In today’s blog, we’re going to interview one of our businesses currently raising funds on Eureeca – Zink Pay, interview with Co-Founders and Co-CEOs Timmy Alassad and Padraic McGreal.
Zink Pay is on a mission to obliterate cheques? Why? What’s the problem with cheques?
P: The UAE and other MENA+ countries are still heavily cash and cheque-based economies. It is a legacy payment system that is slow, inefficient, and costly for businesses, customers, and the overall economy.
Most businesses today still require cheques for recurring bills such as rents, utility bills, insurances, school fees, and auto leasing to name a few. The process of collecting, processing, and storing post-dated cheques is very expensive for Billers, not to mention the 1.1M+ cheques that bounce annually. The entire end-to-end process is inefficient and time-consuming, expensive, prone to human error, slow, and susceptible to bounced cheques and irregular signatures. Longer processing periods mean longer time windows required to recognize missing payments and the need to chase payments.
According to our research, it costs $5 USD to process each cheque. If we quantify this cost in terms of dollars as to the negative impact it has on the overall UAE economy, we can simply look to the UAE Central Bank’s figures for 2021. In 2021, there were 21M+ cheques presented and cleared with a total value of over $272B USD. The math is easy – $5 cost per cheque multiplied by 21M cheques, amounts to over $100B USD in processing costs.
Moreover, we are talking about 1000s of hours wasted on such manual cheque-related tasks as cheque collection, cheque scanning, standing in line for deposits, and the most painful task of all – manual reconciliation. 1000s of hours of wasted human resources that could be directed towards business development, growth, and innovation instead of standing in queues and paperwork.
T: Let’s talk about the Payers for a second. UAE Payers all too well know the real pain behind post-dated cheques. Cheques hinder the Payers’ visibility of their cash flow. First of all, Payers must track their post-dated cheques via calendar reminders in order to not miss the next payment. Yet, Billers are not obligated to deposit Payers’ cheques on the date that is indicated on the cheque. Payers must anxiously carry the right balance in their account just in case the biller decides to deposit the cheque. Billers have the right to deposit their cheque any time within the 6-month window from the date of the cheque.
And last but not least, Payers also have to deal with the headache of irregular signatures on cheques and potential cheque-related fraud cases.
What Solution is Zink Pay bringing to the Market?
P: Zink Pay is a new payments and reconciliation model which is Biller focused and Biller driven.
Zink Pay is a complete end-to-end payments and reconciliation disruptor for any recurring payment. It is a new payments and reconciliation model which is Biller focused and Biller driven. It eliminates a business’ reliance upon the traditional cheque and cash-based system and moves the market’s mindset to monthly payments.
There are 2 elements to the platform – Payments and Reconciliation.
Payments consist of Business-Initiated Direct Debit, Direct Transfers, and International Transfers.
Zink Pay’s Direct Debit and Reconciliation System is a “pull-based” system. In other words, once authorized by the payer, Zink Pay “pulls” the payment from the payer’s account and reconciles the payment back into the businesses’ accounting software.
This “pull-based” nature has huge benefits for the business including but not limited to reducing late payments, ensuring timely payments, improving cash flow, retaining existing customers, attracting new customers, reducing admin cost, reducing payment failures, simplifying the billing setup processes, and of course, simplifying reconciliation, and allowing more data control.
The Zink Pay solution provides businesses with visibility, control, and predictability over their inbound payments and cash flow. It is designed to make it easier, more efficient, and more secure for businesses to collect payments while providing their customers with a simple, safe, and secure payment option for their regular payments or one-off payments. It is an aggregated solution that works for B2B, B2C, and C2C.
What makes Zink Pay different from a Bank’s Direct Debit?
T: Banks today in the UAE only offer payer initiated direct debit. The Payer has complete control over the amount and timing of the payment and can cancel the direct debit at any time with his or her bank. Businesses have no visibility, control, or predictability over their inbound payments or cash flow. Banks do not reconcile payment into the Businesses’ accounting software.
Zink Pay is a biller-initiated direct debit and reconciliation system. Businesses have complete visibility, control over their inbound payments and cash flow. Zink Pay then reconciles the payment back into the businesses’ accounting software.
Isn’t it easier for people to pay with credit cards?
T: That’s a very good question!
Individuals and business can use their credit cards or debit cards to pay for any recurring or once-off payment as it’s fast and convenient to set up. However, the downside of credit and debit cards is that they’re very expensive – with 2% to 3% of transactions going to the card companies which comes directly out of the Biller’s pocket, reducing their bottom line. In addition, people’s cards expire every 3 to 4 years, or in some cases more frequently, depending on the bank, which results in payment failures and ultimately customer churn.
How Big is the Market?
P: The market is huge!
Zink Pay will operate in the UAE and across the MENA+ region in multiple sectors including real estate, schools, auto leasing, insurance, subscriptions, and any other recurring payment sector. Zink Pay aims to be in 5 countries within the first 3 years, including UAE, KSA, Egypt, Pakistan, and Indonesia with an estimated 10M+ active accounts. The Company will earn a minimum of $1 USD per account/month with an individual Payer having multiple accounts such as rent, school fees, auto leasing, insurance, subscriptions, and any other recurring payments. With the region having a population of more than 635.5M people we estimate that there is huge potential for Zink Pay to hit its account target.
2022 will see businesses in the region investing heavily to strengthen their digital payment offering to help reduce their costs and capture a technology-savvy customer base.
What other products will Zink Payroll out across the region?
