AUNG Kyaw Moe, founder and CEO, 2C2P is well aware that Web3 could disrupt his 19-year-old B2B payments business but like the entrepreneur and survivor that he is, he’s facing it head-on because he believes the new world of Web3 will improve payments and ultimately is good for the consumer.
“Web3 will allow customers to provide input and give them the ability to shape the service going forward,” he said. “It will empower consumers and connect them with the source. It will remove the layers of middlemen and we are one of them and so we are under threat.
“But every threat is an opportunity. We have to study the potential pitfalls and improve our product. Every business has to prove its value in the supply chain in order to survive.”
He said that the decentralised nature of Web3 would allow content creators and consumers to deal with each other directly without relying on a centralised intermediary. “With the Web3 aspect, all interactions and transactions are recorded on chain. So, it’s transparent and clear. Once a transaction is done, there is no ambiguity.”
He also knows it’s very early days still for Web3. “There’s a lot of discussions going on about it now but what we see now is not what it will be.”
He equates it to “blog writing” in the early days of Web 1.0 which then became something like Facebook, which then evolved into social commerce which he sees “as the last mile of Web 2.0”.
So, what will the last mile of Web3 look like, I asked? He laughed, “I’d give my right arm to know that. Something new that we cannot see yet will come along. Remember, we who are in the industry are like professional footballers, we don’t play tennis.”
Well, Aung is certainly one of the most experienced and determined professional footballers when it comes to payments in South-east Asia. He started 2C2P in 2003, five days after his son was born. A Burmese living in Thailand at the time – his student visa for the UK did not come through and he decided to stay on in Thailand, he said, “I was a socialist boy but decided to become a business owner when my son was born. My immediate priority shifted to providing for and raising a family. I thought I could make more money founding my company than being a salaried employee.”
2C2P and Ant Group – one of the largest deals in South-east Asia
He’s proven himself right of course. This year, Ant Group became the majority shareholder of the company he founded – described as a global payments platform helping businesses securely accept payments across online, mobile and in-store channels –in what is speculated to be one of the largest deals in South-east Asia. .
But let’s get back to the beginning.
He built his first product, following the 3D Secure protocol for credit cards, and he secured the licence to sell the product to banks in South-east Asia, starting with Thailand. He went on to secure 40 banks. “That’s how I got into payments, it was before the word ‘fintech’ was born,” he smiled.
Five years later, he built the tech to power ecommerce payments for banks. He saw this opportunity to service banks when during his visits to these financial giants, he saw how they would have 20 people in their ecommerce teams and he thought, ‘if I can have 200 people, I can build something better and faster’.
He relocated his business to Singapore where it remains headquartered, raised funds and adapted his business model from being a supplier to banks, “the end of the food chain”, to becoming an independent supplier servicing not only banks but ecommerce companies. “Banks became our supplier and we could negotiate on equal terms.”
’By end 2019, 2C2P had raised more than US$50 million in funding from investors including the World Bank Group’s International Finance Corporation, Cento Ventures and Arbor Ventures.
Its first travel client was Nok Air, the low-cost subsidiary of Thai International. In 2007, he was called in to help the airline tackle fraud issues. He adapted the banking product to airlines. At first it helped Nok Air with consumer payments but soon it started developing B2B solutions to help the airline pay its suppliers – insurance, car rental, travel agents.
Today, 2C2P serves more than 25 airlines in the region and has an airline team working on travel. “Amongst the South-east Asian national airlines, at least half of them are working with us,” he disclosed.
Travel accounts for 40-50% of his business, the other major verticals are ecommerce and insurance. Its team of 500 members work across 10 markets.
“The more advanced the tech, the more fragmented the market”
What makes travel different from other verticals, when it comes to payments, is the higher risk, the possibility of bankruptcies of airlines and travel agents, he said. Its global nature also makes it highly complex with multi-currency settlement the biggest pain point yet to be solved, he added.
“The irony is, the more advanced the technology, the more fragmented the market. We thought payments would become easier, we would just have three credit cards but now we have a proliferation of local wallets with each country having their own regulations around them. In Singapore, even though I am the payments guy, I too get confused by the number of payment options available to consumers – the poor supplier has to have a multitude of terminals.”
He said that 2C2P is working on a “global wallet with local compliance” to help airlines address this complexity.
The future of digital currencies and regulation
As for digital currencies and their role in the future of payments, he said you had to look at it from two angles. “One digital currency is bitcoin – which is more of a speculative asset than a currency right now – and will be harder to make headway in the travel industry. The other is Central Bank Digital Currency (CBDC). We now have the digital yuan and krona. In Thailand, we are one of three companies participating in the Bank of Thailand’s pilot study of the potential of the digital baht for retail purposes, and we are the only one that is not a bank.
“It will be easier for these national digital currencies to become more mainstream and become accepted as a currency by suppliers.”
Asked if regulation was adequate or failing to provide for new models, Aung said, “Regulation always follows innovation. There are two types of regulators – one that gives you room to innovate with intent to regulate and the other that stops innovation. Singapore is a good example of the former – it creates sandboxes for companies to test and fail, within limits.”
The most positive thing about Web3 is it could bring down the cost of payments, he said. Right now, the cost of payments is too high for suppliers. “In Europe, the cost of accepting international credit cards is 0.5% because it is regulated by the EU. In Asia, it’s around 2.5% to 3%, but in Malaysia, it is 1%,” he said.
Asked if he saw his long-term competitors as either legacy banking systems or new payment gateway entrants, he cited the latter
“This is why the Ant Group partnership is good for 2C2P – it will allow us to grow the company faster. The management still leads the company and it’s a large enough stake for us to be motivated to take 2C2P to the next level, towards Web3 and beyond.”
Note: Aung Kyaw Moe is speaking at WiT Singapore 2022, Oct 3-5.
Featured image: Credit – Getty Images