As consumers spend more time interacting over social media and messaging platforms, those providers are making sure that they can also make payments related to any topic of conversation. But the arrival of Apple Pay Cash is complicating the market.
Tel Aviv-based PayKey had to deal with this issue a year ago, shortly after Australia’s Westpac added PayKey to its iOS banking app. Westpac added the capability in March 2017 but withdrew the PayKey button in July after pressure from Apple. Apple’s move against Westpac appears to reflect the dynamics of the Australian banking industry, since several of PayKey’s bank clients in other countries were able to add PayKey to their iOS banking apps — Westpac is one of several leading Australian banks which declined to offer Apple Pay to their cardholders because of a dispute over open access to the NFC hardware on iPhones. However, the move sent a clear message to PayKey that it needed to diversify, particularly as Apple adds its own P2P functionality to its iMessage platform.
“We initially just offered P2P payments, because we saw banks were losing out as customers used non-bank services for P2P transfers,” said Guy Talmi, PayKey’s CMO. “But we recognize there is a lot of potential beyond just P2P transactions.”
PayKey offers banks a white-labelled “social banking” payments keyboard which consumers can download, and which is embedded in social media apps such as Messenger, Twitter or WhatsApp. PayKey sees major opportunities in Asia-Pacific and Latin America, particularly in emerging markets where PayKey provides banks with a way to reach underserved customers.
“We’re experiencing great expansion globally, with 15 banks already commercially signed with us, of which 10 are live and the other five are finalizing their integration,” said Talmi. “The latest banks to join are Standard Chartered and Shinhan from Korea.”
Other banks using PayKey include Singapore’s UOB, Turkey’s Garanti Bank, Israel’s Bank Leumi and Colombia’s Banco Davivienda.
Last October, PayKey received $10 million in Series B funding led by Israeli-Chinese investment firm Mizmaa, taking its total funding to $16 million. PayKey’s technology partners include Mastercard and banking software vendor Temenos.
PayKey is looking at other verticals besides banking and recently launched what it terms a Social Telco Solution and Mobile Smart Keyboard for telcos. This provides a single channel for telcos to communicate with their customers, as an alternative to siloed communications channels which can include telco-operated call centres, IVR systems and websites as well as third-party mobile resellers.
“We’re working extensively with non-bank mobile wallet providers such as telcos, and are already getting traction with them,” said Talmi. “We realized we could bring significant value to telcos, as they are very similar to banks in having millions of customers. Wallets provide a very good revenue model for telcos, as they are an attractive way for them to generate new transactions. For telco-operated wallets, we can handle anything that involves account information such as balance enquiries, P2P transfers, and airtime top-ups and transfers.”
The success of Venmo, a PayPal P2P app designed to mimic a social networking app, is a key driver for banks to want to offer PayKey-style P2P payments, Talmi said.
“Venmo makes it so easy and fast to send money to someone, compared to traditional bank transfer services,” he said. “Because so many people are using it for P2P transfers, Venmo has disrupted a space that was traditionally the domain of banks.”
PayKey could work with bank-owned P2P payments schemes such as U.S.-based Zelle, which Talmi describes as complementary to PayKey rather than as a competing platform. The Zelle platform itself has guidelines for keeping its branding and experience consistent across banks; PayKey can serve as a way to extend those capabilities beyond what Zelle allows.
“We place a bank’s ‘real estate’ inside its customers’ messaging apps,” Talmi said. “Millennials tend to just use a few favorite apps. With PayKey, instead of searching for their bank’s app among the many apps on their phone, they can find their bank inside their favourite social media apps.”
Without needing to leave their social media app, consumers can send money to one another from their bank account or perform banking transactions such as balance enquiries or depositing funds to saving accounts. Senders don’t need their recipient’s banking details, as PayKey is a contact-to-contact system, but recipients must have bank accounts. Integration between the bank’s app and PayKey takes place at the API level, with the bank handling encryption and authentication.
Last year, Davivienda integrated PayKey with its DaviPlata digital wallet (Plata means cash), which is aimed at its own customers and unbanked consumers.
“Using PayKey, we’ve transformed the smartphone keyboard into a new channel for financial services,” said Maritza Perez Bermudez, Davivienda’s executive VP of retail and marketing. “This enables P2P transfers and balance enquiries from within any mobile application, including all social and messaging apps."
Davivienda is generating significant marketing opportunities from customers who’ve downloaded its banking keyboard.
“We see huge advertising value by having our brand placed right in front of them every time they use the keyboard, even when they don’t tap the banking button to open the menu,” Perez Bermuda said. “Since March 2017, when we launched the keyboard functionality, the number of downloads of DaviPlata has tripled to 1.1 million, and our customers have made over US$3 million in transactions. We were able to release an entire marketing campaign and create a lot of buzz around the new banking keyboard, for which we developed a lot of advertorial content.”
Davivienda has expanded the features available in its keyboard to include the ability to request payments from friends, split bills, and top up airtime. Requesting payments from a friend, for example for their share of the rent or a meal, is a very common use case in millennial P2P payments, said Talmi.