Pakistan’s first electronic money institution, NayaPay will launch a chat-based digital payment and enterprise financial management super-app.
According to the latest report of the credit rating agency, Fitch Solutions, Pakistan shows a noticeable degree of mobile financial services adoption, and its underbanked and largely tech-savvy youth population creates a supportive environment for leveraging further fintech products. In this reference, the agency forecasts a bullish outlook for the market.
“We suspect NayaPay will explore more sophisticated fintech verticals to remain competitive over the medium-term and will attempt to secure extra financing to do so,” adds the report.
NayaPay has raised USD 13 million in funding to roll out a messaging and digital payments super-app in Pakistan. NayaPay’s seed-funding round was the largest of its kind in South Asia, surpassing the USD 12 million raised in September 2021 by a Pakistani banking and financial services start-up called Tag.
In September 2021, NayaPay became the first fintech of its kind in Pakistan after it was granted an e-money license by the State Bank of Pakistan, meaning the company is well-placed to begin offering mobile financial services (MFS) products.
The commercial side of NayaPay’s super-app is a chat-led platform, similar to other chat-based platforms WeChat Pay and AliPay offered in Asia and is targeted primarily at Pakistan’s large mobile-first youth population. Consumers will be able to create an account and digital wallet on their mobile phone using their Computerised National Identity Card as proof of ID and, once registered, a virtual Visa debit card is linked to the account for online transactions. In this way, Fitch Solutions asserts that NayaPay is clearly aimed at boosting financial inclusion in the country.
It bears mentioning that according to the 2017 World Bank Global Findex Report, only 21 percent of the population had a bank account, creating a significant population for leveraging fintech applications.
Pakistan’s growing level of mobile penetration and smartphone adoption also serves to create a conducive environment for the uptake of MFS. According to the agency’s estimates, Pakistan’s mobile penetration rate stands at 81.8 percent by the end-September 2021, which further demonstrates that there is extensive room left for organic growth. “Our mobile market forecasts see the country’s mobile penetration rate growing to nearly 91 percent (242 million subscribers) by the end of 2031,” the report said.
The latest data from Pakistan’s Central Bank suggests there were nearly 9.9 million mobile money accounts in the country at the end of March 2021, up from 5 million two years ago. Whilst these figures indicate a relatively low proportion (5.4 percent) of Pakistan’s mobile users who have a mobile money account, the burgeoning level of MFS adoption bodes well for the uptake of fintech platforms like NayaPay.
According to Fitch Solutions, the low level of financial inclusion in Pakistan also extends into the enterprise segment with many SMEs also underserved. Using the capital raised in seed-funding, NayaPay plans to integrate its own enterprise software-as-a-service (SaaS) platform NayaPay Arc which will provide SMEs with universal payments acceptance and financial management capabilities.
Over the medium term, the credit rating agency expects NayaPay will look to integrate more advanced fintech products within its super-app, likely starting with investment/savings tools as well as small-scale loans. The latter of these verticals will fit particularly nicely into NayaPay’s current enterprise product and will present SMEs with the opportunity to apply for business loans.
Conversely, the report notes that these applications are more sophisticated than NayaPay’s current MFS offering and sustained investment will be required in order to build out these products as well as to acquire the technology necessary to do so. It expects that NayaPay will be actively pursuing partnerships with other SaaS providers or companies that offer artificial intelligence (AI) and data analytics solutions given that the technologies are especially useful for assessing credit risk.
In terms of competition, NayaPay’s main rival is enterprise-focused start-up Finja. Finja is the only fintech in Pakistan to be awarded both an e-money license and a non-banking finance company (NBFC) license. The latter enables Finja to offer digital loans to SMEs.
By September 2021, Finja had disbursed over 500,000 loans to more than 10,000 SMEs. NayaPay will have to successfully apply for an NBFC license with the Central Bank in order to provide digital lending services.
Chat Feature is the ONLY thing I hate in NayaPay. It is intrusive. There must be a way to completely “Disable Chat”