The Edge – KiplePay to turn Green Packet profitable by 2021
KUALA LUMPUR: Loss-making Green Packet Bhd, which ventured into the fintech space three years ago, is confident that its e-wallet business and payment gateway solutions unit Kiplepay Sdn Bhd will put the group on the road to profitability in 2021.
Earnings from Kiplepay fall under Green Packet’s digital services segment. For the six months ended June 30, 2019, the segment posted a wider loss after tax of RM9.72 million due to higher business development costs.
But Green Packet executive director Tan Kay Yen said the digital services business is expected to contribute positively to the communications and technology group in three years once the business grows significantly with sufficient merchants and user base to provide recurring income.
Kiplepay, which posted a gross transaction value (GTV) of only RM20 million in 2017, is expected to see a GTV of RM300 million this year and as much as RM1 billion next year, said Tan, who is also Kiplepay CEO.
To date, Kiplepay has more than 515,000 users, with more than 5,000 merchants.
Green Packet acquired Kiplepay, then known as Webonline Dot Com Sdn Bhd, in 2017. Today, the unit has two main product offerings namely kiplePay that functions as an e-wallet and kipleBiz as a payment gateway that offers a dynamic platform for both consumers and merchants in cashless transactions.
Two other solutions under the Kiple umbrella are kiplePark, which is an end-to-end parking solution from cashless payments to a ticketless solution with real-time monitoring and reports through License Plate Recognition, as well as kipleHome — a residential app for a gated and guarded community that keeps the home environment secure and connected.
Setting itself apart from the typical e-wallets’ business model of targeting the mass market, Tan said Kiplepay serves the 3E sectors, namely education, e-commerce and large enterprise sectors.
He said the education sector is expected to contribute to about 20% of Kiplepay’s total revenue. Another 40% will come from e-commerce, while the large enterprises make up the remainder.
Tan said Kiplepay initially went with the conventional business model of most other e-wallets, which targeted at the mass market.
But, this business model was a “typical platform chicken and egg issue”, whereby neither the merchants nor the users are willing to go on board until there is a substantial user base, Tan explained.
Kiplepay realised that having partners would be “way more advantageous”, as this would enable the company to tap into their already-paying customers, said Tan. In a nutshell, this means that Kiplepay would be implementing the business-to-business-to-consumer model.
“We don’t think that business model (targeting the mass) is for us because we are still a tech company from day one,” Tan told The Edge Financial Daily. “We want to use our technology capabilities to help enable and help these companies serve their customers better.”
Having also secured the conditional approval of Bank Negara Malaysia to provide white labelling services, Tan said this would lead to Kiplepay facilitating more businesses to launch cashless services.
This would also work well to empower companies operating bus services in the Klang Valley, companies that prioritise loyalty programmes or even multilevel marketing, said Tan.
He said there are already large enterprises from various sectors such as the oil and gas, banks and government initiative programmes cooperating with Kiplepay. Most recently, Kiplepay entered into a strategic collaboration with Bank Islam to empower the cashless communities in both the education sector and the e-commerce industry.
Apart from enabling large enterprises in the e-payment transformation journey, Kiplepay also aims to assist local universities. The company launched its first cashless community in Universiti Utara Malaysia (UUM) in May — making it the first to do so in the country.
Pointing out that there are about 20 public universities in Malaysia with close to 700,000 students and 34 polytechnics with 100,000 students, Tan said the total living expenses of the students are estimated at RM3.7 billion a year.
Following the first project with UUM, this solution has garnered interests from other universities, said Tan. Another three to five universities are expected to jump on this bandwagon in the next few months.
Elsewhere, with the growing interest in virtual banking, coupled with the digital bank licensing framework that is expected to be issued by the central bank by year end, Kiplepay is also keen to explore this area.
“We are definitely keen to explore this to offer a further complete yet enhanced cashless experience,” said Tan.