Armed with new funding, fintech payments PayMongo empowers small businesses in the Philippines to join the digital economy.
a The three-year-old Philippine fintech company is helping digitize the country’s predominantly cash-reliant economy, one click at a time. Founded in Manila in 2019, PayMongo has seen its user base and transaction volume soar with its entry into the country’s vast array of small merchants – from mom-and-pop stores to independent fashion stores – who have relied on personal cash dealings before the pandemic.
Backed by investors including PayPal founder Peter Thiel and payments giant Stripe, PayMongo allows sellers to send payment links to customers, who can pay using a range of options including credit cards and e-wallets. CEO and co-founder Francis Plaza says it’s “a bar for the Philippines.” Honoring the Forbes Asia 100 you’ll see last year, PayMongo is aimed at small and medium-sized businesses, which, along with small businesses, represent 99.5% of businesses in the Philippines but are still not served by traditional payment providers. “Our biggest competitor is traditional payments, like cash,” says Plaza in a video interview in March from Madrid, where he celebrated his 28th birthday.
In February, PayMongo raised $31 million in Series B, bringing its total funding to about $46 million. Founded in March 2019, join Y Combinator set up the summer later that year, becoming the first Filipino financial technology company to be selected by a US startup accelerator. Upon graduation, she earned $2.7 million in seed financing Of San Francisco-based Global Founders Capital, Justin Matin and co-founder of Tinder. PayMongo then raised $12 million in a Series A Round Led by Stripe in 2020, the company subsequently said it tripled its trading base to more than 10,000 businesses and quadrupled its monthly transaction volume. Plaza declined to disclose these numbers.
“Our biggest competitor is traditional payments, such as cash.”
Plaza, which is looking to expand beyond the Philippine archipelago, owes each funding round to “changing the company’s narrative” by helping it roll out products for e-commerce platforms, such as Shopify and WooCommerce, and mobile apps.
“From the beginning, the biggest misunderstanding we had to actively educate outside investors was the reality of the Philippine market,” says Plaza, winner of the Forbes 30 Under 30 Asia award since 2020. “Now they are the ones who say we should double our business in the Philippines,” he recalls. The country was the fastest growing digital market in Southeast Asia in 2021, according to A Report By Google, Temasek, Bain & Co. It expects the Internet economy in the Philippines to double to $40 billion by 2025 from $17 billion in 2021.
Part of this growth is likely to come from increased financial inclusion in a country where about half the population is still unbanked. the government Estimates that while only half of Filipino adults had a bank account as of 2021, group size nearly doubled from 27% in 2020. The country’s latest National Financial Inclusion Strategy aims to deliver digital payments to all communities by 2023. “We need more. People using digital tools in order to expand the economy further,” says Plaza.
He views the prospect of more people joining the digital economy as a win-win for Philippine fintech companies, which constitute a “complementary ecosystem.” To achieve its goal of becoming an industry leader, PayMongo is partnering with other fintech companies including established e-wallets GCash and Maya to make online payments more convenient. Sachin Mittal, who heads communications, media and technology research at DBS Bank in Singapore, says prioritizing partnership over competition makes sense for PayMongo. “It is important that you partner with a market leader who will promote your solution,” Mittal says, referring to GCash, the Philippines’ largest e-wallet with 51 million users as of October 2021.
“We had thousands of companies asking for a solution overnight.”
The digital payments platform isn’t what Plaza and his fellow PayMongo co-founders — including chief technology officer Jimmy Heng III, COO Edwin Lacerda and former growth director Luis Sea — had in mind. A computer science graduate from MIT, I met Plaza Sia in college through her participation in computer science clubs. Plaza later worked with Hing to develop software at local logistics company QuadX. He and Lacierda – a spokesman for the late Philippine President Benigno Aquino III – collaborated in 2016 to build an analytical platform for voting behavior.
Plaza says PayMongo was initially a “side project” for a short-lived software consulting company he founded in 2018 called 22 Delta Labs. He realized that payments integration was among the most difficult tasks for SMEs as they had to rely on outsourcing software. “We had thousands of companies asking for a solution overnight,” says Plaza. “We realized, why don’t we actually focus on payments only?”
PayMongo is now planning not only to expand outside the Philippines to other countries in Southeast Asia, but also plans to expand its remit by becoming a platform for scaling small businesses in the region. By the end of the year, it plans to increase its number of employees from 200 to 300 while expanding the range of services it offers to its vendors. Last August, PayMongo launched an acceleration program to help young entrepreneurs with two-month transaction fee waiver across all PayMongo payment channels and free webinars on business, finance and technology. The company believes that future initiatives may build such programs.
After benefiting from the Y Combinator acceleration program and knowledge gained from investors and partners, Plaza says PayMongo wants to do the same with other small businesses looking to grow. Besides providing a “financial infrastructure for everyone,” he says the true measure of PayMongo’s success lies in its ability to empower its employees to start their own businesses. “When the people who helped us actually build this look back and say their time at PayMongo has been instrumental in helping them succeed with their new venture, this is really the flywheel for more startup firepower, which will eventually grow [Philippine] economy,” he says.