Paying. An activity most of us in the developed world conduct many times throughout the average day, something we don’t think twice about. Whether it’s paying for a pair of sneakers at the mall, the latest hip-hop album on iTunes or sending money to a friend for that late night take-out. For the most part, our payment experiences are safe, seamless, and inexpensive. However, the majority of the world’s population deals with a completely different experience. Instead, hundreds of millions of people in emerging markets still endure the disadvantages of being marginalized by incumbent payment ecosystem players. Particularly, those that have yet to develop products and services that accommodate the needs of cash-centric consumers. After all, over 80 percent of the world still relies on cash as a means of exchanging value, or paying. So yes, cash is still king, so to speak.
After spending the last 15+ years at leading consumer finance (and payment) companies such as American Express, MasterCard, and most recently PayPal, I came to understand global payment ecosystems intimately. What surprised me the most was how exclusive traditional payment ecosystems actually are. That is, most payment products and services continue to mainly cater to segments who own bank accounts, have 24/7 internet accessibility and access to credit and/or debit card instruments. However, in countries such as Mexico where 61 percent of the population (roughly 53 million people) over the age of 15 lacks a bank account, existing payment ecosystems are inaccessible. For the most part, these customer segments continue to be left on the outskirts having instead to rely on the dark-underbelly that frequently exists in certain corners of the payments world. That’s why I made the leap and joined Abra – to help develop the world’s first truly “inclusive” payments brand. A company whose digital wallet will meet the needs of both cash-based and banked customer segments and E-commerce companies alike. Where everyone will be able to exchange value with family, friends and the online retailers they want to shop from. Independent of country, mobile carrier, handset operating system, etc. – a truly open payments ecosystem. While the applicability of Abra’s platform are many, the two that most excite me are cross-border P2P payments (i.e., remittances) and cross-border E-commerce payments.
Cross-Border P2P (aka. remittances)
Does it make sense that Manuel Buitrago, a Salvadorian working two jobs in Reston, VA, still pays an average fee of 8-10% (before any FX fees) to send money to his sister back home? Or that Lidia Garcia, a waitress at Miami’s La Carreta restaurant, has to pay fees of up to 20% to send money to her mom in Havana? Which by the way is only 90 miles from Miami. In a world where a smartphone now enables you to find a dog-walker in minutes, book a room in someone’s house and more recently find Pokémon, it’s hard to believe that seamlessly moving money electronically remains such a friction-riddled and expensive experience. At Abra, I found a team reimagining the traditional remittance experience altogether because the way things work, well, shouldn’t work. As a team, we’re building the rails that will more easily connect immigrants to their loved ones using just the money in their pockets and the phone in their hands. Abra’s platform is making use of an emerging and cutting-edge technology (e.g., Bitcoin/Blockchain) to more securely move money without the need for costly intermediaries, while providing an intuitive and transparent user experience. With global remittance volumes reaching close to $1 trillion per year (formal and informal channels), I’m confident Abra will satisfy a significant need (for speed, cost and transparency) in the market.
This use case in particular is my favorite and it’s probably what attracted me to Abra the most. You see, I spent the last five-plus years at my former company trying to address a huge and growing market still peppered with pain-points. In Latin America, for example, E-commerce volumes are expected to reach $80 billion by 2019 according to eMarketer. Yet, for all this growth, the majority of Latin Americans (and others across emerging markets) are still trying to find ways to pay online as most payment gateways, wallets, etc. typically require credit cards. In a region with anemic credit card penetration, cross-border E-commerce is somewhat reserved for the privileged few. At Abra, we’ll provide everyone with a wallet enabling them to use cash to buy the products and services they covet most from leading online retailers. We’re serving as an enabling instrument of sorts, closing the payment gap between cash-centric consumers and the E-commerce companies whose appetite for growth in emerging markets is exponential. Ironically, despite the addressable market and size of the problem none of the major incumbents such as PayPal, MasterCard or Visa have been able to solve this at scale. I’m enamored with this use case and I know that we’re on our way to truly powering global cross-border E-commerce.
Having joined Abra has definitely been a big change in many aspects. I’ll admit, after years of working in big-box companies where the ability to execute is frequently challenged by politics, bureaucracy and the like, the pace at Abra requires some getting used to. But, that’s the most exciting part of this new journey. Knowing that as a team we’re rifle-focused on creating the world’s first inclusive payment brand, the speed with which we execute is fundamental. There is no question that Abra’s goal is an audacious and challenging one. However, if we can succeed as a company we will have unquestionably re-wired how everyone on the planet exchanges value. Here’s to making Abra and this experience iconic!
By Arnoldo J. Reyes, Head of Latin America – Business Development & Strategy