THREE FORMER GOOGLE STAFF JOIN HANDS TO BUILD MIDDLE EAST’S VENMO

▶ Mamo, a peer-to-peer payment app, aims to enter Saudi Arabia by next year, with Pakistan and Turkey also in sight,

When colleagues Asim Janjua and Imad Gharazeddine became flatmates after moving to Dubai, they had a tough time sorting their shared expenses.

The absence of a peer-topeer app that would simplify fund transfers in a market that was only gradually embracing online payments became evident to the duo.

“We were divvying up our rents and our electricity bills and it was such a nightmare to send money through bank transfer. You have to log into a bank account [and provide an] Iban number,” says Mr Janjua, co-founder and chief experience officer of Mamo, a peer-to-peer payment app.

“We were constantly finding ourselves complaining and whining [about the elaborate process].”

Digital payments transactions in the UAE were on the rise, growing at an annual rate of more than 9 per cent between 2014 and 2019, outpacing even Europe’s average annual growth of 4 per cent to 5 per cent, according to a report by McKinsey.

“At the time, players like Careem were disrupting the way you hail rides while Delivery Hero was disrupting the way you order food, it seemed only logical and natural the next space to be improved would be FinTech,” says Mr Gharazeddine, Mamo’s co-founder and chief executive.

Having struck a camaraderie with each other at the Dubai office of Google – where they worked – the duo, along with another colleague, Mohammad El Saadi, launched Mamo in 2019 to simplify payments.

Like many other peer-to-peer payment apps, users can sign up digitally following a few simple steps.

Once signed in, they can link either their cards or the bank account to initiate a fund transfer by choosing a name in their contact list. Recipients will get a message asking them to download the Mamo app to access the funds.

Mamo, which currently operates from the Dubai International Financial Centre, also offers a similar service for businesses, allowing them to transfer funds without cumbersome procedures and lengthy wait times.

The timing of Mamo app’s launch, which began development in 2019 and materialised for use last year, was fortuitous.

Months into the launch, the world began to battle a pandemic.

While it was hardly an ideal environment to start a company, Mamo founders soon noticed a rise in online payments in a region that was highly reliant on cash use.

The digital payments market in the Middle East and North Africa began to boom as consumers increasingly preferred online payments over cash due to the health crisis.

More than three quarters of Middle East respondents polled in a survey by McKinsey estimate their use of digital payment modes has increased by about 10 per cent due to the Covid-19 pandemic.

“Back in 2019 … if you remember, Amazon was still doing cash on delivery. You can literally give the driver money,” says Mr Janjua.

But that has changed drastically following Covid-19. Digital payments remained the preferred mode for transactions, with consumers favouring contactless solutions such as debit or credit cards, digital wallets and mobile payments, according to a report by Visa last year.

“This is how far we have come in terms of credit card use in the region,” Mr Janjua says.

The peer-to-peer payments space in the Middle East alone is expected to grow to $115 billion by next year, from $22bn in 2019, Mamo estimates.

Mamo has recorded more than 20,000 installations across Android and iPhone to date.

The FinTech has processed about Dh3 million ($816,771) worth of peer-to-peer transactions since its launch, its founders say.

Its app for businesses processed more than Dh30m worth of transactions since its launch.

“We’ve enabled 50,000 plus customers to pay the businesses that are registered and on-boarded. That figure is growing by roughly 100 per cent and it is doubling every quarter,” said Mr Gharazeddine.

Mamo does not charge consumers a fee for sending and receiving money but they will incur a slight charge if they use an international credit card or one that is not issued by a UAE bank to send money.

The company’s revenue largely comes from its app for businesses where a fee of between 2.6 per cent to 3.1 per cent is charged on every transaction processed. Mr Gharazeddine declined to say how much revenue the company is earning but said the UAE is an ideal market for growth.

“The size in terms of revenue that we are potentially able to generate, based on the target market in the UAE, is about $3bn in revenue every year and that’s coming from, you know, a 3 per cent share of $100bn total payments being processed by these SMEs that we plan to target in the UAE alone annually,” he says.

“Within the UAE we have about 250,000 small-to-medium sized businesses that we would like to acquire as customers of Mamo for Business and that is a huge undertaking.”

However, prior to achieving those targets, founders are well aware of the regulatory milestones that need to be crossed before widespread use.

Currently, Mamo has just exited the first phase of DIFC regulator Dubai Financial Services Authority’s innovation testing licence that allows FinTechs to test their products in a controlled environment.

The company is only allowed to activate 1,000 users in the first phase. It can increase this number to 3,000 and then 10,000 in the second and the third phase respectively, Mr Gharazeddine says.

Upon graduation from the third phase, there will be no restrictions on the number of users the FinTech can take in.

“If you think about why this is the case, the regulator really wants to see we have the controls and systems in place to manage user funds effectively. So, they basically restrict the size of the market we’re able to go after a while they work with us on validating all of that,” Mr Gharazeddine says.

Mamo has also raised two major founding rounds to fuel its growth. It raised $1.5m in a seed round in 2020 that was led by Global Founders Capital. Global Ventures, VentureSouq, MSA Capital, Dubai Angel Investors, 500 Startups and some angel investors also participated in the round.

Last year, the FinTech raised $8m in a pre-Series A round led by Global Ventures, the UAEbased venture capital firm.

New York venture capital firm 4DX Ventures, Saudi Arabia’s AlRajhi Partners, Boston’s Olive Tree Capital and investors from Silicon Valley also participated.

“The goal, since the last fundraise, was essentially to integrate all the compliance work we’ve done into our product and find ways on acquiring users efficiently,” says Mr Gharazeddine.

“We have a couple of milestones that we wish to hit by third quarter or fourth quarter of this year, at which point we will be ready to raise our Series A round.”

Mamo’s founders are also planning to expand beyond the UAE as they complete the testing phase with the DIFC.

“Our vision is basically to become Mena-wide. We want to be present in all markets here,” says Mr Gharazeddine.

The next market that Mamo plans to focus on will be Saudi Arabia, where it aims to launch next year.

The GCC and then Pakistan and Turkey will be the other markets on its radar, the founders say.