Banking on cashless transactions
Banking on cashless transactions
With Cambodians beginning to embrace online shopping and other e-commerce activities, there is a pressing need for local online payment platforms similar to PayPal or Stripe to process their transactions. Bongloy, a homegrown online payment gateway, was developed to replace the prevalent cash-on-delivery system currently favoured by Cambodian e-commerce businesses, enabling them to go completely online.
The Post’s Ananth Baliga sat down with former Silicon Valley startup consultant David Wilkie, managing director of Bongloy, to discuss the experience of developing a payment platform in Cambodia and the growing demand for online payment processing.
In its Doing Business 2016 report, the World Bank this week ranked Cambodia 180 out of 189 economies for the ease of starting a business. How does that translate to startups?
For me personally, Cambodia is actually a very easy place to start a business. I would say it is easier than some other countries in the region. I’m from Australia [and comparatively] it’s not that expensive starting a business here. For me, it was relatively straightforward to get started. I think two weeks is what it took us and that’s not a long time. And the cost was reasonable as well, around $500. It may be different for different sectors. But the experience, for me has been OK.
I think Cambodia in general is a good place to launch a startup. First thing is there’s a lot of opportunities here and the market is opening up. The second thing is you can bootstrap quiet easily here with the low cost of living.
The World Bank report also highlighted the ease of access to credit for businesses in Cambodia, yet startups often struggle to find capital. Is funding an issue for startups?
For what we are doing it can be difficult to get capital. I don’t search for capital; I try and seed the startup myself until I have the working products and customers. And once you’ve got something going, then it’s easier to raise capital. That’s the way I’ve always done it here. It’s not like the US where you can have an idea and get capital. But, here you need a working product before you can show it to investors.
You had announced a tie-up with Wing earlier this year. How is that partnership progressing?
At the moment we’re on pause with Wing. We are focusing on capturing some credit card transactions and have some customers already who need this service. Our aim going forward is talking to banks and to get that going first. So, for Wing we are still interested, but we are focusing on the credit card side for now.
Talking about credit cards, do you think with e-commerce the next step will be getting online payments going?
I think that’s the next natural step. With cash-on-delivery it’s hard to scale and you have to trust in your deliverers. So e-commerce makes sense in a lot of ways.
Online shopping is starting to pick up and this extends to the hotel industry as well, with people who want to book their hotel from overseas. We want to be the payment gateway where people can plug into us and direct those transactions through us.
With setting up a payment gateway, are there any regulatory issues you have to overcome?
We still have to study the law, but as long as we don’t hold the cash we will be OK. We are just the middlemen and only process [transactions]. Right now, we are at a stage where we want to partner with banks and use their licence to do the transactions.
How long do you think it will take to move from cash-based society to one where online payments are the norm?
I think it’s happening now. More and more people are getting bank accounts and with bank accounts come debit and credit cards. I don’t think we will see too much credit card use in the sense of borrowing from the bank. But I do see a lot of debit cards. I think this is the future.
You are also looking at two different kinds of consumer bases here. If you look at tourists, the majority of them have credit cards but nowhere to use them. There are really no point-of-sale spots here and people don’t use them because they are expensive. But then the people here are starting to get credit cards too. They really aren’t spending on credit, but rather on their own cash, and that trend is starting catching on.
