Fast, dependable and easy to use. Can SadaPay revolutionize the FinTech landscape in Pakistan?

Is the EMI model viable in Pakistan? SadaPay seems to think so but can they really have a meaningful effect on FinTech and the banking industry as a whole?

In the last two years, the State Bank of Pakistan has issued at least 12 different licenses for the provision of digital financial services. This license allows startups like SadaPay and NayaPay to establish an Electronic Money Institution (EMI). Among them, Sadapay stands out as a popular topic of conversation online and offline. Customers and competitors wonder whether Sadapay has managed to live up to its name. 

What the SadaPay team has really done is distill financial complexity into a fun, interactive and an incredibly smooth process of participating in banking. However, the idea of financial inclusion and digital financial revolution in Pakistan goes way back and was definitely not pioneered by SadaPay – the question here then becomes, how to evaluate Sadapay’s success in the FinTech revolution and what really can be said about the viability of this financial model? 

Before we step into the FinTech world which is one of the most rapidly evolving industries in the country, we must clarify the assumption that Pakistan hopes to become a digital nation. According to the State Bank of Pakistan’s second quarter report for FY2023, there were a total of  1.1 million EMI accounts when only 4 EMIs had been given a commercial license to operate. This number has been growing rapidly since then.

SadaPay’s growth displays Pakistanis are interested in banking through SadaPay  which as of 27 June 2023, had registered 2,988,007 sign-ups on their mobile application which means.. As the startup continues to gear itself towards accommodating each and every one of them, scaling up and not losing sight of the goal, the team has set up a very high bar for other stakeholders to meet. 

So what is attracting banking customers towards EMIs and most importantly, towards SadaPay? 

How Pakistan began its FinTech journey

Let’s go back a couple of years and then a couple more. As a first step in the direction of branchless banking and financial inclusion Telenor, Pakistan’s second largest mobile operator at the time purchased 51% stake in Tameer Microfinance Bank and launched a branchless banking joint venture called Easypaisa. It offered over-the-counter and mobile wallet facilities to its customers all over the country and began to be heavily utilized by the unbanked who had only recently left rural life and began struggling in the urban business centers of the country. 

“Before Easypaisa was launched, truck drivers used to transport cash from village men working odd jobs in the cities to their families in rural areas. These truck drivers were eventually replaced by ‘agents’, who are able to validate over-the-counter easypaisa transactions from one city to another,” explained Amer Pasha, former head of Visa in Pakistan. 

Several carefully explained video and print advertisements were circulated in the media but it took several years to shift consumers from over-the-counter (OTC) payments towards mobile wallets. According to the Financial Inclusion Insights study, by 2014, six years after Easypaisa was launched, only 0.4% of its total users were using digital wallets. This shows that the majority of Easypaisa’s customers preferred over-the-counter user experience via an agent. 

Just a year later, 2015 marked the smartphone rush in Pakistan. Not that people had just started buying smartphones but that in an unfortunate but interesting turn of events, after the APS attack, Pakistan state and establishment renewed their fight against local Islamist militancy, a motivation which led to the decision of regulating the proliferation of illegal and untraceable SIM cards. The six terrorists who had carried out a carnage inside the vicinity of the Army Public School, Peshawar, were using cell phones which were all registered to one woman’s name who had no clear connection to the attacker. So the government issued a directive to all mobile companies to verify the owners of all the SIM cards they have issued so far – giving way to the existence of the most instrumental data for the purpose of digitizing the financial landscape of the country.

The auction of 3G and 4G spectrums a year prior in 2014 was also a significant and important development. Apart from raising $1.1 billion at the time, it opened the door for faster internet on mobile devices across the country. Overtime, the cost of mobile internet, more commonly called ‘data’ also reduced, making Pakistan a viable market for investment in IT-driven application companies. It would not have made sense for companies like SadaPay or Foodpanda and the like to invest in a Pakistan that was still offering 2G mobile internet speeds in a 4G world. 

“When we launched Easypaisa, the idea was for the bottom of the pyramid, which is not what NayaPay or SadaPay or the other EMIs are trying to do. Through our business model, customers were suddenly able to transact domestic remittances to hundreds of different locations within a matter of minutes. That was truly a financial revolution, we were helping move 6 to 7% of the GDP. A revolution is defined by tens of millions of people changing their behavior.”, commented Easypaisa founder Nadeem Hussain speaking to Profit. 

