Three undergraduates from the American University in Cairo ventured into entrepreneurship a decade ago, creating an e-commerce platform in a nascent Egyptian market.
This trio, Islam Shawky, Alain El Hajj, and Mostafa Menessy, later founded Paymob, an innovative payment infrastructure for digital wallets, in 2015. Their startup has thrived, earning $22 million in recent funding and becoming profitable in Egypt.
Origins and Early Challenges
Originating from their e-commerce platform, Paymob was conceived to bridge the gap between banks and the needs of modern businesses. Initially, only 2% of Egyptian households engaged in e-commerce due to limited online payment methods.
Shawky highlighted in a 2022 interview that traditional banks failed to meet the digital payment needs of new business models. The integration of payment gateways from local banks posed significant challenges, prompting the creation of Paymob as an alternative solution.
Evolution and Expansion
Since inception, Paymob has transformed into an omnichannel gateway featuring over 50 payment methods. It supports 350,000+ merchants across five countries in the Middle East and North Africa, providing tools for both online and offline payments.
In 2022, Paymob raised an initial $50 million in their Series B round, with investments from PayPal Ventures. This funding facilitated expansion beyond Egypt, reaching Oman, Saudi Arabia, and the UAE. The addition of a $22 million extension brings their total Series B funding to $72 million.
Innovative Product Offerings
Paymob has introduced various products, including an app for small and medium businesses (SMBs), embedded checkout experiences, and financial products like lending and advanced settlements.
CEO Shawky explained, ‘We help businesses accept, pay, manage, and grow. Acceptance is the core of our business, and we cross-sell everything based on it.’ Paymob’s strategy includes onboarding merchants and gradually offering them tools to manage their finances and business operations effectively.
Profitability and Market Presence in Egypt
In the second quarter of this year, Paymob achieved profitability in Egypt, with revenues growing sixfold since mid-2022. This profitability was driven by increasing the number of merchants and cross-selling additional services.
Despite its success in Egypt, Paymob has not yet reached profitability in other countries. Nevertheless, the efficient growth model and extensive service offerings have laid a strong foundation for future profitability in new markets.
Digital Payment Adoption in the UAE
Digital payment adoption is rapidly increasing in regions like Egypt and the UAE. According to Mastercard, 88% of Egyptian consumers have used at least one emerging payment method in the past year, and 85% of SMEs recognize the importance of accepting omnichannel digital payments.
In the UAE, the demand for digital payment methods is even higher, with 77% adoption nationwide. Paymob’s transaction volume in the UAE has matched the volume of its entire Egyptian business within just 14 months.
Strategic Partnerships and Future Prospects
Partnerships with companies like Shopify and Tabby have allowed Paymob to offer a comprehensive suite of products. This approach has significantly improved their profit margins and operational efficiency.
CEO Shawky noted, ‘We’ve managed to grow profitably by building a fundamentally sound business that addresses clients’ needs.’ The commitment to advancing a cashless society and the supportive efforts of Egypt’s central bank are expected to bolster Paymob’s future growth.
Summary
Paymob’s journey from a college startup to a regional fintech leader is a testament to innovation and strategic growth. With substantial funding and a growing merchant base, it stands poised for continued success and expansion in the digital payment landscape.
Paymob’s strategic growth and innovative product offerings have paved the way for its success in the digital payment sector.
The company’s journey from a small startup to a profitable, influential player highlights its potential to revolutionize digital payments across the Middle East and North Africa.
Source: Techcrunch