PayMongo fresh-funds fintech to help small businesses in Philippines enter digital economy.
With fresh funding in hand, PayMongo, a payments-focused fintech, is using the funds to enable small businesses in the Philippines to enter the digital economy.
PayMongo, a payments fintech, is enabling small businesses in the Philippines to join the digital economy with its new funding.
A three-year-old Philippine fintech firm is helping to digitalize the country's cash-based economy, one click at a time. PayMongo, which was founded in 2019, has seen its user base and transaction volumes soar as it taps into the country's pool of tiny merchants - from mom-and-pop shops to independent fashion boutiques - that relied on in-person cash dealings before the pandemic.
PayMongo, which has the backing of PayPal cofounder Peter Thiel and payments giant Stripe, enables sellers to send payment links to customers, who can pay using a range of options including credit cards and e-wallets. It's "Stripe for the Philippines," says CEO and cofounder Francis Plaza. The inaugural Forbes Asia 100 to Watch honoree last year, PayMuno targets small- and medium-sized companies as well as micro businesses (which together make up 99.5% of businesses in the Philippines) that remain underserved by traditional payment providers. "Our biggest competitor is traditional payments like cash," Plaza says in a video interview from Madrid, where he celebrated his 28th birthday.
In February, PayMongo raised $31 million in a series B round, bringing its total funding to about $46 million. Founded in March 2019, it joined Y Combinator's summer cohort later that year, becoming the first Philippine fintech to be selected by the U.S.-based startup accelerator. Upon graduation it obtained $2.7 million in
“Our biggest competitor is traditional payments, like cash.”
Plaza, who is looking to spread beyond the Philippine archipelago, says that each funding round has "changed the narrative of the company" by helping it to release products for e-commerce platforms, such as Shopify and WooCommerce, and mobile apps.
"From the start, the biggest misconception we had to actively educate outside investors about was the reality of the Philippine market," says Plaza, a Forbes 30 Under 30 Asia honoree from 2020. "Not too long ago, they saw it as a small market," he recalls, adding that "now they're saying we should double down in the Philippines." The country was Southeast Asia's fastest-growing digital market in 2021, according to a Google, Temasek & Bain report. It forecasts that by 2025, the Philippine internet economy will have grown from $17 billion in 2021 to $40 billion (2x).
Some of this growth will likely come from increased financial inclusion in a country where about half the population remains unbanked. The government estimates that while only half of Filipino adults had a bank account as of 2021, the group almost doubled in size from 27% in 2020.The country's latest national strategy for financial inclusion aims to introduce digital payments for all communities by 2023.. "We need more people who are 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 fintechs, which are forming a "complementary ecosystem." To achieve its goal of becoming an industry leader, PayMongo is collaborating with other fintechs including established e-wallets GCash and Maya to make online payments more convenient. Prioritizing partnership over competition makes sense for PayMInput, says Sachin Mittal, who heads telecom, media and technology research at DBS Bank in Singapore. "It's important that you collaborate with a market leader that will promote your solution," says Mitta l, referring to GCash, the Philippines' largest e-wallet with 51 million users as of October 2021.
“We had thousands of businesses asking for the solution overnight.”
When Plaza, along with fellow PayMongo cofounders—including chief technology officer Jamie Hing III, chief operating officer Edwin Lacierda and former chief growth officer Luis Sia—first got together to start the company, they weren’t thinking about a digital payments platform. Plaza met Sia in college through their involvement with computer science clubs. The two later worked together to develop software at local logistics firm QuadX. In 2016, Plaza and Lacierda joined forces to build an analytics platform for voting behavior.
Plaza says that PayMongo was initially a "side project" of the short-lived software consultancy he founded in 2018 called 22 Delta Labs. He realized that integrating payments was one of the hardest tasks for micro, small and medium-sized enterprises as they had to rely on outsourced software. "We had thousands of businesses asking for the solution overnight," says Plaza. "We realized, why don't we actually just focus on payments?"
PayMongo now not only plans to expand beyond the Philippines to other Southeast Asian countries, but also intends to broaden its scope by becoming a platform for scaling small businesses in the region. By year end, it plans to increase its employee count from 200 to 300 while expanding the range of services it offers sellers. Last August, PayMuno launched an accelerator program that helps small entrepreneurs with a two-month transaction fee waiver and free webinars on business, finance and technology. The company believes future efforts could build on such programs.
After benefiting from Y Combinator's accelerator program and learning from partners and investors, Plaza says that PayMongo wants to do the same for other small businesses looking to expand. Besides providing "financial infrastructure for everyone," he says the real measure of PayMongo's success will be in its ability to enable its employees to start their own companies. "When people who have actually helped us build this look back and say that their time in PayM