mobile payment services similar to those offered by Paga. Do you perceive this as a challenge to the growth of your business?

The simple answer is no! There are places where we obviously and clearly would compete with banks and there are more places where we collaborate with the banks to do what we do.

Remember also that certain banks have licences to do mobile payment. When you talk about payment broadly, the question is, is there room to compete and is there room to collaborate? There are places you can extend what we are doing beyond where people do it today.

Take for example, you don’t find many banks pursuing collection of payments by small businesses the way that we do. Banks have branch network. The largest bank in Nigeria may probable have over 1,000 branches.

But Paga alone has 6,500 agents across 32 states in the country. This is a larger service network than all the banks in Nigeria combined today and we continue to grow.

Somehow, there is a gap in what the banks can do presently. But quite frankly, even within our two million users, many of them, I may even argue that half of them, are bank customers, but they find Paga to be a lot more efficient and to be creating a lot more options for them to access their services.

What is the Paga Business suite that was launched recently all about?

As a company, just as we have individuals as customers, we also have businesses as customers. Several of the products we have released would apply to both parties.

We have made the move to further clarify what we have as a package for businesses. Specifically, there are three or four products I can talk about that are within this package.

The first one has to do with collections of payments. Paga as a business, when you think about it, is about payments. Any situation where value is being sent from one party to another, be it a partner, be it a business, Paga has a role to play and can improve the flow of the value.

So, when you think of payments, every business needs payments. So, for collections, we have a suite of products under that collections umbrella. The customers may be offline or maybe online, and there is opportunity to collect through our agents.

We have series of products that are coming that would support that kind of payments. We also have a suit of corporate payment tools. You can also call them bulk payment tools. For example, a company may use Paga bulk payments to pay its entire staff members. The payment could go directly to their phones.

Similar products exist for airtime. You are a company or a small business and you have 50 employees and every month you give them N10, 000 airtime, you don’t need to scratch cards, you can just set it up on Paga.

But we have several other things on the line that would be of interest to small businesses as well, basically improving their operations and helping them stay in line with what they expect them to do.

What is the total volume of your transactions since you commenced operations and what is the expectation from your firm in the next five years?
An interesting statistics to use is that we have approximately two million users on the platform today and every minute, there is at least 15 transactions happening on Paga. From a stand point of volume, that gives you an indication of where we are.

Every month we see the value of transactions people do on Paga increase. We even see people leaving more money on Paga because they want to do more transactions on the platform.

In terms of where we see Paga in the next five years, a key aspect of where we want to be as a company is that we want to support economic development in general and the firm believe we have as a company is that small and medium size companies are what would drive economic development in Nigeria.

The GDP rebasing has already allowed for us as a country to access the benefits that many small businesses are bringing in. Paga as a company also sees the value we can provide in helping these small businesses grow so that they can continue to contribute to the GDP.

In five years, I think the expectation is that Paga would be playing a bigger role in enabling businesses, helping new entrepreneurs to bring products and services to the market and also allowing the flow of information and value between parties to be more efficient.

- Culled from: http://www.vanguardngr.com