Simplifying digital payments for small businesses

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Entrepreneurs Clayton Hayward, Paul Carter Brown, Jason Penton and Mike Smits jointly run software development firm Gini Guru, which provides solutions to problems relating to transacting, payments and telecommunications.

About 14 months ago, they took stock of their technical skills and realised that they had excess know-how which they could put towards corporate social investment, says Hayward. 

This culminated in them co-founding uKheshe (meaning cash in isiZulu), a micro transaction platform that allows its cardholders to pay and get paid by scanning a QR code. 

Much like a barcode on a physical product, a QR code is a machine-scanable image, only it can instantly be read by a smartphone. 

Through this functionality, uKheshe cardholders can send and receive money, anywhere at any time. 

uKheshe cards are sold for R20 at the platform’s retail partner, Pick n Pay, where users can also draw cash by presenting a reference number, which can be requested via the uKheshe app. 

Having recently partnered with Mastercard, uKheshe can also accept payments from most mobile money payment and banking apps.

Hayward spoke to finweek about the new fintech.

What gap in the banking market is uKheshe’s digital payments solution closing? 

When we built uKheshe, we really wanted to make a difference in people’s lives at the bottom-end of the pyramid. 

A lot of banks, payment and insurance companies talk about making a difference to the people at the bottom-end, but they come up with propositions that do not really speak to the challenge.

The question was, how can we make it easy for that person to give money to somebody who does not have a bank account but will benefit from receiving a digital payment? 

How has the concept been received by the unbanked population you are targeting?

We are receiving a lot of viral traction with our existing users referring new users to the platform. 

So, we are not in a situation where we have to engage in a big brand-building exercise, because the street network is talking. 

We have stories of street vendors who have doubled their income since they have been able to accept faster digital payments. 

How beneficial has uKheshe’s partnership with Mastercard been?

It gave us inter-operability across all the players in the market. 

One of the best breaks was that – at the time that we launched – all the players in the market had decided to standardise by adopting Mastercard and their technology.

What that meant for us is that anybody who had our QR cards could receive payment(s) from anybody. 

They could use the FNB, Zapper, SnapScan or VodaPay apps because Mastercard has created the inter-operability. 

How many QR cards have been taken up by the market thus far?

About 300 000 QR cards, and we are adding about 20 000 new users a month.

How does uKheshe generate its income?

Our whole model is not to make revenue out of the payments. In terms of our pricing models, we are the cheapest acquiring platform in the market. 

Our business model is centred around value-added services that are offered to the user once they are an uKheshe member. Our interchange fee now is a flat rate of 2%. We charge R5 a month for the account fee. 

What are some of the biggest business challenges you have had to overcome thus far?

Firstly, it’s time. Things just don’t happen overnight. This market is not for the faint-hearted. 

The big challenges are in launching any fintech propositions in the SA market. Because of our regulatory environment, we have to partner with existing incumbents. 

We, for instance, have partnered with Nedbank. If you, for instance, look at our retail partnership… integrating with a retailer, the likes of Pick n Pay, and getting your product on their shelves, could be a 12- to 18-month process.

Secondly, partnerships with existing incumbents are difficult. One has to bear in mind that incumbents are protecting their domain and generally do not want to partner with start-up companies. 

Thirdly, there are regulations. The regulatory environment is very firm. We have strict Financial Sector Conduct Authority and central bank policies. 

Innovation is not something that you could quickly go to the market with because SA is a highly regulated environment. It is not like Kenya, Rwanda or Nigeria where you can launch a fintech start-up, go to the market and get millions of users overnight.

What has been the biggest business lesson that you have learned from this journey?

Patience and tenacity.You have to understand that the financial services industry is a very conservative sector. The incumbents tend to want to make sure that you are going to stay the course. 

They sit on the fence and watch you for a year, just to make sure that you have the tenacity to stick it through and that you are not in a get-rich-quickly scheme. And then, once they see that you are serious, they start taking you more seriously.

Would you consider fintech like FNB’s eWallet and Absa’s CashSend digital payment solutions as your direct competition?

We have many competitors. FNB’s eWallet is a competitor, so are SnapScan, Zapper and Yoco. But none of these propositions offer what we are offering to our clients. 

We are focused on the small entrepreneur, giving them the help, support and platform – that is what makes us different.

What differentiates uKheshe from its competitors? 

We focus solely on that subsistence and survivalist entrepreneur who is looking for a platform to enable digital payments to take them to the next level of commerce. 

And, as their business grows, he or she may then turn to one of our competitor’s products, like expanding to a R799 Yoco card terminal.

How many people does uKheshe employ?

Currently about 12 people.

Between writing code and running uKheshe, how do you stay motivated as the co-founder?

It might sound like a cliché but the smiles that I get from the merchants, especially after onboarding them, is priceless.

uKheshe is not a job for us. It is a calling. We are doing it because we want to do good — and it is another business that pays our bills. But, ultimately, we started the business to make a difference in our country. 

What is the medium- to long-term vision for uKheshe?

In the medium to long term, we want to expand worldwide. 

This article originally appeared in the 6 February edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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