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Pathao Preparing To Launch Digital Payment Wallet

Pathao, Dhaka-based fast growing logistics + motorbike ride-hailing startup, aspires to be more than a ride-hailing company. It has since expanded to food delivery, car-hailing and continues to look for opportunities to explore. Now, the company is in the process of launching a digital payment wallet. In an interview with CNBC on Thursday, Pathao CEO Hussain M Elius, said that Pathao has been working on a mobile wallet and is about to launch the service in May.

“Payment is a big challenge. Bangladesh is a cash-based economy. Most of the transactions happen in cash. However, we are very excited to move into the e-transaction space,” said Elius. “Just the next month we are launching our own wallet.”

Riders will be able to top up their app before hopping on a ride or top up from a driver after a ride. Pathao plans to use its existing driver network as a distribution channel for its digital wallet which should give it an advantage from the beginning.

Founded in 2015 by Hussain Elius, Shifat Adnan, and Fahad, the company started out as a consumer-facing on-demand delivery business as part of a venture experiment from now-defunct business building platform HackHouse.

It later pivoted to e-commerce delivery where it quickly found a business and became a leading player within a short period of time. “On-demand delivery was a challenging space to operate because of poor market demand and huge resource requirement, so we shifted our focus to ecommerce in last October 2015,” told Hussain M. Elius to Future Startup in a 2016 interview. Today, Pathao logistics is one of the biggest players in eCommerce delivery in Bangladesh.

In 2016, it made its foray into ride-hailing transportation space with Pathao Rides and a fleet of 200 motorbikes. The idea was to use the same fleet to carry passengers in the peak-office hours and maintain eCommerce delivery during the off-peak hours.

The company now claims to serve ‘thousands of’ daily rides and continues to receive rave reviews from its users.

In November last year, Indonesian ride-hailing unicorn Go-Jek reportedly co-invested “around US$2 million” in Pathao as part of its Series A funding. The startup has just raised another round of investment at a valuation of over $100 million.

Getting into payment is a strategically important move for Pathao. The company has been trying to become a platform for various services to fend off competition. I wrote in Pathao Launches Pathao Food, Why Pathao Food, Pathao's Leverage and The Business Of Food Delivery:

“To my reading, there are a couple of reasons why Pathao is getting into food delivery 1) it will increase efficiency, for both its logistics business and when it connects ride-hailing, for the riders as well 2) Pathao is a venture funded company and growth is what you sell and Pathao has an obligation to show that it can grow really big 3) finally, Pathao is building its moats, a rather defensive strategy to secure its ride-hailing leadership (in bike of course) by owning customer interactions and giving more than one reason to customers to stay with it ahead of competitors. There are other reasons but these are I think the most important ones to note.”

For Pathao, initial user acquisition for its wallet, up to a certain level, should not be that big of a challenge given the fact that its existing riders will be its users and drivers will be its distribution point.

It will be fascinating to see how it competes with pure fintech players like bKash, which has just got into a strategic partnership with Ant Financial, and iPay going forward.

Related reading

Correction on June 14th, 2018:

A previous version of this article incorrectly mentioned Fahim Saleh as a co-founder of Pathao. Mr. Saleh is an angel investor, not a co-founder.

Mohammad Ruhul Kader is a Dhaka-based entrepreneur and writer. He founded Future Startup, a digital publication covering the startup and technology scene in Dhaka with an ambition to transform Bangladesh through entrepreneurship and innovation. He writes about internet business, strategy, technology, and society. He is the author of Rethinking Failure. His writings have been published in almost all major national dailies in Bangladesh including DT, FE, etc. Prior to FS, he worked for a local conglomerate where he helped start a social enterprise. Ruhul is a 2022 winner of Emergent Ventures, a fellowship and grant program from the Mercatus Center at George Mason University. He can be reached at ruhul@futurestartup.com

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