This week I had a chance to interview Esther Kanduza, the Brand & Marketing manager of Digital Paygo, a Zambian Fintech startup, which is building a marketplace for shared digital solutions such as software/infrastructure as a service to lower entry barriers for Zambian businesses into utilize fintech.
Their team has secured funding from private equity and was selected to be a part of the FinTech4U accelerator program that took place from January to April of 2020.
How did you become so interested in mobile money?
I was born into a house where excellence was not only strived for but expected. As the youngest of six children and the daughter of two professors, I always felt as if I had something to prove.
This led to me beginning to read at a young age and always being a top performer in school. Our father had one goal for us and that was to get a PhD by the time we turned 30, motivating us to turn our informal table conversations into debates about sociology, economics, politics, and religion.
I decided to attend the University of Botswana to study economics and was one of only 20 people that were selected. It has always been a passion of mine to understand how to use financial data for the poor.
This led to me basing my undergraduate research on utilizing microfinance to alleviate people from poverty. This eventually morphed into a passion for mobile money as I was working with Airtel Zambia, a company in global telecommunications, as a territory sales manager.
My inspiration came from a startup, Zoona, launching a service in 2009, that allows customers to use simple text messaging to send and receive money.
The company that I worked for, Airtel, had its own product called Airtel money wallet, but was not taking off like we had planned. The customers were using another digital financial services (DFS) and were hesitant to trust our services. They knew us more for purchasing Talktime, not for money transferring.
Our team decided to push our service into the market anyway. We ran into several obstacles, but by improving upon our ideas, we were able to get people on board to utilize Airtel money.
This gave me the motivation that I needed to join Digital Paygo two years ago. I wanted to bring my passion and practicality together and join a team that could enrich that. I wanted to provide a product that was simple to use and make things easier for the consumer.
I realized that Digital Paygo was where I wanted to be when they stated that their overall goal was to make Zambia a cashless society.
We started with seven startup members when we opened our doors in June 2019. The management team consisted of 5 members, three being female.
Right now, we have 14 members and 7 of them are female. Our team consists of people with backgrounds in either telecommunications or banking sectors. Every member has a passion and was brought here to expand upon it.
Why does your team start Digital Paygo and what service do it offer?
Digital Paygo was started in order to meet the increasing demand for DFS. This was fueled by a 42% jump in using DFS in a four-year time frame in Zambia market. We wanted to further encourage people to become an active part in this market.
The founder, Charity Chitalu Mwanza, has been a presence in the banking industry for over 20 years, involved in numerous roles including digital transformation and management strategies. Ten years ago, she was a member of the DFS team at the Zambia National Commercial Bank (Zanaco) and was a part of the first digital wallet launch.
This allowed her to realize that mobile money was making headway in Africa and thus, launched her own startup, Digital Paygo. Charity obtained the ability to lead with the future in mind and had a brilliant amount of dedication.
We quickly secured our license in December 2019 from the Bank of Zambia and registered with Digital Shared Services Limited. We wanted to set ourselves apart from other digital wallets and started to look at the service from the view of the customer. Our idea was to create a QR code that would allow consumers to pay easily and act as a unifier between all digital services.
This could be made possible due to the current Zambian mobile penetration rate. Almost 100% of Zambians are connected to a mobile network and 30% of them have smartphones.
We envision a future in which even more people will gain access to smartphones and everything will become interconnected over a mobile network. These were the conditions that we needed to begin to roll out our services.
Digital Paygo offers three services, starting with our anchor product, the mobile merchant payment. We provide the QR code for the micro-merchant which then allows them to process payment efficiently.
Next, we also offer shared agency banking. In the past, this was an expensive endeavor, leading to members of different money wallets having to withdraw and pay fees in order to send money to family and friends. Digital Paygo would connect members of all different wallets, starting with MTN and Zanaco users, and make the money transferring process easier through the Digital Paygo shared agent platform.
Third, we are also a payment gateway. We are currently attempting to collaborate with the local government in order to make G2P and P2G a safe transaction through our service.
Who are the target customers and how do they use your service?
