What makes IOUpay (ASX:IOU) a formidable fintech player in South East Asia?

Highlights

• ASX-listed IOUpay is a fintech player in Malaysia, with planned expansion into other SEA market jurisdictions
• Major initiatives in the recent past include upgraded BNPL offering, Shariah-compliant payments system, myIOU Business+ and a slew of collaborations
• The KA$Hplus and myIOU co-brand prepaid VISA card will greatly expand the merchant base of myIOU to all VISA approved merchants

Financial technology (fintech) is giving a new shape and look to the traditional payments system. Elements like mobile banking, buy now pay later (BNPL), and instant digital payments are simplifying and accelerating transaction processing for merchants and consumers. IOUpay (ASX:IOU), a stock market listed entity, has nearly twenty years’ experience reliably providing secure payment processing services in South East Asia (SEA). 

An Australia-headquartered company, with Dato’ Wan Asmadi Wan Ahmad as its non-executive Chairman, IOUpay connects banks, telecom operators, merchants, and consumers with its point-of-sale and e-commerce payments solutions. Listed hereunder are some of the strides that the company has made in the recent past. 

Strategic partnerships for growth and scale

By entering into mutual agreements with big entities and brands, IOUpay has laid the foundations to deeply penetrate Malaysia’s BNPL market. To put things in perspective, the country had nearly 600,000 BNPL service users in 2021, and this figure is expected to touch a whopping 4 million by 2028. IOUpay’s flagship platform myIOU app was launched in June 2021 to compete in the lucrative BNPL space. 

The company’s strategic alliances include marketing collaborations with a host of entities comprising, amongst others, PayHalal (a Shariah-compliant payments system with over 7,000 member merchants), Bank Simpanan Nasional (one of the biggest retail banks in Malaysia with 390 branches and 6.5 million card users), senangPay (an e-commerce gateway with over 15,000 member merchants), and Pine Labs (a major merchant commerce service provider in the SEA region). 

The above-mentioned initiatives are set to provide strong growth to myIOU operations through new merchant and customer acquisitions. IOUpay is primarily targeting Malaysia’s credit-worthy customers including government employees and top-notch merchants. Of the total banked population of the country, IOUpay seeks to capture the top two-thirds. 

The company continues to focus on acquiring quality merchants as part of its ‘best-in-class’ brand positioning in SEA. In its most recent reporting, as of 15 November 2022, IOUpay had more than 2,800 merchant outlets system-active on the myIOU platform across thirteen industry verticals. These active outlets represent relationships with more than 1,000 businesses from around Malaysia.

© 2022 Kalkine Media®, Source: Company update dated 1 December 2022 

Major initiatives boosting IOU’s position in the booming SEA market

KA$Hplus Card

The card is a game-changer in fintech operations. It expands the merchant base of IOUpay by bringing on board all VISA approved merchants. Besides, the card supports international purchases, thereby giving a cross-border service push to IOUpay’s operations. The prepaid KA$Hplus and myIOU co-brand card is to be integrated with IOU’s BNPL platform (subject to central bank approval). 

Once integration is completed, consumers will be able to make purchases anywhere VISA is accepted and seamlessly convert those purchases into instalment-based payment plans on the myIOU BNPL platform.

Shariah compliance - myIOU Islamic

With a view to expand the consumer base of its digital payments vertical, IOUpay applied for and was duly provided the Shariah compliance certification in July 2022. This was quickly followed by signing of a partnership agreement with PayHalal. IOUpay’s platform processed the first Shariah-compliant BNPL transaction ahead of schedule in September 2022. 

IDSB and myIOU

IDSB is a leading consumer loan portfolio processing agent and investment partner of IOUpay.  IDSB and IOUpay entered into a collaboration to unlock commercial opportunities and extract synergy benefits from their operations. IDSB acts as a loan processing agent for banks with civil servant customers. This would enable IOUpay to cross-sell its services to high-credit quality customers with excellent track records servicing long term instalment payment plans. Customers would benefit as both short-term and long-term financing needs would be fulfilled under the single umbrella. 

myou Business+

IOUpay’s next product development initiative is a new, short-term financing solution for business-to-business purchases. Targeting small to medium sized enterprises (SMEs), myIOU Business+ is an online portal that enables business purchasers of goods and services to process B2B payments efficiently, with cash flow benefits for both purchaser and supplier. 

Structured as a ‘pay-in-four’ instalment payment plan over 3 months, myIOU Business+ opens up access to a significant new market for IOUpay with SMEs comprising 97% of Malaysia’s business firms generating 38% of the country’s GDP. 

The Roadmap -- phased growth

IOUpay considers the financial year 2022 as the initial growth phase, with focus on protecting capital and having in place a robust credit risk framework. The financial year 2023 is destined to be the portfolio expansion phase, with focus on a second SEA market development, product innovation, and scaling and cross-border system development. 

The financial year 2024 would be a phase of multi-jurisdictional flexibility and wholesale portfolio debt funding, with focus on shareholder value creation for strong P/E growth and market leadership of the IOUpay brand. 

IOU shares on ASX were trading at AU$0.048 in the early hours of 4 January 2023.