For the people, by the Pyypl

Antti Arponen saw an opportunity in the space between m-money providers and the banks in a region where opportunity is boundless, but access to finance limited. With blockchain-driven Pyypl, he hopes to plug the gap

Having previously worked at Virgin Mobile for 13 years as country CEO, group COO and group chief digital officer for the Middle East and North Africa (MENA), Antti Arponen was well aware of how a lack of infrastructure can seriously hold back poorer communities.

“At Virgin, we believed that everybody should have a mobile phone with an internet connection,” he says. “Our whole reason for launching in the MENA region was that we saw how incumbent telecom providers gave preferential treatment to high-income population segments, and so weren’t bothered about working to offer quality service at a reasonable cost to the masses.”

It was while building this missing link for the telecoms sector that Arponen came up against a similar roadblock to universal access to financial services – and it inspired him to found the financial technology company, Pyypl.

Pronounced ‘people’, the blockchain-powered startup’s first focus was a virtual pre-paid card, which was available to everyone and, crucially in this part of the world, allowed them to spend anywhere – including online.

“At Virgin, when we began tracking how our users paid their Virgin mobile phone bills, we realised that the few people who did have credit or debit cards were unable to use them to pay online. We couldn’t believe this,” recalls Arponen.

“The process of obtaining a credit card in many of these regions is often a long one: you need to go to a branch, you need to fill in a pile of paper, you need to have a credit score, which you can’t have if you are not banked yet, etc. The fact that even those who were successful in their application still didn’t have online financial freedom felt crazy.

“It turned out that banks were in a position to offer the service, but their cost structure simply didn’t make it possible for them to extend those services to low- and mid-income markets. And non-bank alternatives were faced with the challenge that the regulatory approval to provide such options was a three- to four-year procedure, which needed to be done for every single country in the region separately.”

Believing that online payments should be accessible to all, Arponen made the decision, then and there, to start the painstaking regulatory dialogue needed to build an online payment solution that could work not just across the MENA region but the whole of Africa, and Central Asia, too. It was a bold move, given the regulatory disparity between what are still mostly cash-based states.

“People perceived us as masochists for welcoming the headache, but we didn’t see it as such,” says Arponen. “We love the regulators – they’re just trying to protect the consumer. And that’s 100 per cent aligned with what we wanted, as well. Regulators have a really difficult job, and we know that first-hand from our co-founder, Phil, who worked in senior positions for two of them.”

Now five years into his journey, Arponen believes engaging in deep dialogue with regulators before the technology was even built, to really understood the landscape in the United Arab Emirates (UAE) and beyond, gave Pyypl a distinct first-mover advantage, especially over the many foreign startups now taking an interest in the region.

“Innovation couldn’t have happened on a superficial level by building some nice-looking app or grafting an American or European fintech,” he says. “It needed to happen at a deeper, regulatory level because we were in new territory. Moreover, many of these regions are entirely based on cash, so foreign business models built on foundations which are invalid here, would fail.”

Arponen has previously described Pyypl as sitting between the growing number of mobile money providers and the banks. While some of the former, including M-Pesa – Kenya’s transformative m-money service for the masses – allow both online and cardholder-present transactions, card take-up from banks is limited for the reasons Arponen outlined.

Pyypl, however, offers both phone-based and digital wallet options, and includes a prepaid card that can be used across all payment channels without restrictions, as well as mobile airtime top-up, and domestic user-to-user transfers.

It was launched in 2019 as a graduate of the Abu Dhabi Global Market’s fintech sandbox, RegLab, and Apernon says total transaction volumes are growing by 49 per cent month-on-month. Currently being used by 106 nationalities in 48 currencies, it’s driven by blockchain-based architecture developed in-house, which adds the simplicity of an m-money service onto a framework that can deliver the sophistication and reach of a bank, plugging more people into a broader range of financial services.

