“I was always against working for someone else. I never wanted to be an employee.” It’s the reason why Abdulaziz Al Jouf, who comes from a “family of employees”, chose to start his own payment solutions company PayTabs after getting fired from several jobs for being, in his own words, “unmanageable”.
Four years after the launch of his firm, Al Jouf has created a force in the world of financial technology (fintech) that might become similarly troublesome – at least for his rivals. His aim is to transform the face of banking in the GCC and the wider Middle East by creating alternative payment solutions, which are set to account for 59 percent of global online transactions by the end of 2018.
Banks have a lot of red tape. We have much faster work around solutions, while not compromising on compliance and risk”
The issue that Al Jouf and his company is trying to address is one that is a recurring problem for SMEs across the Middle East and developing world: slow bank payments processes. SMEs in countries such as the Philippines, China, India, Bangladesh, Nepal and others in the GCC struggle to get banks to process their payments in a timely fashion, particularly if they require customised payment options. That was the opportunity Al Jouf saw in earlier forays into telecoms and logistics.
“Banks have a lot of red tape”, he says. “We have much faster work around solutions, while not compromising on compliance and risk,” he says. “The reason we are backdated with payments with banks is that there is a lot of pressure in terms of KYC (know your customer), KYB (know your business) and all those regulations. We’re trying to cut that out and do it much faster with more advanced technology. We work with the bank to take care of this entire product, so we kind of become the bank in terms of payment processing. In some markets, we get our own license to become the banking partner.”
While it typically takes merchants between three to six months to integrate with a bank, PayTabs can achieve the same in just a couple of hours thanks to advanced technology. He claims to be able to process payment systems for start-ups and have them live online within as little as an hour. So far, it seems to be favoured by many SMEs, which make up 80 percent of its clients. The firm has achieved a reported 92 percent satisfaction rate on its customer service, a score Al Jouf also claims has not been achieved by many banks.
One crucial aspect of the payment solutions equation that PayTabs is addressing is financial fraud, which has seen cases rise 34 percent in 2017 in the Middle East compared to 26 percent in 2016, according to PwC’s 2018 Middle East Economic Crime and Fraud Survey. The most frequent types of crime reported by respondents included asset misappropriation and business misconduct. The survey also revealed financial scams has cost organisations between $100,000 and $50m.
Al Jouf understands the rising significance of anti-fraud technologies and says PayTabs offers customers ease of mind through the use of highly sophisticated artificial intelligence data protection, through which it managed to block over $400m of fraudulent transactions. He says that these are the last issues SMEs should confront as they grow their business.
“Let’s say you want to sell dresses and you want to use us to sell globally, because you have zero experience in payments. And you shouldn’t worry about payments in the first place. Your expertise is in dresses, not payments. This is what we’re trying to accomplish,” Al Jouf says. “Our team would call you and warn you against transactions that we doubt or consider to be fraudulent. We have some merchants selling cupcakes, some selling dresses, and many of their worries revolve around how much cupcakes or dresses they can sell, not on which platform they can conduct payments for the sales. We want to give the power to the business owners to have the capability and enable them to understand their business.”
We want to give the power to business owners to have the capability and enable them to understand their business”
In a bid to ease some of their pressure, banks have also started to recommend payment solutions companies such as PayTabs to merchants, Al Jouf says, due to the firm’s ability to customise their systems for each merchant, making them highly attractive. But is there enough room for both traditional banking and fintech? The sector is expected to grow by 270 percent by 2020 in the MENA region, according to figures by business intelligence company Informa Middle East, with over 100 start-ups in the sector having raised more than $100m in funding in the last ten years.
The region’s high smartphone penetration rate and young, tech-savvy population paired with regional governments’ aims to steer away from oil-dependent economies makes the area particularly appealing for fintech.
Where many start-ups go wrong, however, is failing to understanding each country’s business culture, something banks have long mastered. “Doing business in the UAE is not the same as doing business in Vietnam. It’s totally different. My vision is trying to localise our brand in every country we are in,” says Al Jouf, stating that PayTabs’ most popular features differ from country to country.
So far, he seems to have got just about everything right. The CEO claims the firm has been adding “one zero” to its revenue every year since it started. This year, it hopes to process multiple million dollars. While it’s not up to Al Jouf’s mark yet, he says a personal feeling of satisfaction matters more to him than numbers.
When you start a business and you start to scale up, the moment you put the dollar sign in your head, you’re a dead man”
“The satisfying feeling of when someone in India is sitting in her house or small shop and uses PayTabs to sell to someone in Germany… I always tell myself and the team that if she managed to do this then there are hundreds like her in Singapore, Bangladesh, the Philippines and more.
