Measuring success one idea at a time

SUCCESS happens when one’s ideas are used by a lot of people.

That is according to Robertson Chiang, whose big idea is Dragonpay, an online payment channel that he and his wife have been running full-time in the last five years.

It was in early 2010 when the idea of putting up an online payment channel came up. Mr. Chiang back then was working as head of technology for Mozcom, Inc., an Internet service provider (ISP) that years before acquired his start-up ISP.

“We were dabbling [in] online payments when I realized the very low penetration of credit cards in the local market,” Mr. Chiang recalls, adding that he saw the “need for a more universal alternative payment to cater to our local condition.”

Mozcom management gave its blessings to his side project. Call it a hobby for someone who admits to having none, but thinking up of a new business is par for the course for a computer science graduate of the Ateneo de Manila University who subsequently took up an MBA degree at the Babson Graduate School of Business, the US’ leading entrepreneurship college.

So when Dragonpay began taking up more of his time in 2012, Mr. Chiang bid Mozcom goodbye to focus on his latest start-up.

As an online payment channel, Dragonpay serves as an intermediary, ensuring that a buyer pays up for merchandise ordered online.

Catering to consumers who either don’t have a credit card or opt not to charge the transaction, Dragonpay allows the buyer to debit it against their bank account or to pay cash over-the-counter at any Bayad Center outlet. Once it receives the payment, Dragonpay notifies the merchant that the product or service is cleared for delivery.

Dragonpay therefore improved the value chain in e-commerce by extending alternative forms of payment to the consumer market.

TRANSACTION COUNT

Mr. Chiang said their primary key performance indicator is the number of transactions a month. This fits hand and glove with the company’s fee-based, as against percentage-based, revenue scheme, thus making it a high-volume, lowmargin business.

“Unlike our competitors, Dragonpay’s fee structure is not percentage-based, but fee-based. So it does not make a difference to us if the amounts are big. What is more important is that there are a lot of transactions regardless of the amount,” Mr. Chiang said.

“We know we are making progress if our transaction count is increasing, and so far, it has been,” he said, adding that the company has to make hundreds of transactions a day just to cover its payroll.

Transaction count in turn depends on the number of merchants who include Dragonpay as a payment option, as well as on the number of online consumers. For small players, the greatest barrier to entry is trust, especially given the growing incidence of scams in the online space.

“If you came out of nowhere and then you start offering your business, the natural question would be ‘Sino ka ba? Bakit namin ipagkakatiwala pera namin sayo?’

( Who are you? Why do we have to entrust our money in your company?) ‘How do we know you will not run away with our money?’” Mr. Chiang said.

This is why Dragonpay decided to take in a foreign partner, Tokyo Stock Exchange-listed GMO, which is Japan’s largest payment gateway. Foreign investment helped legitimize Dragonpay, helping generate confidence in its payment system among merchants and consumers, both of whom feel secure that somebody else performed proper due diligence that the company was a worthy investment.

“One of the reasons we took them [GMO] in so if somebody asks a question [about our legitimacy], [we could respond] look the biggest payment gateway in Japan believed in us, we hope that you can take our word for it,” Mr. Chiang said.

To date, Dragonpay has gained the trust of the following merchants: consumer companies like SM, Robinsons, Metrodeal, AirAsia, Grab, OLX, Booking.com; social media platforms like Facebook and Spotify; payment channels like Bayad Center, LBC, M. Lhuillier and ECPay; and government agencies like the National Bureau of Investigation, Professional Regulatory Commission and the Philippine Overseas Employment Administration.

DOMINANT PLAYER

Dragonpay focuses on alternative payments systems, making it a dominant player of a small segment of the payment system of e-commerce.

“We have been lucky because we came into the game early so we have been marketed mainly through word of mouth, or when a prospective merchant sees our logo in some other Web site,” Mr. Chiang said.

“The payment space is still relatively small with few players. We do not really run into our competitors that often,” he said.

“You don’t really see us advertising, you don’t see AsiaPay, iPay88 putting up newspaper ads. We sort of just get known by word of mouth or if somebody bought something at Metrodeal, and ’ pag nakita nya ang Dragonpay, matawagan nga sila (if an online sellers saw Dragonpay used as a mean of payment in a marketplace, they made contact the company) so that is how we sort of got around.”

Dragonpay instead joins trades shows both local and foreign and they partner with bigger players like Union Bank of the Philippines, through the Unicap consortium, which conducts roadshows throughout the year and promotes e-commerce.

As such, Dragonpay does not compete with credit cards, but complements them. Proof of this is the growing number of banks that have joined Dragonpay’s network: BDO, Metropolitan Bank & Trust Co., BPI, RCBC, RCBC Savings, Unionbank, United Coconut Planters Bank, China Bank, Philippine National Bank, EastWest Bank and Land Bank of the Philippines.

“We always tell merchants, kung may credit card ka na, idagdag mo na yung Dragonpay para kumpleto na. Hindi namin sinasabi na tanggalin mo ’yung credit card mo. ( If you are currently using your own credit card, just include Dragonpay as one of your means of payment. We don’t recommend eliminating using your credit card totally), it’s not to the advantage of the merchants,” Mr. Chiang says.

As e-commerce is still a sunrise industry in the Philippines, Dragonpay considers companies in the same work space such as AsiaPay as possible replacements rather than direct competitors. The same goes for iPay88 and Paynamis, with which Dragonpay transacts businesses as well.

“We compete and cooperate with them. It is a relatively small industry and we all have very strange relationships with each other,” Mr. Chiang says.

VISION

“Our vision [at Dragonpay] is to make e-payment accessible to as many Filipinos as possible from all walks of life. It should not matter whether he has credit cards or bank accounts, he should be able to pay using whatever facility is available to him [ be it] cash, mobile, ATM, remittance, COD, etc.,” says Mr. Chiang.

This vision ties in with the Bangko Sentral ng Pilipinas’ (BSP) financial inclusion agenda, which aims to expand the number of Filipinos who transact within the formal financial system. According to the BSP’s latest Consumer Finance Survey, only 2% of households have credit cards.

As credit card penetration in the Philippines remains low, Dragonpay sees a huge opportunity to provide alternative payment systems for the online selling businesses.

“The challenge for e- payments has always been the lack of credit cards in the Philippines ( only about 5% card penetration). So the challenge has always been how to educate the mass market to use alternative forms of payments to complete their transactions. This is the vision of Dragonpay actually — which is to solve that problem,” Mr. Chiang said.

Given the huge role that culture plays in the success of online retail, Dragonpay innovates with an eye on how a scheme fits with socio-cultural norms. Such was the motivation behind “SureTayo,” a person-to-person escrow service, which makes paying and receiving payments between buyers and sellers more convenient and safe.

The jury is still out on whether this new service will take off, but Mr. Chiang is undaunted.

“This is 24 hours a day. There is no beginning and no end. Basically every waking hour, unfortunately,” he said of his work hours.

“E-payment will continue to grow. We are seeing a big push by the Philippine government to bring e-services to its constituents and our recent forays with some large agencies going online has, indeed, been encouraging.”