T: Our entry point into the market is with a practical solution designed to simplify payments management. Zink Pay’s direct debit and reconciliation services remove the headache of late payments, giving businesses confidence in their cash flow and reducing their operating costs while reconciling all payments into the business’ accounting software via an API. We have 3 phases in our Product Road Map:
Right now, we are launching Phase I: Payments and Reconciliation
Over the next 6 to 9 months, we will be rolling out other payment channels including a Biller App; Cards; Wallets; F(x); Cryptocurrencies; and any other payment options that may exist in the country in which we operate. Billers will not have to integrate into each and every payment channel. Their single integration into Zink Pay will give them access to any payment channel mix they require via our suite of APIs. This significantly reduces their integration and operating cost.
By leveraging their integration into Zink Pay, Billers will minimize their integration touchpoints. This will allow them to streamline their reconciliation process. Instead of receiving multiple reconciliation files from their different payment channel providers, they will receive one file from Zink Pay which will include the reconciliation of all payments from all their payment channel providers. This allows Biller’s to significantly reduce their integration costs.
The second Phase includes Service Now Pay Later (SNPL) offering. Zink Pay is applying a “Buy Now Pay Later” offering to the service industry, spreading the cost of the “service” out over a more manageable timeframe. The current process for handling a big-ticket service is broken. It is not unusual for the region’s schools, insurance providers, landlords to request large upfront payments just to avoid the hassle and costs associated with multiple post-dated cheques.
Zink Pay offers a simple alternative to the upfront payment of services. It is a very different proposition to other Buy Now Pay Later services, as Zink Pay is not encouraging people to buy things they don’t need, but rather enabling them to purchase the service they require at an affordable rate.
Phase Three includes Data Analytics, AI, and Direct Marketing through Zink Pay. Data analytics and AI will allow Zink Pay to predict payer’s and biller’s behavior, improve decision-making across the board and allow Zink Pay and its partners to target their marketing efforts more effectively. Zink Pay will not only be able to protect its market share, but also expand into new territories more cost-effectively.
What is the Revenue Forecast over the next 3 years?
P: We have a very conservative revenue forecast. Zink Pay will be operating in 5 countries within the first 3 years, earning $1 USD per account/month. An individual payer can have multiple accounts such as rent, school fees, insurance, subscriptions, and any other recurring payments. The projected number of accounts by year 3 is 10M+ active accounts. The Revenue forecast is broken down by year 1 where we aim to earn $713K USD, Year 2 at $26M USD, and Year 3 at $157M USD.
Our revenue forecasts are based solely on Phase 1, Payment and Reconciliation platform, which constitutes a channel mix of direct debit and credit cards. Phase II, Service Now Pay Later and Phase III, Data mining, analytics and direct marketing will be implemented in 2022/2023. These revenue streams have not been factored into our current financial forecasts.
Bounced Cheques are No Longer a Criminal Offence – effective Jan 2022. What does this mean for Zink Pay?
P: No longer can the heavy hand of the criminal justice system be used to enforce payment of a bounced cheque, making cheques one of the “dodgiest” and most expensive payment methods today in the UAE. Businesses must shift their over-dependence on cheques as a payment method to other methods of payment given that the much-desired coercive power of the criminal courts no longer exists for bounced cheques. The illusion of cheques being secure as a payment method has just evaporated.
Many UAE landlords, for instance, are already forced to make some changes in the way they sign new tenancy agreements. In the past, the threat of criminal prosecution for bouncing a cheque allowed some landlords to request and accept 12 post-dated cheques from their tenants. Now, landlords don’t want to deal with 12 cheques that can potentially bounce without any criminal consequences for the tenant. With the lack of criminal consequences around cheques, cheques offer little value to landlords and create a situation for an increased number of potential disputes. 12 cheques simply mean 12 potential disputes with each cheque eligible for partial payment that could require multiple physical trips to a bank branch that can process partial payments. It should be remembered, that not all bank branches process partial cheque payments, and only then when there is in excess of 5% of the total value of the cheque in available funds in the account.
However, with Zink Pay, even if the payer misses their payment on the due date, Zink Pay will simply perform automated re-try until the direct debit balance is settled.
Today, Zink Pay’s business-initiated direct debit and reconciliation system can ease the headaches for Billers by seamlessly collecting and reconciling any recurring payments for businesses. Our direct debit and reconciliation system gives businesses greater control over the payer/user experience and speed of settlement. Businesses can eliminate the hidden inefficiencies in their existing payment processes while retaining existing customers/tenants and acquiring new customers/tenants. Not only that, but they can also make payments their competitive advantage by streamlining and future-proofing their finance function, all while offering their customers the best experience available.
How does Zink Pay Collect and Reconcile Payments Automatically?
T: Payers enter their payment details securely online, digitally sign a Direct Debit Mandate authorising the Biller to collect payments by Direct Debit.
Zink Pay uses direct debit to pull payments automatically from the Payer’s designated bank account on the due date. Zink Pay connects seamlessly to the Biller’s accounting software to automatically reconcile the payment down to the account level.
Businesses have full visibility and control of all payments. They can collect 97.5% of payments successfully, on first-time requests. When a payment does fail, Zink Pay automatically notifies the Payer of the failure and when the next retry payment will occur.
Want to Become an Investor?
If you are interested in knowing more about Zink Pay and its crowdfunding round, you can take a look at the broad range of investment opportunities on offer today by clicking this link. If you have any questions or comments, or just want to say hello, you can always get in touch via our contact form