“For a behaviour change you must incentivize it without using monetary measures”

AURORA: How does Paymob work?
FAWAD ABDUL KADER: Any payments space in the world has two sides: a supply side – where funds come from (banks for e.g.) and a demand side – where a payment is accepted (merchants, businesses). Paymob works to digitally enable the demand side by collecting payments from the supply side. We are a payment infrastructure provider offering a diverse suite of financial products and services, such as e-commerce payment gateways, POS machines, soft POS and other payment links.

A: What does Paymob's target audience look like?
FK: We cater to all types of businesses, from brick-and-mortar stores to online businesses, but with a special focus on SMEs. In Pakistan, there are four million plus underserved SMEs, which make a 40% contribution to the country’s GDP and 78% contribution to the country’s industrial employment. The economic activity in the SME sector is enormous, therefore, capturing it through custom payment solutions makes perfect business sense.

A: How did the idea for Paymob come about?
FK: Paymob was launched in Egypt, in 2015, by founders Islam Shawky, Alain El Hajj and Mostafa Menessy, with the intent of being an e-commerce website. At the time, banks were the sole providers of digital payments, which entailed difficult technical integration between the demand and supply side; an expensive set up was the only way for a business to use a payment gateway service. Paymob realized the need for entering this untapped market in both Egypt and Pakistan and started to support merchants in attaining simple, digital payment integration services, and in turn helping grow their business due to digitisation.

A: When and why did you establish in Pakistan?
FK: We set up in Pakistan in the second quarter of 2022. As per a report by the State Bank of Pakistan, there are only 34,000 active POS machines in the country. In Pakistan, only top-tier merchants have POS machines. If a business does not have a viable footfall, banks believe the ROI on their POS sponsored machines will be low. This is where we come in as we play in volumes and go deep in the market. We have tools, such as soft POS, which only need a smartphone to operate. A retailer needs to download an app, on an NFC-enabled phone (which most phones over Rs 15,000 have) and register on it to accept payments via ‘Tap-on-Phone’. We are enabling normal mom n’ pop shops to start accepting cards.

A: What were the initial challenges that came with pushing Paymob to customers?
FK: One) establishing trust and acceptability by a new entity in a market dominated by large regulated financial institutions and two) the fear of using a digital service that will lead to them being documented – the preference of cash-based transactions basically. When you need a change in behaviour, you must incentivize it without using monetisation (discounts for e.g.). So, we need to educate merchants on the cost of managing cash instead. They believe in the concept that cash is free while digital payments have a direct cost, when in reality cash has a higher indirect cost (managing funds, insurance, returned deliveries etc.) than the cost of digital payments. So far, our awareness creation in Egypt has been successful and we want to do the same here. To encourage more people to give up cash, we need policy intervention and awareness. The ability to convince a merchant of the fact that their clientele will multiply if they invest in digital payments (the propensity of a person increases if he has plastic in his pocket).

A: How do you differentiate from other players in the market?
FK: Paymob’s mature and tested technology stack, and we do not think the market is at the point of maturity where anyone should be worried about competition. If anything, our biggest competitor is cash. We feel with an aggressive and collaborative approach, we are here to lead the market to a new era of digital payments.

A: What are Paymob's plans for converting Pakistani consumers?
FK: Paymob is planning on expanding heavily in Pakistan via onboarding 100,000 merchants by 2024 with digital payment acceptance and payment tools (Online, POS and SoftPOS) while creating thousands of direct and indirect jobs.

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