Many may still find it hard to imagine of having a high-tech cashless society in an emerging market like the Philippines, but for technopreneur Mark Vernon, it is just a matter of time.
Vernon is the founder of Tagcash, a $2 million paid up capital company and micropayments platform headquartered in Makati City that started in 2014, creating apps and investing in products and services that use cashless transactions.
In a chat with DEALSTREETASIA, Vernon shared he is determined to promote a cashless economy in the country and detailed the steps he is taking to achieve his goals.
“Over the last three years, my initial ideas have moved on to promote the cashless economy in the Philippines, something I know will have a huge impact on improving efficiency, cutting down corruption and introduce new business models as well,” Vernon said.
Vernon hails from the United Kingdom and also owns three other companies, the Virtual Training Company Inc (VTC), Zeresoft Software Development and Services, and Miskio, an android app that features chat, dating, shopping, services and rewards with a fully integrated wallet from Tagcash.
He founded VTC in Silicon Valley in 1996 as a training CD publisher, and started online delivery in 1997. The company is now based in Virginia USA, with satellite offices in Australia, South Africa, UK, France and India. Zeresoft is a premier Philippine outsourcing company that started in 2012 which focuses on IT and web development, social media marketing and support services. Edited Excerpts.
Take us to your startup’s journey.
After six years sailing around the world, I moved to the Philippines and started investing in property, and setting up a small office as an incubator for my own projects in IT. One of the these involved giving monetary rewards for sharing adverts and I needed a way of doing that, but there were no online APIs (application program interface) for Gcash or SmartMoney, the two companies that handle eWallets here. So we had no choice but to make our own system and that is now Tagcash.
What does Tagcash exactly do?
Tagcash enables users to add money to an ewallet via banks, 7-Eleven and other partners and then spend it with merchants on the Tagcash platform, or transfer to each other. Tagcash also handles closed loop currencies for any merchant to create their own currency for transactions or rewards, and this can be used online or offline using stored value on NFC cards or wristbands. Anyone can also send money or pay via SMS as well which is pretty useful given the poor state of the internet in the Philippines.
How is Tagcash funded? Or do you plan to raise funds?
I am my own investor and the only one, with no real plans to raise more money yet. Creating products and services here in Philippines is much cheaper than USA or Europe, and the regulations here allow us to experiment a little more freely with new models – I also prefer to grow organically and let the products we make prove themselves. Throwing massive amounts of money to compete with the likes of Globe, and Smart, or Beep will just be a waste anyway. They will always have more money.
Are you looking to invest in other startups this year? What types of startups are you looking for and why?
I am always looking to seed invest in either our own startups or others that can spread the use of digital cash more effectively, or can use the extensive Tagcash API. One of my startups is an app called Miskio that integrates Tagcash Payments & Rewards with a lot of services for users and merchants, and I am looking for partnerships that can be leveraged in that app, such as booking type services, general ecommerce, ticketing, crowdlending/funding, logistics etc. I am also interested in any kind of business that would promote micro transactions down to fractions of a cent or peso, something the Tagcash system handles very well.
How do you compare Tagcash to other fintech companies especially in the Philippines?
I think our biggest advantage lies in the open API and clear and simple fee structure. We are also very quick to add to or tweak the API for customers. When the market is ready, we also have the SMS payment structure that works very similar to mPesa in Kenya, or BKash in Bangladesh. It’s amazing that the Philippines is still way behind in electronic payments and the replacement of cash, but I realise that there must be a need to use a system that is more effective and useful than cash. The goal will be to create new business models based on our API and services that can make that happen, either by building them ourselves or investing in others.
How is your business traction so far? What are your targets for this year?
We tend not to have targets, we grow organically. The payments business takes a while to build trust. We are seeing the results of marketing over the last year and we are having a lot more enquiries from merchants. As we build, and invest in different products, we will see even more growth.
How do you see the fintech business in the Philippines today in terms of prominence and scalability?
Until we bring in the unbanked which comprises the majority of Philippine users, I think it will be slow progress. Lack of internet in most of the country is a major problem so I see SMS payment solutions forming the backbone of Fintech here. Globe and Smart have had eWallets and SMS money transfer for 10 years now, but I still cannot buy something at a corner store Sari Sari store or at Starbucks using my Ewallet or SMS. Even Kenya is ahead of Philippines in that respect.
We have built Tagcash to be used anywhere in the world, for example we take Bitcoin as a method of funding wallets, but each country has its own regulations and navigating these is challenging – to say the least. I would prefer to partner with financial institutions that are already regulated and provide our technical solutions as a service.
How will you convince other users who are still reluctant in doing online transactions, worrying about security issues?
That just comes from usage. Friends are using it, merchants using it. It takes time to build that trust. Tagcash is a payment system which includes the eWallet. So I expect people will use it as a payment method first before adding and keeping money in a eWallet.