After working with the big shots, Jojo Malolos decided to dip his fingers into the world of startups where capital is a challenge, but not for one whose solution provides a wide and meaningful impact with the promise of profitability in the long term.

Jojo is president and CEO of PayMongo, a Filipino fintech that offers online payments processing to micro, small and medium enterprises (MSMEs).

The company allows businesses in the Philippines to accept payments of all types over the Internet quickly and easily.  As a digital payment platform, enterprises can accept payments using credit cards, e-wallets, direct online banking, and cross borders soon. PayMongo is like an aggregator of all payment systems giving customers a wide range of digital payment options to choose from when she checks out her orders online.

PayMongo’s standard, easy-to-integrate API and e-commerce plugins accelerate internet businesses by lowering integration time with a few lines of code. The company's PayMongo Links and Pages products enable businesses to provide a simple digital checkout for their customers, even without a website. PayMongo's payment platform delivers fast onboarding, consistent checkout experiences and robust fraud detection systems.

Jojo himself is a veteran in the digital banking space who co-founded and served as chairman of the country’s digital bank licensed by the Bangko Sentral ng Pilipinas GoTyme Bank. Jojo also previously served as President and CEO of DAVI and JG DEV, the data analytics and venture arm of the Gokongwei Group, respectively. He was also CEO of Wing Bank, a leading digital financial services provider in Cambodia, and of Smart Money, now known as PayMaya/Maya. His global fintech experience includes stints with Mastercard Financial Services in Latin America and Cignifi Boston, which brought alternative credit scoring innovation to African emerging markets.

DIGITAL MSMEs

As to his latest baby, Jojo said that PayMongo seeks to empower merchants, especially MSMEs to sell their products online. “It opens up more opportunities for customers to widen your customer base,” he said.

“What we provide them is an ATM of sorts where you can pay through GCash or Buy Now Pay Later using the facility by which your products can be paid,” he said.

So, the goal is to bring in as many MSMES as possible. Already, Paymongo has activated more than 16,000 merchants on food, apparel, rent for association dues, schools, sari-sari stores, appliance centers, among others. They are still focused in the National Capital Region, but it is going to the regions because online activities are also increasing in the provinces.

The digital payments market is also big, estimated at $95 billion worth of total addressable markets in the country. “There are lots of competitors in the market, but there is enough room for everyone,” he said.

ANGEL INVESTORS

PayMongo has already attracted angel investors. In fact, PayMongo is the first Philippine fintech startup backed by Silicon Valley-based Y Combinator, the premier startup accelerator in the world. In February 2022, the company secured $31 million in Series B financing with support from Justin Mateen's JAM Fund, ICCP-SBI Venture Partners, Lisa Gokongwei’s Kaya Founders, Global Founders Capital and SOMA Capital. To date, the company has raised a total funding amount of almost $46 million, including their $12 million Series A round in September 2020 and $2.7 million seed round in September 2019. Other notable investors in the company include Stripe, Peter Thiel, Y Combinator and Bedrock Capital.

According to Jojo, investors are pouring in their money in startups than property. There has been a scarcity lately though because angel investors are ensuring that they are spending for viable startups.

“Investors are waiting for proof that you are worth investing in. So, that is the challenge that you are a viable company at the end of the day,” he said. Understandable because the current average is there are only three successful startups in every 20.

That’s why, startups must have innovations to solve specific problems because that is what angel investors would evaluate as a gauge of profitability in the future and be worthy of their money. Startups are also important because there are problems that cannot be solved by traditional methods.

Jojo himself is an angel investor with 15 startups under his portfolio. So far, he said, only three are performing well, but the value of the three combined already accounts for his investments in all 15 startups that he invested in.

“The interesting thing is there are many bright ideas so just hope that all of these become profitable,” he said.

TRUST

To make the digital payments successful and more acceptable, there is a need to address trust issues, too. With all sorts of horrible stories about online purchases going awry, there is still a long way to go to hurdle this problem.

So far, 80 percent of buyers in online shopping platforms are paying their purchases COD.

In the case of PayMongo though, Jojo said that it has a very minimal fraud rate. On one hand, paying cash is also very prone to real risks, like robbery or holdups.

“So far, we’ve done good in managing fraud issues. We have not experienced grave issues because we connect you to very reputable companies. It is really awareness and education of customers,” he said.

TARGET

To expand further the number of MSMEs to get online, PayMongo managed to get their EMI (electronic money issuer) license, allowing them to move and receive funds or even borrow. This means, PayMongo does not only give merchants the opportunity to sell online, but also allow them to borrow money to expand their operations.

“We have started closing partnerships with some banks, we can be a realm because we have the data so we collaborate with the banks,” he said.

By end this year, PayMongo hopes to have a total of 10,000 active merchants out of its 16,000 merchants at present. They are also looking at onboarding clients in the Visayas and Mindanao cities.

“Eventually, we can go out of the Philippines,” said Jojo citing opportunities in the ASEAN region. But for now, the focus is Philippines. “There is still a lot to do in the country,” he added.

The expectation is that PayMongo becomes profitable in two years time or by 2025 or six years since it started operation four years ago. That is already ahead of the 10-year industry average wherein a startup starts making profit.

“We are not yet making profit, but we have a clear path to be profitable,” he said.