Recently, a Singaporean-headquartered startup called convertCASH made its way to Malaysia, claiming that it would pay for your monthly installments first.
Their service is targeting users who do not have sufficient funds in their bank accounts to pay for their rental, home and car installments, and more, as long as it’s a fixed monthly payment plan. At the same time, it claims that no interest fees would be charged.
Users who sign up with convertCASH are promised that their payments would be made within 1 working day of the transaction. You might be thinking it simply sounds too good to be true, so we spoke to co-founder Jason Bak to learn more about the workings of the business.
You Still Answer To Your Credit Card
The gap that convertCASH is trying to fill in the market is the ability to extend your monthly installments by 45 days by paying for you first. This would work for plans that require you to pay with your bank funds and not credit cards.
However, convertCASH itself requires users to own a credit card. “In the digital era, all internet transactions require a credit card to secure their purchases or services. So, the risk to convertCASH is manageable,” Jason explained.
To use their service, users will have to install the app, register, and input their credit card information. Users will have to fill in their recipient’s bank account and bank name, car plate number, etc. to make a transaction. All these payments will receive instant approval, whereby users do not need to go through an application process as they would with a loan, Jason told us.
Once payments have been made, users can share the receipts of their transactions with convertCASH to their installment recipients.
Users are allowed to extend their installment payment for 2 or more different loans at the same time, and use their service for months consecutively, Jason said, but there is also a daily limit of RM10k, and everyone is limited to RM25k per month for payments.
Where Does The Money Come From?
While you’re technically paying from your credit card, they still need capital somewhere that can pay your installments upfront for you, which honestly is a lot of money considering their daily and monthly limit.
But Jason shared that they have enough capital to sustain 1,000 transactions a day which he believes is good enough to cover the first and second-year forecast. Their initial capital invested was around US$1.5 million, which is equivalent to around RM6.1 million.
On average, he shared the transaction per user per month is around RM1k to RM2k, but some are higher than that. Out of curiosity, we asked if the framework of convertCASH’s business model was regulated by the relevant bodies in Malaysia like Bank Negara Malaysia and Securities Commission Malaysia, or if this applied at all.
Jason replied that because they’re not in the industry of offering a service like e-wallets, remittances, payment gateways, and P2P platforms, they don’t require such regulation. Instead, he assured, “convertCASH is connected to a local licensed payment gateway so our service is secure and verified.”
Aiming For A Success Like Grab’s
Now, because convertCASH actually charges zero interest fees, it’s puzzling how they’d continue generating enough revenue to continue covering these installment payments upfront for their users.
Jason explained that they’re relying on the number of users to increase their equity value, and that revenue in their case is their gross merchandise value (GMV).
Dictionary Time: Gross Merchandise Value is the total amount of sales a company makes over a specified period of time, typically measured quarterly or yearly.Corporate Finance Institute
“Any transaction that passes through us will be counted as GMV. Hence, the more GMV we get, the higher our equity value will be. This is how internet-based companies work,” he added.
As of now, convertCASH has over 5,000 users, but only 20% are active so far. Their target user base for 2021 will be 100,000 active users, and should it gain traction as they hope it would, the goal is to have 1 million by 2025.
Hence, Jason’s way of measuring success for convertCASH will be from the value he creates with the business, measured through the number of users they have and the potential of the business rather than the profits he’ll be making with this.
However, he does have future monetisation plans for the service which are transaction fees, product (like car insurance) commissions, and third-party advertisements. As of now, convertCASH is focusing more on their user acquisition, and Jason told Vulcan Post that they want to be present in 8 countries total by the end of 2021. They are already in Singapore, Malaysia, and Australia.
The convertCASH team seems ambitious when it comes to user acquisition, but based on ratings of their app on Google Play Store, it seems that the app and service still needs a lot of work done.
Users who have tried the app have said that they were unable to log in (it works for us) or verify their account due to bugs, and 2 users also stated that it actually took more than 1 working day for convertCASH to settle their installment even though their credit card was already debited.
If the goal of 100,000 active users is to be realised by 2021, Jason and his team would need to address these user experience concerns quickly, as users are sensitive when it comes to anything finance-related too.
Featured Image Credit: Jason Bak, founder of convertCASH