Progoti Systems announced that it has obtained the Bangladesh Bank license to work as a payment service provider (PSP) as per the Bangladesh Payment and Settlement Systems Regulations 2014. The company said it will launch a digital payment service in the near future. The product named NoboPay is currently in beta and the company did not announce a date for the commercial launch.
Progoti's previous attempt at payment with SureCash is a mixed bag. SureCash tried and did several things right. But it could not break out in the market for various reasons including strategic missteps, competitive pressures, and lack of resources.
This time around, the company has certain advantages. One for the experience. It understands the market and its limitations. Second, it has built a successful bookkeeping product for small businesses called TallyKhata that can offer it significant leverage in the market. More on that in a moment.
Give me some background and context. Progoti Systems earlier had the central bank license to work as a payment system operator (PSO). It had provided technical services for mobile financial services (MFS) of four banks, including Rupali Bank’s SureCash. The company came to consumer consciousness as the owner of the SureCash brand.
The company began a strategic change of direction last year after running into challenges amid the pandemic. To that end, it wanted to change its structure of service from PSO to PSP and applied to the central bank for a license, per a Bangladesh Bank official. The Bangladesh Bank then canceled its PSO license and awarded the PSP license.
What do we know so far about NoboPay? As mentioned above, NoboPay has not launched commercially yet. The company's website said the service is in beta. NoboPay will allow users to send and receive money from one NoboPay wallet to another, transfer balance, pay bills various utility bills, and add money from banks and cards. The website also said sending money, cash-out, and bill pay services will be free of cost.
What are we missing? Over the past years, Progoti Systems has built a highly successful bookkeeping product for small businesses called TallyKhata. The company claims some 5 million businesses use the TallyKhata app across the country for keeping all kinds of business records. The app is free and runs without the Internet. As Progoti Systems launches NoboPay, it can easily integrate the payment system with TallyKhata fast-tracking its user acquisition. Currently, TallyKhata does not have a payment feature. But a need among businesses for payment solutions within the app is a no-brainer. Yes, TallyKhata can integrate other payment options and it likely will do. But for NoboPay, TallyKhata offers an excellent launchpad while also strengthening TallyKhata's use case.
But what is TallyKhata? TallyKhata is a bookkeeping app for small businesses owned by Progoti Systems, as mentioned earlier. The app comes with a handful of useful features for small businesses and aims to do more. To begin with, it allows businesses to send a transaction SMS to the customer for each credit sale helping maintain a transparent record of the transaction and credit.
Cashbox Milai feature allows businesses to see the daily status of cash in 3 minutes. You simply enter your transaction details and the app gives a report instantly.
To make credit collection easier, the company launched a feature called Tagada which lets businesses send reminder SMS to customers for payment. "Tagada messages can be sent at any time to remind the customer of the credit transaction payment," TallyKhata website says. "This makes credit recovery easy. Now, you can collect the dues on time and there is no chance to miss the old ones as well."
TallyKhata has the ambition to get into the financing as well. It looks to use the accounting data of users to create credit profiles of each business and help them access bank finance. "Tallykhata creates a data bank and transaction profile based upon transactions and activities on the app," writes the app. "You can develop a transaction history and profile for your business. It can help you to get access to collateral-free loans to expand your business." The company has not started on this path yet but it is a real possibility.
Launching NoboPay can add to all these strategic ambitions. TallyKhata describes on its web: "By attaching your mobile banking account in Tallykhata, you can quickly receive payments from your customers, pay to your suppliers and do direct transactions with banks."
Small business digitization and B2B commerce: Digitizing small businesses and B2B commerce have become a highly lucrative vertical over the years. As ecommerce comes full circle, B2B commerce has seen some of the biggest funding rounds in Asia in the last few years. In Bangladesh, ShopUp has been working in the vertical and has built a comprehensive business around lending, ecommerce, and logistics. TallyKhata, given the scale of the app, has a real opportunity to build more features on top of its platform for small businesses.
PSP payment products landscape: Four companies: iPay Systems, D Money Bangladesh, Recursion Fintech, and Green and Red Technologies – have so far been issued the PSP license in Bangladesh. Pathao is also in the process of getting a PSP license and is about to launch its wallet product in the next few months. Online grocery startup Chaldal has also applied for a PSP license. Unlike MFS companies, PSP players have yet to build large operations in the country. The first PSP player iPay was launched in 2018 and shut down its operation after three years of operation.
Progoti Systems has some experience in the payment business. SureCash, at one point, did well before running into operational and growth challenges. With that experience and TallyKhata as a launchpad, NoboPay has a chance to break into the market. At the same time, a native payment product can benefit TallyKhata as well. But every advantage comes with inherent disadvantages. Each of these products offers large enough market opportunities. Pursuing both can create an internal competitive challenge. To that end, we will have to wait to see how the company plays with its leverages.