Mobile payments are a key trend making waves in the US and Europe, but the technology has potential for emerging markets too. Indonesia-based startup Coda Payments is one company looking to unlock the potential in less traditional markets and today it launched its service in partnership with local operator Axis — which has 17 million customers — targeting mobile-owners of all types.
Carrier billing in emerging markets is not new — Bango, partner of Facebook and countless others, raised $10.2 million last week to increase its footprint in Asia — but Coda is adopting a different approach. The company is founded by former GSMA executives who spent three years helping operators bring e-commerce solutions to emerging markets, with mixed results.
“Lots of the operators didn’t see success with their products and services, despite the fact that they had great assets. There’s so much potential here and they were big missed opportunities,” co-founder and CEO Neil Davidson told TNW.
Mobile payments for all devices
Coda’s technology essentially turns any mobile phone — including feature phones — into a payment devices which can buy content for a phone, PC, or even the physical world. Given that credit and bank card ownership is low in many markets — US-born Davidson estimates that fewer than 1 million of Indonesia’s 240 million popular own cards — the technology has vast potential for users, merchants and operators alike.
“The idea of Coda is to make it much easier for operators to leverage assets in payments, make it easier for online merchants – especially those in digital content — to charge using prepaid airtime,” Davidson said.
Bango and its ilk target smartphone owners using an app-store centric approach which enables carrier billing for mobile owners. However, typically up to 60 percent of the value of mobile transactions is taken by operators, but Coda is also enabling a fairer spread, and more revenue for merchants.
“Carrier integration is tough for merchants so it makes more sense for us to do it,” Davidson explained, pointing out that Coda has an API for merchants. “We believe that we have the commercial innovation is to make carrier billing affordable, and an opportunity to unlock lots of really cool use cases, while keeping it profitable for all parties.”
The firm charges merchants an undisclosed percentage for processing transactions, “keeps a bit” for itself and shares the rest with operators. Costs are kept to zero for users since the confirm SMS that they send is free, though downloads that use a data connection are not exempt from charge, as you’d expect.
Axis Beli Pake Pulsa
Axis customers can make payments through their device by selecting the ‘Beli Pake Pulsa‘ option on a merchant website, which then prompts them to provide their phone number. An SMS is sent to them with a confirmation code, to which they then reply with the confirmation code to confirm the purchase.
Regional expansion plans
The service is starting in Indonesia, but Davidson said there are plans to expand to other markets in Southeast Asia.
“We’ll be looking at trying to expand regionally…[since] there’s a lot of potential in a these markets. We’re initially focused on Indonesia, where we are aiming to build a critical mass of merchants and operators, but we are in talks with Malaysia operators, and our investors have connections in Vietnam and Thailand.”
Coda’s engineering team is actually based in California, but the startup — which is domiciled in Singapore, as many in the region are — is hiring customer care, development and sales staff to broaden its base in Indonesia’s capital city Jakarta.
The startup was started by Davidson, Paul Leishman (COO) and Bobby Choi (CTO). It has raised undisclosed funding from Japan’s GMO Venture Partners — becoming the first investment from its $15 million Southeast Asia fund — while Coda was also one of Singapore-based Goldengate Ventures‘ first deals. Its other investors include Digital Media Partners, and a number of angels.