Global Ventures leads investment in Egypt-based fintech Paymob
“A vision towards pioneering the stride to a cashless society”
By providing access to digital financial services via innovative mobile wallet technology, Paymob is bridging the financial inclusion gap in the MEA region, enabling sustainable development and growth for businesses, SMEs, individuals, and economies alike. Here’s why we are excited to partner with Paymob’s co-founders, Islam Shawky, Alain El Hajj, and Mostafa Menessy.
Despite Egypt’s 108% mobile penetration and 35% internet penetration, cash is still king. 42% of Egyptian consumers shop online, yet 91% of these shoppers use cash on delivery as a payment option. Cash continues to dominate transactions in the country, where only 35% of the 100+ million people population have a bank account, and POS penetration is barely 0.7 per capita. In fact, the overall MEA region remains a predominantly cash-based society, capping individuals, businesses, and governments from realizing optimal growth. There is clearly a massive need for sustainable financial inclusion through digital transaction methods. Understanding the transformative value of unlocking the potential of the payments sector in emerging markets, Global Ventures zoomed in on Paymob and its exceptional founding team that is targeting a highly underserved market.
Islam Shawky, Alain El-Hajj, and team founded Paymob in 2013 with the ambitious vision of creating digital and cashless economies. Only the young and reckless would voluntarily deploy their promising talent and education to a seemingly hopeless uphill endeavor in post-Arab Spring Egypt. The traditional banking sector was not going to return the calls of some relentless techies seeking to expand financial services to the masses. A fresh refusal of reality enabled them to identify the root causes of resistance to e-payment: accessibility, awareness, and cost. Digital payment services are not widely adopted as costs outweigh any perceived benefits. Cash, however, with all its flaws, was considered dependable, familiar, and trustworthy. Paymob challenged that.
The Company is an electronic payment enabler, offering integrated infrastructure solutions across a wide range of payment methods and channels. When we initially met the co-founders last year, it was evident that they understood first-hand the significant challenge that exists for users in trusting modern payment methods in the region. As such, Paymob developed a suite of financial technology solutions and offerings that empower financial institutions, mobile operators, merchants, and end-users, through the following channels:
- A digital wallet platform, enabling financial institutions to issue mobile wallets in addition to offering digital VAS modules
- Accept payment gateway, a payment aggregator providing online and offline businesses with payment acceptance services
- A cashless platform, aimed at digitizing payments to provide a superior customer experience across venues
When the Company initially started, the digital wallet market was in its nascent stages and the Egyptian population was slow to adopt these wallets. Paymob fast-tracked consumers into the digital payment era by providing the necessary infrastructure for institutions to issue mobile wallets, including its partnership with Mastercard to launch Vodafone Cash, the mobile network operator’s wallet solution. Vodafone is now the leading mobile wallet operator, and Paymob dominates the market with 87% of total volume processing on digital wallets.
In 2019, the Company took a key step in solidifying its position as one of the market-leading payment facilitators in Egypt by becoming one of the first startups to receive a facilitator license from the Central Bank of Egypt. The platform collaborates with Mastercard in facilitating the digital wallet infrastructure offering it to banks and mobile network operators in the MENA region. Subsequently, Paymob implements and manages the core wallets payments processing engine and empowers digital financial services across MEA through mobile wallet technology.
Additionally, as consumers become increasingly more tech-savvy and digitally-enabled, Paymob founders developed new payment service solutions for online and offline companies. They introduced “Accept”, an omnichannel, localized payment gateway, that empowers businesses to seamlessly accept payments from clients through multiple channels – in-store, cash on delivery, online cards, installments, loyalty points, or digital wallets.
Merchants struggle to fully leverage electronic payment solutions primarily due to users lack of awareness of global commerce mechanisms, dearth of data security, and concerns over the disclosure of personal information and financial transactions, amongst others. Yet, Paymob now has over 1,000 merchants and 8M+ registered users on its platform, with over 20M transactions processed. It has acquired established clients which include the likes of New Generation, Elite Schools, Swvl, Galleria 40, Sodic sports club, and Riseup. Additionally, the user base has increased from 13,000 users to over 20,000 users in 2019 alone, representing user growth of over 50%.
Given the projected growth in Egypt’s e-commerce sector (i.e. $2.9 billion market size by 2022) coupled with an increase in the number of cardholders in the country (i.e. 40% more credit cards and 36% more debit cards since 2010), we believe that Paymob represents an exciting investment opportunity. Paymob is actively paving the way for end-consumers and merchants to access finance and digital payments that inevitably support a cashless society.
Why Global Ventures? The company’s outlook is promising, but not without challenges. Competition is fierce, despite the company’s early mover advantage and unique positioning. Egypt is ripe for additional growth and so are other MEA countries actively seeking Paymob’s products in their markets. Funding capacity to grow its market share and further develop its products are collectively as important as having a partner with a strategic presence in local as well as adjacent markets. Global Ventures carefully constructed FinTech portfolio spans the MEA region with complementary synergies. Paymob can plug-in as the prized payment player to our portfolio and extend its reach to new segments. Regional know-how has enabled Global Ventures to lead the round, and bring in institutional investors who share our vision for the impact of FinTech in MEA.
Paymob continues to develop a suite of innovative FinTech solutions to increase the ease of digitized payments. We are incredibly thrilled to be a part of the founders’ journey as they pioneer advancements in digital payment solutions across the region.