Our target individuals are the 80% of Zambians that work in the informal sector. Those that live in low-income areas do most of their shopping at corner stores rather than malls, resulting these shops to process $2,500 in a day, yet, they have not upgraded their payment processes for daily operations. Our also target at micro-merchants that achieve a monthly revenue of around $200.
At the moment we have over 30,000 of these merchants and hope to cross the 50,000 milestones soon. We generate revenue by taking a cut out of every transaction and a one-kwacha processing fee, at the moment we are experiencing 20,000 transactions monthly and processing a $500 daily average.
Although the majority of our transactions come through the USSD (Unstructured Supplementary Service Data) platform, our dream is to roll out the Digital Paygo services which will allow us to serve both low and high-income customers. Once we start to bring in partners, we plan on splitting the profit 70:30.
The earlier version of our service allowed us to learn that we needed to simplify the customer journey. Our research focused heavily on Wechat and Alipay and ineffectively tried to place those models in the Zambian market. This ultimately failed due to our transactions mainly taking place from featured phones. We also realized that there is a prolonged process in using USSD which we ultimately edited to become a simple three step process.
If a micro-merchant would like to use the more cost effective QR code from Digital Paygo, they would start by selecting a bank. It takes the bank just a few minutes to open a digital wallet account for a customer. Next, they register themselves on our platform using a simple USSD.
Finally, our team will provide the merchant a QR code and provide the proper training required. If a customer would like to use the Digital Paygo service, all they would have to do is a quick scan of the QR code while making the payment.
This service is effective because although there are 13,000 POS terminals from all different banks â€“ it is an expensive process. This makes it impractical to the lower tier of the market which the cost effective QR code could remedy.
Building a startup from scratch isnâ€™t easy. We are currently challenged by the fact that the decision-making process takes weeks to complete, however, we are aware that this is necessary due to having to send proposals and present our case so that we can onboard clients.
COVID19 has been a blessing in disguise for us, although a terrible thing, due to the new market wide push for digital payments. This has caused a surge of interest in our service and allowed us to onboard more partners.
How does the competition look like in Zambia market?
We have a few competitors, however the market in Zambia, which we aim to be the center platform for, is wide open and up for grabs. We desire to be a collaborator with the following companies and we firmly believe in co-opetition.
The only potential competitors that we have found in Zambia are based out of South Africa (Paygate) and Kenya (Cellulant). But they have only set up minimal QR codes at major Zambian shops.
MTN also has a QR code payment service. They mainly rolled their platform into different shopping malls, that deals mainly with credit cards, to analyze customer behaviors without doing a full launch.
Also, an indirect competitor, Zazu digital wallet is on the market. They have a great start and we are in good terms with them; however, they do not offer a QR code payment which we believe is a necessary factor to success.
A competitor a little farther from home is Swish from Sweden. We tested the market around the same time in 2019, but beat them to the market. They came to us and proposed that we join efforts, which we are now discussing.
The goal of Digital Paygo is to connect all of these partners to one platform so that we can focus on the necessary branding and expanding upon public awareness for the client.
Who are your role models and what advice would you offer to other female entrepreneurs?
My role model in this business sector is without a doubt the CEO of Barclays Bank of Zambia, Mizinga Melu. I recently participated in one of her webinars and heard her explanation of how people at the higher level arenâ€™t always have the fresh eyes that we need.
Young female professionals can be looked over in a male driven workforce. But what is inspiring, is her drive to conquer a division that is typically male powered and go on to succeed in her endeavors to become the first Zambian woman to hold such an exalted position.
Another role model of mine is the former CEO of Airtel, Charity Lumpa. I was one of the first graduate trainees that was selected to join her management program and I was fortunate enough to meet her. Charity gave me the inspiration to thrive in the company regardless of my gender.
Worldwide, females are not regarded as forceful beings of power in business situations. Of course, success stories do happen and it is up to the women of today to make them a more prominent reality.
You need to be resilient. It takes a multitude of hard work and trials to start from nothing and build it into something. Also, take heart in building the right team, one that is open, honest, and realizes your dreams.
Lastly, remember that you can always improve and have confidence in the fact that you never stop growing.