“When you start a business and you start to scale up, the moment you put the dollar sign in your head, you’re a dead man. It’s more of a balance, of course, because at the end of the day, I have to get money. I don’t want my investors to get worried. But it’s really what kind of value you bring to the continent or country or merchant. Value and profit always fight each other in a CEO’s head. It’s a very thin line, because anyone can beat you in numbers, even if you are the greatest. It’s like Apple, we shifted our mentality from being spending cautious to becoming value cautious,” he says.
Another mentality that needs to be shifted, according to Al Jouf, is the private sector’s competitive approach towards SMEs. While there has been increasing support for SMEs in the region over the past three years, the CEO believes much more can be done, starting with changing deterring attitudes, some of which come from banks.
“When you go to banks and you tell them you’re an SME, they tell you their SME [fund] is [reserved] for those in the $50m category. Give me a break. Come on. We’re still an SME,” he says.
We might add some more countries in the coming two years. I’m always pro-Asia”
“We are not expecting governments to change, the change should be coming from us – the private sector and banking industry – but that change is hard because they always think SMEs are competing with them,” Al Jouf adds.
He compares SMEs to small fish and private companies to bigger fish that have two options: to eat the smaller fish or nurture them to sustain an ecosystem. “This is how business owners should think… We need to financially and mentally support SMEs through coaching and mentoring, because that is what will create the ecosystem,” he says.
PayTabs is certainly gaining plenty of support itself. The company, which was founded in 2014 on a $1m budget Al Jouf spent a year collecting, raised $20m in 2017 after impressing the likes of oil giants Saudi Aramco. “I explained everything to them on a Starbucks tissue,” I said. “And they asked if they could take it. I said ‘Yes, of course’. A month later, they invested.”
The funding round placed PayTabs alongside regional success stories Careem ($150m), StarzPlay Arabia ($41m), Fetchr ($20m) and Wego ($12m) as some of the top investments made in the MENA region in 2017. It enabled PayTabs to plot its expansion to other markets across MENA and Asia. Today, it is getting close to its 20-territory goal with a presence in 17 countries, including India, Singapore, Hong Kong, the Philippines, Egypt, Morocco and Lebanon.
In terms of future growth, the CEO insists he will refrain from expanding to the US or Europe and will focus on developing markets with little or no competition instead.
“We might add some more countries in the coming two years. I’m always pro-Asia. We target developing markets where technology is not there and where banks are not yet developed technically. So we will not go to Europe or the US, because they’re already exposed markets with hundreds of [fintech] companies. Will we add value there? We’d like the competition, but if there is a lot of competition, it probably means there are enough players in the market,” he says.
Alternatively, PayTabs will deep dive into existing markets such as Egypt, Morocco and the Philippines by offering more services, putting more people on the ground and ultimately increasing market share. Al Jouf reveals the company is even working on projects in certain countries that will allow it to act completely as a bank, though he refused to name the markets just yet.
“Users like you and I will not have to go to the bank and open a bank account. They’ll be able to do everything using their phones. They can simply download the app and wire the money. Smartphones are definitely shifting our human behaviour to go further to digital banking,” he says.
A large portion of digital banking is expected to integrate new platforms such as blockchain and even cryptocurrencies, though Al Jouf says there are many unanswered questions when it comes to both concepts. The CEO is adamant, however, that digital currencies will remain.
“Cryptocurrency is here to stay. How will this happen? There are different dimensions and different directions where it will go. Keep in mind that central banks until today are trying hard to ban [cryptocurrency] because they feel it is out of [their] control. If you think back to why cryptocurrency launched, it is because of the massive collapse in 2011… [It aimed] to make sure currencies and money is protected everywhere,” he says.
Aljouf adds that PayTabs are working together with some partners to process cryptocurrency, as their fiat channel. “However,” he says, “there’s a lot of hype on how to make money out of it. I’m sure you heard that if you had bought x amount of bitcoin… You’re a billionaire today. But in reality, there’s a big issue on how to get this money out of the cryptocurrency industry,” he says.
Regardless, he reveals that PayTabs is working on a couple of projects with exchanges in Asia and the Middle East to utilise cryptocurrency in compliance with regulations. One of the projects includes speeding up remittance processes. Judging by the fact that remittances in the UAE alone have risen over 17 percent in the first three months of 2018 to equal AED43.5bn ($11.8bn), we cannot begin to imagine the opportunities that lie ahead for the “unmanageable” CEO.
We could even go as far as to raise the question, “Is this the future of banking?”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.