 According to the State Bank of Pakistan’s second quarter report for FY2023, there are over 97 million branchless banking accounts in Pakistan (this includes Easypaisa and Jazzcash). Hussain also enlightened us on how exactly the railroads for the digital payments network of today were set by Easypasia in 2015 and later Jazzcash. “When the interior ministry issued the directive for mandatory biometric registration of issued SIM cards in 2015, we went back to the State Bank of Pakistan and we said if someone already has a biometric identification then why can we not open a limited Level zero account for this customer. And then by simply dialing *786# with your CNIC number, customers were able to open a Level Zero account. So that was the hard work put in by Easypaisa and Jazz paved the way forward for the digital nation.” 

 Level Zero accounts are ones that can get activated with the minimum level of KYC (know your customer). Accordingly, they also have the lowest transfer limit; Rs50,000. 

A robust digital payments system is perhaps the most important building block in inching closer and closer towards a safe and secure digital economy. “Towards a financially inclusive digitized future, the most important building block is digital payments. Several actors including the commercial banks, regulators and lawmakers have to work together in an optimal fashion to achieve this goal. Without a well-protected infrastructure for digital payments, there is no digital nation.” said Habibullah Khan, CEO and Founder of Penumbra Digital. 

The simple method of SadaPay 

Founded by Brandon Timinsky who came to Pakistan first in 2018, Sadapay was granted the in-principle approval from the State Bank of Pakistan to launch their Electronic Money Institution (EMI) in April 2020. In just the last three years it has managed to provide services to over 500,000 customers and reached a valuation of $90 million within just one year of beginning operations. But what is the secret behind Sadapay’s success? How did it manage to attract and retain so many users in a highly competitive and regulated market with almost 3 million sign-ups?

In an economy that has become increasingly more difficult to participate in, Sadapay lets you create a digital wallet in 5 minutes of filling an online form and 1 business day with a card that’s acceptable everywhere MasterCard is. The company’s marketing and branding strategy combines innovative features, customer-centric design & user-interface, a referral system, and community building to create a loyal fan base and a strong brand identity. In June last year, Profit reviewed Sadapay and ranked its app as the best and the easiest to use interface. But despite that, the app didn’t make it to the top of our rankings because it did not have the features for utility bill payments and mobile top-ups. In 2023 Sadapay added these missing and necessary features. 

“The country has a huge population of young people, everyone is already using smartphones, the 3G and 4G internet connectivity has been optimum, over 90% of the adults had biometric identity. At SadaPay, we have a team of 240 people with 90% of them being in Pakistan and we are not interested in expanding anywhere else, Pakistan is so big on its own”, commented Brandon Timinsky, speaking to Profit. 

Including the initial seed funding of $7.2 million which Sadapay raised in March 2021, its total capital reached $20 million in April 2022. With a staggering growth in the number of smartphones in Pakistan, the unbanked population has found a channel through apps like Sadapay, Nayapay and other EMIs to be able to participate in the economy. 

Profit conducted a focused market-survey of Sadapay customers and we found that the majority of these customers were not exclusively using Sadapay and were primarily using their conventional banking accounts to collect their salaries, which they would later transfer into their Sadapay account to make transacting a smoother process. More than 70% of respondents claimed that their favorite feature about Sadapay is how quick and efficient the mobile app is compared to all other banks. Respondents highlighted OTP-fetching, simple security verifications processes and a seamless transaction experience which begins and ends within a minute, as the most important reasons for why they preferred the SadaPay app compared to other banks.

Timinsky is wildly optimistic about SadaPay and EMI’s position in the Pakistani market and especially about scaling it up. He welcomed the revision in the EMI regulations as well and believes that SadaPay’s strategy of targeting the Gen-Z and millennials of the middle income household demographic who are in possession of some disposable income is a workable one and a part of the market that could be acquired rather easily. 

“The first problem we wanted to solve was about what young people want to do online. How we can make everyday transactions simpler, quicker and efficient. When we designed the app, we stuck with the parable that someone who is using a smartphone for the first time should be able to carry out a transaction with ease”, he explained.

