For any FinTech product, having a solution that can address as much friction for as many users as possible is key to scale. Yet when those end-users exist across a range of markets with differing levels of digitization and varying degrees of regulation, scaling can quickly become a complex puzzle.
In the Middle East and North Africa (MENA) region, much of the population is underbanked, while the regulatory climate differs from one market to the next. As Ali Sattar, founder and CEO of SimpliFi, recently told PYMNTS, this market fragmentation can make it difficult for any FinTech to find traction.
Yet Sattar also acknowledged a rising gap in the market as digital platforms take off. More businesses are seeking ways to make digital payments to workers and business partners, with market segments like the on-demand economy opening the door to streamline the process of one-to-many payouts.
As Sattar explained, developing a solution that works with the existing climate can help ease the challenges that market fragmentation bring to B2B payments modernization.
A Fragmented Market
Before launching SimpliFi, Sattar recalled his experience at United Arab Emirates-based Careem. Often viewed as the MENA version of U.S.’s Uber, Careem offers on-demand services including ride-hailing and food delivery services.
In the U.S., such a technology company can adopt technology that is suitable for most of its drivers and customers across all 50 states. However, in the MENA region, facilitating payouts to restaurants and drivers emerged as a major pain point.
“The MENA region is very fragmented,” noted Sattar. “You’ve got lots of different markets which are very small, with very different regulations. You’ve got to solve for lots of different local pieces for every market which becomes very difficult to solve for and sale across.”
Making this challenge even more intense is the high level of underbanked individuals. Even if the infrastructure were in place to seamlessly pay a delivery driver, for instance, that driver may not have a bank account into which funds can be deposited.
Often, gig workers and other types of employees are required to front the bill. In this context, Sattar identified prepaid cards as a valuable payment technology that could not only overcome the challenges of a fragmented market but also do not require a bank account to allow a recipient to access and use those funds.
The As-A-Service Model
While the creation of a platform for a business to issue cards to end users like employees or gig workers is not a new concept, SimpliFi, which recently launched with seed funding, is using the as-a-Service model to connect with businesses and platforms.
Cards-as-a-Service offers greater flexibility in how this on-demand prepaid card issuance is applied to various use cases, noted Sattar, from employee expense management to gig worker payouts, while it also ensures businesses retain their brand and customer relationship with the cards they issue.
What’s more, business adopters can also open a new revenue stream via the interchange fees, which would normally go towards a bank. Firms can also make use of the data they obtain from the transactions and usage patterns on the cards.
All of this, noted Sattar, might be able to drive businesses towards modernization and a more digital approach to managing finances. As a flexible solution that can facilitate a high volume of payouts more quickly, the solution can also support firms’ customer acquisition and talent satisfaction.
Most importantly, he said, the businesses that issue cards do not need to have expertise in development or finances.
“You don’t have to have an army of finance people in the back office, reconciling and pushing payments through different banking channels,” he explained.