Fintech Service That Extends Monthly Installment Payments
Recently, a Singapore-based startup called convertCASH traveled to Malaysia claiming that they will pay your monthly payments first.
Their service targets users who do not have sufficient funds in their bank accounts to pay their monthly rental, housing and car payments, and more, as long as it is on a fixed monthly payment plan. At the same time, he claims that no interest charges would be charged.
Users who sign up for convertCASH are promised that their payments will be made within one business day of the transaction. You might think it just sounds too good to be true, so we spoke to co-founder Jason Bak to find out more about how the company works.
You always answer your credit card
The gap that convertCASH is trying to fill in the market is the ability to extend your monthly payments by 45 days by paying for you first. This would work for plans that require you to pay with your bank funds and not with credit cards.
However, convertCASH itself requires users to have a credit card. “In the digital age, all Internet transactions require a credit card to secure their purchases or services. So the risk associated with convertCASH is manageable, ”explained Jason.
To use their service, users will need to install the app, register, and enter their credit card information. Users will need to fill in their recipient’s bank account and bank name, license plate number, etc. to complete a transaction. All of these payments will receive instant approval, with users not needing to go through an application process like they would with a loan, Jason told us.
After payments have been made, users can share their transaction receipts with convertCASH with their recipients.
Users are allowed to extend their installment payments for 2 or more different loans at the same time and use their service for consecutive months, Jason said, but there is also a daily limit of RM 10,000, and everyone is limited to 25,000 RM per month for payments. .
Where does the money come from?
Although you technically pay with your credit card, they still need some capital somewhere that can pay your down payments up front for you, which is honestly a lot of money considering their daily and monthly limit.
But Jason said they have enough capital to support 1,000 trades per day, which he says is good enough to cover the Year 1 and Year 2 forecast. Their initial invested capital was about US $ 1.5 million, which equates to about RM 6.1 million.
On average he split the transaction per user per month around RM1k to RM2k but some are higher than that. Out of curiosity, we asked if the framework for convertCASH’s business model is regulated by relevant bodies in Malaysia like Bank Negara Malaysia and Securities Commission Malaysia, or if this applies at all.
Jason responded that since they are not in the business of offering services such as e-wallets, remittances, payment gateways, and P2P platforms, they do not need a such regulation. Instead, he assured, “convertCASH is connected to a locally licensed payment gateway so that our service is secure and verified.”
Aim for success like Grab’s
Now, because convertCASH doesn’t actually charge any interest fees, it’s surprising how they would continue to generate enough income to continue covering those installment payments up front for their users.
Jason explained that they rely on the number of users to increase their net worth and that the earnings in their case matched their Gross Merchandise Value (GMV).
Dictionary time: The gross value of merchandise is the total amount of sales made by a business over a specified period of time, typically measured quarterly or annually.
Institute of Corporate Finance
“Any transaction that goes through us will be counted as GMV. Therefore, the more we get from GMV, the higher the value of our equity will be. This is how internet-based businesses operate, ”he added.
He compares his business model to something like Grab’s, where even though they suffered losses of $ 800 million last year, they were still able to opt for a $ 40 billion IPO. of dollars.
Currently, convertCASH has over 5000 users, but only 20% are active so far. Their target user base for 2021 will be 100,000 active users, and if it gains traction as they hope, the goal is to have 1 million by 2025.
Therefore, how Jason measures the success of convertCASH will be based on the value he creates with the business, measured by the number of users they have and the potential of the business rather than the profits. that he will.
However, it has future monetization plans for the service which are transaction fees, commissions on products (like auto insurance), and third-party advertisements. As of now, convertCASH is focusing more on user acquisition and Jason told Vulcan Post that he wants to have a presence in a total of 8 countries by the end of 2021. They are already in Singapore, Malaysia. and Australia.
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The convertCASH team seems ambitious when it comes to user acquisition, but based on their app’s ratings on Google Play Store, it looks like the app and service still needs a lot of work.
Users who tried the app said they weren’t able to log in (it works for us) or verify their account due to bugs, and 2 users also said it took longer one working day at convertCASH to settle their payment, even though their credit card has already been debited.
If the target of 100,000 active users is to be reached by 2021, Jason and his team should respond quickly to these user experience issues, as users are also sensitive to everything related to finances.
- You can find out more about convertCASH here.
- You can read more of the finch articles we’ve written here.
Featured Image Credit: Jason Bak, Founder of convertCASH
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