Fintech and financial inclusion: Q&A with Nel Laygo, CEO and founder of Peddlr

Peddlr is an inventory and financial management startup based in the Philippines that focuses on digitization and financial inclusion for micro, small and medium enterprises (MSMEs).

Headquartered in Catbalogan, Samar, the startup helps MSME entrepreneurs manage sales, track inventory and increase cash flow visibility with automatically generated financial reports through its point-of-sale (POS) mobile app.

CrASIA chatted with Nel Laygo, CEO and founder of Peddlr, about how the startup is helping the digital transformation of MSMEs in the Philippines.

This interview has been consolidated and edited for brevity and clarity.

KrASIA (Kr): How did the idea to set up Peddlr come about?

Nel Laygo (NL): Before Peddlr, in 2016, I founded a startup called HiBes, which is an on-demand personal assistant that helps users order food and groceries, make bill payments, and other types of hyperlocal services. For four years, I worked closely with MSME owners from various tier-3 cities in the Philippines. Through that experience, I saw the daily pain points of MSMEs in handling manual processes, especially inventory management.

Leveraging my previous work experience at Unilever and P&G, where I had built financial tools, in July 2021 I created a POS application to help MSMEs, especially Sari Sari neighborhood convenience stores in the Philippines, manage their operations more efficiently.

When we started, we offered digital bookkeeping and inventory management for free to any merchant. Earlier this year, we launched our monetization model based on our digital products such as prepaid mobile airtime embedded in the POS application, which allows customers in Sari Sari stores to purchase prepaid credits that they can sell to their customers.

NOK: As of August 2022, the start-up company’s total funding reached around USD 4.9 million. How did you manage to achieve this, especially for a homegrown startup headquartered outside Metro Manila?

NL: Initially, we got the attention of angel investors based on how we address the pain points of MSMEs as well as the localized solutions we have developed, which meet the requirements of local sellers.

The other factor is the scale we achieved in a short time. We launched in July 2021 and by November our app had 300,000 downloads. Right now we have about 2 million downloads. This shows the grip we have gained in such a short time.

Kr: What plans do you have for the coming year?

EN: In the next two months, we will be launching a bill payment feature in our app. This will allow Sari Sari stores to receive payment for utility bills and essential services from their customers instead of having to go to utility company branches in malls to make such payments. We also recently launched a pilot feature for “e-Supplies”, which is a B2B e-commerce feature that allows Sari Sari stores to purchase FMCG and consumer packaged goods automatically using the Peddlr POS app.

Kr: Why aren’t more consumers in the Philippines paying their utility bills directly through fintech mobile apps?

NL: There are some reasons. First, the majority of the population in the Philippines is unbanked, meaning they cannot make payments online since they do not have credit cards or e-wallets. Also, many people do not have easy access to stable internet connections or mobile data. Another reason is that not many consumers have the technological competence and knowledge to use mobile apps.

Another significant challenge is that many consumers, especially those in the lower middle income segment, would rather pay their bills at brick-and-mortar Sari Sari Store retailers because they trust them more.

NOK: How do you plan to overcome this challenge with one lack of awareness and trust in digital services in the Philippines?

NL: In the Philippines, in terms of financial inclusion and fintech adoption, it is only in the early stages. As internet access and penetration grows in the country, we are seeing a higher use of e-wallets in the population as well as micro-enterprises. But the majority of the population is still experiencing “birth pains” in making the transition to the digital ecosystem.

Since our launch, we have partnered with the Department of Trade and Industry of the Philippines to improve the financial literacy of Sari Sari stores in the country.

We have also introduced tools like POS management to more Sari Sari sellers to help them participate more actively in the digital economic ecosystem in the Philippines.

Kr: In addition to offering digital inventory and bookkeeping services, are there plans to help MSMEs with financing?

NL: Next year we will look at converting Sari Sari stores into bank agents so that they can start accepting ‘Cash In’ and ‘Cash Out’ transactions from our partner banks.

We will also provide funding to small and micro retailers who use our app. There are two types of funding we want to provide to MSMEs. The first is inventory financing, which allows Sari Sari stores to expand their portfolio of products. The second is CAPEX funding for merchants to purchase new equipment or renovate their Sari Sari stores.

Kr: Going forward it will the fintech sector in the Philippines it appears to be more strictly regulated. Do you think regulators can regulate fintech startups without stifling innovation?

NL: There is a certain difference in the regulation of a traditional bank versus a fintech like us. Generally, any company involved in digital banking or participating in financial transactions will be regulated by the Central Bank of the Philippines.

For us, we do not yet accept deposits or engage in online payments. What we do is give Sari Sari stores the tools to automate their manual processes, so there is no need for us to be regulated by the central bank.

That said, we have applied for an Operators of Payment Systems license which is granted to fintech startups to accept payments or deposits through a mobile application, so that MSMEs can accept e-wallets or credit cards through Peddlr.

In my opinion, the Central Bank of the Philippines has been open to our concerns and has not stifled fintech innovation in any way.

Kr: A recent one examination conducted by Visa and YouGov found that 21% of APAC consumers had used DeFi (decentralized finance) services before, a share expected to grow by 17% this year. Do you think DeFi will interrupt fintech startups including your business model?

NL: I don’t think DeFi will pose any risk to Peddlr anytime soon. But if and when it comes, like all startups, we will embrace the change and innovation needed.

In the Philippines, the use of cryptocurrency is still limited to the upper middle income segment. For the segment that Peddlr is targeting, especially micro and small business owners, blockchain can be a bit complex for many of our users. They must have higher levels of financial literacy to use such digital technology.

There are also other variables to consider. For example, even if Sari Sari stores could accept crypto transactions through Peddlr, these merchants would have difficulty collecting crypto wallets in the Philippines. Although crypto is not banned in the country, there can be significant problems with withdrawing crypto wallets through banks.