As a happy customer and an industry expert, Habibullah Khan said, “SadaPay has single-handedly legitimized banking for the youth. Let me tell you this, the Gen Z and the millennials, they are sick of the uncle hierarchies in the conventional brick and mortar banks. Even existing customers hate the soulless, kafkaesque environments of the banking institutions.” 

Before SadaPay even received their EMI license, just by signing up over 50,000, people registered interest in the service before it was even officially launched.

 “We were surprised to see hundreds of emails pouring in every day asking us when they will be getting their account numbers and debit cards and when will we officially launch. We didn’t know what to tell them because we were waiting for the license so we gamified our waitlist where one can move up the list by referring SadaPay to their friends, and we would reward them by moving them up the list and give those customers a black debit card saying “SadaPay Founders’ Club”.  Instead of the standard teal card, instead of giving out Zinger burgers or paying people to sign-up, we just focused on making the product so perfectly seamless that you can not wait to tell your friends about it and it worked because we were seeing top decile activity and retention figures out of all the FinTechs in the world,” Brandon told us.

 “And now we are able to clear the list every 3 to 5 days and then on average 50,000 people sign up again. But in total we will cross 3 million people who have signed up for SadaPay by the end of this month.” When someone signs up for a FinTech app, a majority of those who signed up disappear after the first month but Brandon TIminsky claims that at SadaPay anyone who has made two or more transactions through the app, there is a 70% probability of those people sticking with SadaPay until a year later. 

And this is pretty much undeniable. SadaPay’s brand positioning and marketing mantra as articulated by their CEO has been holding up so far. The simplicity of the app and the speed of the transaction with which it goes through makes it incomparable to other banking apps. Most of the respondents to our survey said they use their primary banking apps just to transfer their entire salaries into their SadaPay account and make transactions from there. And every one of our respondents has retained the SadaPay account ever since they first signed up. 

SadaPay’s perhaps accidental marketing strategy was such that it leveraged young people’s feeling of missing out to get the most excited customers to sign-up first, these are customers who eventually became SadaPay brand-ambassadors or advocates since the very beginning, they were invested enough to refer the app to as many friends as possible to get a chance to use it before others. 

“We are not paying people to join SadaPay but we asked them to refer it to their friends to be able to join sooner, so only the most excited customers got to join first and that meant that they became our ambassadors and advocates because they absolutely loved the product. So when you are able to foster superfans, then the brand can have lasting power.” said Brandon Timinsky. 

Habibullah Khan described this phenomenon as the construction of a customer tribe. “SadaPay customer service has a 30-second response time where a very empathetic and aware representative speaks to you like a friend. I saw a screenshot where someone shared news about their break up with a SadaPay customer service agent and received life advice in return – you can never pay enough for moments like these to go viral. SadaPay essentially bridges the trust deficit created by these old banking uncles and works on the basic common sense that is driving empathy and empowering the user experience. First the gamification of their waitlist created the virality and buzz, positioning it as a cool brand to be associated with. On top of that they have the country’s best customer service which truly warrants the customer love that SadaPay gets.” said Khan. 

The ultimate stage a brand can reach in terms of its branding style is when the customer becomes its advocate. Habibullah Khan not only showered the SadaPay team with praises but recalled several instances when the team has directly helped him resolve financial disputes and carry out financial transactions. “There are two things about a FinTech that make or break it – how durable its tech is and how fast things can happen. In this age of 15-second TikTok reels, if the banking app crashes, you lose a customer. SadaPay has gotten a great CTO and built an in-house tech team from the ground up.” SadaPay has on boarded Jon Sheppard, formerly the CTO for Gojek in Indonesia, as SadaPay’s Chief Technology Officer.

It is indeed a remarkable feat to achieve the smoothness with which the SadaPay app runs and the selection of information that is shown on your screen at a particular time – unlike Easypaisa and JazzCash, the screen is never too crowded or too overwhelming or asking for too many pin codes or pass codes for various transactions and unlike the banks, the app never crashes and is always functional. With the recent revisions in the EMI regulations the wallet’s holding limit has been increased to 400,000 rupees and 1,000,000 for advanced digital wallets. Although this is great news for SadaPay, it has been noticed that major commercial banks like HBL have been throttling payments to SadaPay placing arbitrary daily limits on transactions. “HBL has set an arbitrary limit of sending 10,000 per day because HBL customers just started putting all their salaries in SadaPay and using it for transactions. How will this work if the SBP cannot protect these EMIs despite issuing the licenses?” wondered Habibullah Khan.

