Fintech PayMongo Weans Philippines buys cash by simplifying digital payments

Armed with new financing, payment fintech PayMongo enables small businesses in the Philippines to join the digital economy.

ONE The three-year-old Philippine fintech company is helping to digitize the country’s predominantly cash-based economy, one click at a time. Founded in 2019, Manila-based PayMongo has seen its user base and transaction volumes rise as they take advantage of the country’s huge pool of small merchants – from mom-and-pop stores to independent fashion stores – who relied on personal cash trading before the pandemic.

Supported by investors including PayPal co-founder Peter Thiel and payment giant Stripe, PayMongo enables merchants to send payment links to customers, who can pay with a variety of options, including credit cards and e-wallets. It is a “Stripe for the Philippines”, says CEO and co-founder Francis Plaza. PayMongo is an honorary winner of the first Forbes Asia 100 to Watch last year, and targets small and medium-sized companies, which together with micro-enterprises account for 99.5% of businesses in the Philippines, but which are still underserved by traditional payment providers. “Our biggest competitor is traditional payments, such as cash,” Plaza said in a video interview in March from Madrid, where he celebrated his 28th birthday.

In February, PayMongo raised $ 31 million in a Series B round, bringing the total funding to around $ 46 million. Founded in March 2019, it joined the Y Combinators summer cohort later that year, becoming the first Philippine fintech selected by the US-based start-up accelerator. After graduating, it received $ 2.7 million in start-up funding from San Francisco-based Global Founders Capital, co-founder of Tinder Justin Mateen and Stripe. PayMongo then raised $ 12 million in a Series A round led by Stripe in 2020, after which the company said it tripled its trading base to over 10,000 businesses and quadrupled monthly transaction volumes. Plaza refused to disclose these figures.

“Our biggest competitor is traditional payments, such as cash.”

Plaza, which is looking at expansion outside the Philippine archipelago, credits each round of funding by “changing the story of the company” by helping it roll out products for e-commerce platforms, such as Shopify and WooCommerce, and mobile apps.

“From the beginning, the biggest misconception we had was to actively educate external investors about the reality of the Philippine market,” says Plaza, an honorary recipient of Forbes 30 Under 30 Asia from 2020. “Not so long ago, they saw the Philippines as a small market. “he recalls,” they are now the ones who say we should double down on the Philippines. “The country was Southeast Asia’s fastest growing digital market in 2021, according to a report by Google, Temasek and Bain & Co. It estimates that The Philippine Internet economy will more than double to $ 40 billion by 2025 from $ 17 billion by 2021.

Some of this growth is likely to come from increased financial inclusion in a country where about half of the population is still without a bank. The government estimates that while only half of Filipino adults had a bank account in 2021, the group almost doubled in size from 27% by 2020. The country’s latest national strategy for financial inclusion aims to introduce digital payments for all communities by 2023. “We need more which uses digital tools to further expand the economy, says Plaza.

He sees the prospect of more people joining the digital economy as a win-win for Philippine fintechs, which form a “complementary ecosystem”. To achieve the goal of becoming an industry leader, PayMongo is partnering with other fintechs, including established GCash and Maya e-wallets to make online payments more convenient. Prioritizing partnerships over competition makes sense for PayMongo, says Sachin Mittal, head of telecom, media and technology research at DBS Bank in Singapore. “It is important that you work with a market leader who will market your solution,” says Mittal, referring to GCash, the Philippines’ largest e-wallet with 51 million users as of October 2021.

“We had thousands of companies asking for the solution overnight.”

A digital payment platform is not what Plaza and other co-founders of PayMongo – including technology manager Jamie Hing III, operations manager Edwin Lacierda and former growth manager Luis Sia – originally had in mind. Plaza, a computer science graduate from MIT, met Sia in college through their involvement in computer science clubs. Plaza then worked with Hing to develop software at the local logistics company QuadX. He and Lacierda – former spokesman for the late Philippine President Benigno Aquino III – joined forces in 2016 to build an analysis platform for voting behavior.

Plaza says that PayMongo was originally a “side project” for a short-term software consulting company he founded in 2018 called 22 Delta Labs. He realized that integrating payments was one of the most difficult tasks for micro, small and medium-sized businesses as they had to rely on outsourced software. “We had thousands of companies asking for the solution overnight,” says Plaza. “We realized, why do we not just focus on payments?”

PayMongo now plans not only to expand beyond the Philippines to other Southeast Asian countries, but also to expand its area of ​​responsibility by becoming a platform for scaling small businesses in the region. At the end of the year, the company plans to increase its workforce to 300 from 200 at the same time as it expands the service package it offers salespeople. In August last year, PayMongo launched an accelerator program to help small entrepreneurs with a two-month exemption from transaction fees across all PayMongo’s payment channels and free webinars on business, finance and technology. The company believes that future initiatives can build on such programs.

After benefiting from Y Combinator’s accelerator program and the knowledge from investors and partners, Plaza says that PayMongo wants to do the same for other small businesses that want to grow. In addition to providing “financial infrastructure for all,” he says the true goal of PayMongo’s success will lie in its ability to enable its employees to start their own companies. “When people who have actually helped us build this, look back and say that their time in PayMongo has been instrumental in helping them succeed in their new venture, it is actually this flywheel with more startup herring power, which will eventually increase [Philippine] economy, he says.