The value of blockchain

That’s not to say there hasn’t been progress. While it might be true that legacy banks find it hard to address the issue of financial accessibility, Africa, in particular, has seen an explosion of fintechs doing just that – such as Kuda Bank in Nigeria which has a Naira Mastercard that can be used for online purchases (albeit only domestically for now). So where, ultimately, does Pyypl see its future in this landscape? “In our user base right now we can identify about 20 completely different ways of using the Pyypl product. We knew this would be the case from the beginning, so we built our technology platform to accommodate this. While it looks the same app from the outside, Pyypl is actually customised for every single user. They have different services offered, depending on their demographics,” says Arponen. Currently operating as a payment app in the UAE and Bahrain, its ambition is to be in 25 countries by the end of 2025, when, according to the GSMA, which represents the interests of mobile operators worldwide, smartphone penetration will reach 900 million people (out of a population of 1.2 billion) in Africa alone. By then, Pyypl won’t be known just It’s human nature to find workarounds to as a payment app, because the real value apparently intransigent problems, which is lies in its blockchain-based technology, why, according to Statista, as of 2020, cash which has been developed to deliver was the main payment method used in a wide range of financial services. online retail in Egypt, Kenya and Morocco, Granted regulatory approval in accounting for 55, 40, and 41 Mozambique, per cent of the total share, We’re not Kazakhstan and Kenya, respectively. Although poor here just to it was admitted to the card penetration clearly hasn’t hobbled the growth solve the payment latter’s Capital Markets Authority sandbox – the of e-commerce – in some of problem; we want first to be launched by Pyypl’s target states, e-tail to help address a regulatory authority sales are growing 25 times faster than most other areas societal issues – in Africa – last year, to test a phone-based, of the world – not only is it’s in our DNA blockchain-powered consumer experience often tool for entrepreneurs clunky, but cash payment on delivery to raise funds by issuing unsecured bonds. doesn’t advance financial inclusion or move “We’re pretty hardcore when it comes to states beyond a cash-driven economy with technology and regulation, but what we all the inherent drawbacks. really want is to make people feel equal,”

Meanwhile, M-Pesa, the most widely says Arponen. “We’re not here to solve just used mobile money service, provided by the payment problem; we want to help Safaricom, can be used for peer-to-peer address societal issues. It’s part of our DNA.” (P2P) transfers, physical point of sale (PoS) Pyypl’s genetic code can be distilled into and online purchases, among other four Fs: functional, familiar, focussed, first. things, but many of its users simply see “Functional sounds dry, but is important, it as a convenient way to cash out funds. because in these parts of the world, daily It’s not a store of wealth. life can be a struggle, so removing hurdles

As many uses as users:

The Pyypl app is supremely customised

allows people to spend time doing things that they want to do, bringing smiles to their faces,” explains Arponen.

Familiar means that, like an old friend, the Pyypl brand is trusted. “Because even though there are one billion mobile phone owners out there and 80 per cent of them are without a payment card, we are still talking about other people’s money and a culture where trust on a personal level is everything,” says Arponen

“Focussed means we put all our effort into doing the best for our users, employees, regulators and partners. We focus on people.

“And first means we don’t mind taking the hard path, removing obstacle after obstacle to get things done. And if somebody else benefits from our trailblazing, we’re happy about it.”

In Africa, in particular, you can't get very far without addressing infrastructure, and blockchain is seen as a way of helping the continent leapfrog several staging posts, including in the financial space. Deloitte concluded in its report Over The Horizon: A New Infrastructure For Financial Services, that one of the most significant impacts of blockchain was creating an environment where ‘firms and regulators get along better’. Arponen would agree.

“Once you work with the markets and governments to build a little bit more infrastructure, you become part of the infrastructure,” says Arponen. “Research is showing that the next-generation financial infrastructure will be more valuable than the Internet, Cloud and mobile put together. Amazon, Apple, you name it, they’ll be nothing compared to the value-add that a new financial infrastructure will deliver.”