Considering the SBP’s favorable attitude towards digitization of the economy and the commercial banks’ rather ungraceful crackdown on mutual customers’ desire to transact through SadaPay, the question arises… 

What if the banks wake up? 

What if the banks one day wake up and commit to providing the same user experience as SadaPay for its customers. This is a question first posed by Amer Pasha during our conversation, “If tomorrow HBL wakes up and their Product Head says you know what, we are going to improve our user experience and we are going to be at par with this SadaPay, NayaPay, then what are these Pays going to do? For HBL, it is just the last mile experience they need to work on.” Pasha believed that it was entirely possible for the success of SadaPay to urge commercial banks to inch closer towards improving their digital payments system. According to him, it is in the gaps in tech, where EMIs have a relative chance at success if commercial banks have erected themselves as competitors rather than collaborators.

“The real question is what is the viability and future of digital wallets as banks are improving more and more. HBL’s app has improved, UBL’s app has improved – a smarter direction to go in is to assess the feasibility of the merger of these two industries – what is SadaPay’s long term viability? The banks are no longer sleeping.” As Pasha posed this very pertinent but perhaps slightly rude question, we thought it best to consider a second and maybe third opinion on this note.

“This will never happen. The banks are run by uncles in hierarchical organization. You know culture always eats strategy for breakfast. These banks have intense bureaucratic muddles and are very unlikely to make the customers’ lives easier any time soon. Their tech is legacy-based, they can’t even update their apps in a timely manner.” said Habibullah Khan. “The intersection of culture and technology is where it is at.” he added. 

Not surprisingly, Timinsky concurred Khan when he said, “What’s interesting about the EMI business model is that banks have to pay thousands of employees in hundreds of branches just to sit and move paper around while they rely on outsourced vendors for their tech. They may update their app once every quarter but we do it five times a day.”

But Brandon Timinsky also went farther when he expressed the one sure-fire way of success for all stakeholders is simply to collaborate. “The EMI business model is that of a distribution channel, it attracts customers, creates scale and then cross sells different products and services. There are only certain things we can do, so if we want to launch a credit card we can collaborate with a bank like HBL and we would also like to do it with zero interest.” 

His idea was that the EMIs’ future success and viability lies in solidarity because the customers will always have a primary bank so far as SadaPay is a digital wallet. “So even if we are just a payments app, it’s still a good business. And then it is important to remember that what we seek today for SadaPay is only a sliver of what will come through SadaPay in the future.”

Sadapay’s Killer App: The Freelancer Account 

An Oxford Internet Institute (OII) report ranks Pakistan 4th in the global digital gig marketplace, with about 8% of the total freelance work in 2017. Since then and especially post-COVID-19, the gig economy has grown. As of last year, 2% of Pakistan’s total workforce was engaged in the gig economy. In 2020, Pakistan generated $1 billion in revenues entirely from freelancing gigs. Pakistan’s digital gig economy growth was among the world’s fastest, with a 47% increase in 2019. These statistics very clearly show that Pakistan has an untapped potential for a freelancers boom if the digital payments railroad is stabilized. “The remarkable thing to note is that SadaPay has in fact caught on to this. They are trying to resolve the big questions around making this process smoother – How much do freelancers get paid? How do they get paid? How do I open a financial instrument outside Pakistan while being in pakistan? Sadapay is focusing on a more seamless experience, it is trying to do deals and collaborations with whether it is transfer wise or anyone else.” Amer Pasha told us. “

It is true that if one truly understands their customers’ experiences then they might be in the best position to create a profitable journey out of this understanding. 

Brandon Timinsky himself worked as a freelancer in the gig economy for a couple of years with over 8000 paid orders to his name. Understanding the circumstances inside out, SadaPay has also introduced SadaBiz to cater to the gig economy. India’s IT boom began with their freelancers, their now $150 billion IT industry is supported on the shoulders of skilled workers earning through Fiverr and Upwork and eventually scaling up their operations. This is the inspiration for Brandon Timinsky, when he looks at the Pakistani freelancers market, still at its nascent stage. 

