Getting you from Point A to Point B faster than a speeding 138 bus. A cheese kottu delivered to your doorstep to satisfy those late-night cravings. Simply having someone else take care of your laundry. All of this and so much more at the tap of a few buttons. The mobile revolution of the past decade gave birth to the gig economy, which has introduced a luxurious level of convenience to our lives. Yet, the legions of silent workers that make this possible struggle with low access to financial services. Forced to rely on informal sources of credit in times of need, many often fall victim to predatory lending rates and fall into debt traps.
According to the Co-Founder and COO of OGO Pay, Imesh Liyanage, “The problem is caused by 2 compounding factors. Financial institutions aren’t geared to understand the creditworthiness of someone who doesn’t have a traditional payslip. Even if they were able to do so, the overheads of servicing a customer are high. In turn, leading to high minimums that workers who earn in small amounts, on an infrequent schedule cannot meet.” Recognizing this challenge, OGO Pay aims to solve it by utilizing technology and offering greater levels of financial inclusion to gig economy workers.
How OGO Pay works
On the surface, as a customer, you’ll find that OGO Pay is a digital payment platform. One that aims to make it easier to make cashless payments for services. This is a crucial first step in its quest for financial inclusion. Behind the scenes, once the funds reach the platform, OGO Pay works to ensure all participating gig workers are quickly paid in an economical manner.
Through the upcoming OGO Pay mobile app, these gig workers can then pay a bill, repay existing loans, deposit it into their bank account, or invest it in a high return investment plan.
Elaborating on the latter, Imesh shared the company was in talks with financial institutions to create new financial products. Geared towards gig workers, these would have low minimums but provide returns comparable to those enjoyed by high-net worth individuals. Since high minimums are necessitated by high servicing costs, digitizing the process means lower costs to banks, leading to low minimums and democratized access to wealth creation.
Alongside making enablers of wealth more accessible, OGO Pay also works towards removing barriers to credit. “Since we know the income history of gig workers on our platforms, we compile that information into a format that financial institutions can use to make credit decisions,” explained Imesh.
As a result, the OGO Pay app also allows gig workers to apply for credit from any of its partner financial institutions. With these institutions being able to pre-approve the loan, the applicant will only need to visit the closest branch to complete the mandatory KYC process and collect the funds. ”This greatly reduces the resources needed to process a loan which means banks can now service customers that were previously considered unprofitable. Additionally, the workers can choose to automatically set aside a percentage of daily earnings to be repaid, which on a reducing balance loan, would mean less interest to the borrower and faster collections for the lender” adds Imesh.
Throughout this entire process, OGO Pay generates revenue through fees on the payments it processes and sharing revenue on the loans it brings to financial institutions. As such, it’s incentivized to work towards increasing transaction volume. To do so, OGO Pay focuses on the first step of the cycle – making it easier for you to make digital payments. That means giving businesses the latest features, more payment options, and other support to accept digital payments.
The Origins of OGO Pay
The name OGO stands for On-the-Go and the original idea behind it, dates back to 11 years ago. In 2009, the CoFounder and MDof OGO Pay, Asith Hettiarachchi had a vision of digitizing the ticketing process for mass-transit. The project was known as OGO Transit. While he kept running into cost barriers when processing card payments, Asith continued working on the idea for many years.
Fast forward to 2018, a local merchant and its acquiring bank reached out to OGO facing a card processing issue. They asked OGO to create a solution that’d allow them to accept digital payments minus the high fees attached to standard Internet Payment Gateways. These fees are manageable for high-value transactions. But this isn’t the case for businesses that deal with microtransactions where such fees can add up to 8%. OGO agreed to build a solution on a revenue-sharing basis while owning the intellectual property of the solution. Thus, OGO Pay was born.
Following its acceptance into the HatchX Virtual Fintech Accelerator, the founders explored the viability of OGO Pay as a pure payment processor. Imesh summarized their initial assessment as, “Due to market size constraints, we were not an attractive investment for foreign investors. High compliance costs meant we needed to raise a sum that was too high for local investors.” Thankfully, over the course of the programme, the startup was able to tweak its business model where needed.
Describing the journey, Imesh said, “With introductions to the banking C-suite through the HatchX programme and following discussions with trishaw driver trade unions, we identified a new way to deploy our technology to create a greater positive impact. Soon afterwards, we pivoted into OGO Pay’s current mission of financial inclusion by reducing the costs of serving customers of financial services.”
The way forward towards financial inclusion
For many gig workers, it would be an understatement to say that being unable to access financial services makes life challenging. Often, they’re only one emergency away from being trapped in debt from predatory lenders. A fact that was seen as clear as day during the coronavirus lockdown.
Of course, this isn’t a new phenomenon. Even before the recent crisis, gig workers have taken to the streets to protest unpaid wages due to lengthy processes some platforms have in place. Ultimately, while the gig economy has brought us many comforts, it’s workers should also enjoy its benefits. Towards this goal, OGO Pay’s focus on enabling them greater access to the financial system is a positive step forward.