The success of mobile payment adoption in China offers a glimpse of a future where customers spend, save, and make all sorts of economic transactions without old-fashioned cash. Meanwhile, in the rest of the world, fintech startups are addressing a growing consumer appetite for cashless solutions, with traditional financial institutions and banks also rolling out digital payment features.
Following the trend, Wallyt, a Chinese software-as-a-service (SaaS) fintech startup founded in 2018, offers a suite of mobile payment solutions to overseas financial institutions and merchants to help them go-digital. The company also provides tech and marketing strategy supports to local banks, financial institutions, and stores, smoothing their shift to managing transactions cashless.
Wallyt mainly targets Southeast Asian countries including Indonesia, the Philippines, Vietnam, and Thailand, where credit cards were never popular, and consumers might be willing to jump directly to e-payment solutions. It also operates in Hong Kong, Macau, Taiwan, Middle-east, and Europe.
“We want to become the most reliable SaaS provider. Never competing with clients but offering the best products to help banks gain success in the market,” said Liu Tong, CEO and founder of Wallyt, in a recent interview with KrASIA.
Clearing the go-digital path for banks and merchants
Wallyt, registered in Hong Kong and based in Shenzhen, China, was related to the international business department of SwiftPass, a leading Chinese mobile payment solution provider. In 2017, SwiftPass became the first publicly listed company in the industry through the merger with Shenzhen-listed company Huafon Microfibre (SHE: 300180).
Liu joined SwiftPass in 2017 to oversee the firm’s global expansion, after a stint at Westpac Banking Corporation in Australia as a banker. In 2018, to further target the overseas mobile payment, Liu founded Wallyt under a variable interest entity (VIE) structure, with SwiftPass as an early strategic investor.
Wallyt gained its first batch of clients by introducing Alipay and WeChat Pay—China’s two major e-payment platforms— to local banks overseas. Liu explained to KrASIA that many overseas banks and financial institutions were very receptive to one of Wallyt’s core services, the integration of WeChat and Alipay into local banks’ services, thanks to the strong spending power of Chinese tourists.
For instance, it teamed up with Asia United Bank (AUB), Banque Pour Le Commerce Exterieur Lao Public (BCEL), and Commercial Bank of Ceylon PLC to enable Alipay and WeChat Pay in the Philippines, Laos, and Sri Lanka, respectively.
“What Wallyt aims to do is not only for Chinese tourists overseas but also to bring the benefits of mobile payments to local consumers,” Liu explained.
Therefore, the firm has been beefing up its offerings. Currently, it offers a complete set of mobile payment solutions to local banks and business clients, such as white-labeled e-wallets hosting various financial services, personalized electronic card systems for merchants, and online food ordering systems for restaurants owners, among other services.
Compared to that in the US and European countries, Wallyt’s development in the Southeast Asian market goes much smoother, Liu explained. “Selling our mobile payment solution in the US is more difficult since the credit card system is entrenched and paying via smartphones can’t make a great leap on the widely-used credit card.”
In Southeast Asia, instead, the firm found a warmer response from local partners and customers, also supported by state policies fomenting electronic payments.
“For local regulatory agencies, electronic payment solutions can not only help to channel the spending power of Chinese tourists, which is a boost to the economy, but can also help governments regulate and supervise the financial activities in the country underpinned by better data management,” Liu said.
“For banks and financial institutions, the convenience of mobile payments helps them to reach more customers and attract deposits. For some merchants, we have the experience and technology to provide them with personalized services,” he added.
So far, the company has collaborated with more than 100 banks and financial institutions across 50 countries, offering its services to over 100,000 brands, according to Liu. Last year, over USD 2 billion worth of transactions were generated via Wallyt’s system, bringing a revenue of RMB 30 million (USD 4.34 million) to the firm.
The company’s revenues come from two channels: Fixed revenues including setup, maintenance, and consulting fees from business partners, as well as service fees generated from transactions on the system.
Is fintech replacing old finance?
Speed is essential, especially in the highly competitive fintech sector, where other major tech firms such as Grab, GoJek, Tencent Holdings, Ant Group, AirAsia, among others, are vying for a foothold.
A financial revolution is brewing in Southeast Asia, one of the world’s most populous and economically dynamic regions. Nearly half of urban consumers who are commercial bank customers already use e-wallets, while the proportion is estimated to reach 84% by 2025, a study by Boston Consulting Group shows. The report also reveals that more than one-third of Southeast Asian consumers are willing to shift some of their banking activity, including credit cards and loans, to non-bank digital players.
In the midst of the transformation, Wallyt positions itself as a partner for banks and financial institutions willing to digitalize their services.
In Liu’s opinion, compared to news entrants and fintech upstarts, banks and traditional institutions still have solid advantages.
“They probably react to the changing market a bit slower than tech firms, but they won’t be lagging behind forever. It’s because of a well-established credit system, their central position in the industry, endorsements from governments and regulators, as well as a large amount of the banked people,” Liu explained.
Meanwhile, Liu admitted that the impact of the coronavirus pandemic is still lingering. “Our business is hit hard because financial activities haven’t returned to pre-COVID times, while is uncertain when everything will go back to normal,” Liu said, adding that this period of time gives Wallyt a window to consider new upcoming services.
He revealed that the firm has been growing its revenues by 200% year-on-year, and is set to reach an estimated revenue of RMB 80 million (USD 11.58 million) by the end of this year driven by more partnerships, despite a drop in transactions due to the pandemic. The company is also preparing its first external funding round this year.
As a safe and convenient way of making purchases, digital payment is expected to keep growing among Southeast Asian households to hit USD 1 trillion by 2025, according to a report jointly published by Google, Temasek, and Bain & Co. Wallyt wants to get a slice of the pie.
This article is part of KrASIA’s “Inside China’s Startups” series, where the writers of KrASIA speak with founders of tech companies in the country.