“We could help with international payments for freelancers and give them the lowest cost and the best exchange rate – one of our shareholders also has licensing abroad so it is incredibly cost-effective for us to bring money into Pakistan.” said Brandon Timinsky while introducing SadaBiz. “You will be able to send a link directly to your client where they can make the payment from anywhere around the world while simultaneously avoiding any platform commissions.”

This indeed serves as a possibly very successful journey which SadaPay has embarked on but doubts around the venture’s scalability remain. Compared to the monster share of the market that the major banks own, SadaPay and other EMIs stand little chance of putting up a fight if a path to collaboration is not cleared by regulators and stakeholders alike. But is anyone really trying to bank the unbanked? Or is that just a statement industry players like to throw around. 

Major banks’ requirement of formal employment excludes a significant majority of Pakistanis with informal employment to be able to open bank accounts, let alone conduct digital transactions. Currently, their options are Easypaisa and Jazzcash because the education and awareness around EMI products has been restricted to target a certain class of young professionals who have disposable income and are likely to subscribe to SadaPay for the user experience.

Elaborating on this concern, Nadeem Hussain explained, “For Easypaisa we had 150,000 physical locations of Telenor where we could cash-in and cash-out, we also had 35 million customers who we could onboard, simultaneously we had a very profitable lending business at Tameer Bank which made a $12.5 million of pre-tax profit 6 years ago. But the payments business [the EMIs] need serious gains to become profitable, so if I had an EMI license today, I would follow the strategy that these young EMI professionals are following which means I can not take on the mantle of financial inclusion when I need to first ensure that my unit economics is perfect.”

The way forward 

“We have received offers and we have already said no. We have launched SadaBiz, we are looking to evolve and improve business banking in Pakistan, these things can keep us busy over the next 3 or 4 years. I will be very sad if SadaPay gets acquired. Everything I built before is small and silly. This is the first time tens of thousands of people have sent me personal messages saying thank you for doing this.” said Brandon Timinsky.

This should definitely put at ease the concern regarding SadaPay getting acquired eventually, however, maybe not completely. Another way forward could be the route to collaborating with or getting licensed to become – a Digital Retail Bank (DRB). The State Bank of Pakistan has recently also issued 5 NOCs to Digital Retail Banks (DRB) – Easypaisa DB, Hugo Bank, KT Bank, Mashreq Bank, a subsidiary of the UAE’s Mashreq Bank; and Raqami, by Kuwait Investment Authority, which Nadeem Hussain is also affiliated with. “Most of these banks will be deployed between 1st and 2nd quarter FY24  and their true impact on the economy and pushing it towards digitization could only be judged in the 3rd or 4th quarters.”

The digital financial landscape of Pakistan is rapidly changing, DRBs have now been introduced and this has perhaps opened up a fresh avenue of collaboration with the EMIs. However, the major commercial banks’ response towards the small successes of EMI operations such as SadaPay makes one wonder whether a digital nation is even possible without the effective collaboration between multiple stakeholders. 

Commenting on the commercial banks’ throttling of payments to EMIs, Nadeem Hussain said, “So this coalition needs to work and I think the commercial banks are being parochial and too cautious in their outlook with these arbitrary limits settings.” He added, “I think it is a combination of two things – one that banks are worried about AML and KYC requirements and therefore trying to be extra cautious so they are not penalized in the FATF world. And second is that they are simply not interested in facilitating the EMI regime. I can tell you when the digital banks come out, the first thing they are going to do is facilitate the EMIs which make sense and have gotten scaled, as much as they can.” 

Pakistan is a difficult market, the regulators have their favorites and are saddled with nepotistic mind-numbing bureaucratic red-tape. Despite these extremely unfavorable conditions and a consistently deteriorating economy, start-ups are attempting to safely invest in Pakistan. 

SadaPay’s success would not just be an indicator of Gen-Z marketing success but also it will make real the possibility that there is a sector, in this chaos, which can still make foreign investors the money that a market as big as Pakistan can make. “The EMI, as a business, should be focused on distribution and then partner with banks. The bank can be the manufacturer of financial services and then FinTech can be the distributor of these services and this can be a beautiful partnership.” said Timinsky. He told us that SadaPay is already working in close partnerships with Bank of Punjab and Bank Al-Falah among others. 

The ultimate cohesion of this trifecta [commercial banks, DRB and EMIs] of institutions can potentially propel the industry forward in an extremely favorable direction for all stakeholders.



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