By Bernie Cahiles-Magkilat
Financial inclusion for the barrios
Tech startup action.able.inc. has ventured as a provider of a financial technology solution that caters to the rural folks on the premise that they have the volume to drive demand for the business as the provinces are no longer the stereotyped bastion of the poor. The only missing link to these remote areas is access to technology so they can level up and catch up.
John Joseph Gabriel Puzon, CEO of action.able.inc., or JG to friends, knows the depravity of the barrios as only big companies have benefited from the new technology and residents in the urban areas.
“Today’s technology makes things possible for all. It is on this premise that POS!BLE.COM was born.” Its POS!BLE.NET.
“Today’s technology levels the playing field for entrepreneurs, all one needs are the inspiration and the drive – sprinkled by old fashioned ‘Pinoy Diskarte’ then you would already have an innovating competitive edge to succeed,” says Puzon.
After earning a degree in industrial engineering from the California State Polytechnic University in Pomona, CA, Puzon came back to the Philippines in 1995.
Puzon has always believed in the innate talent of the Filipinos – how Filipinos make seemingly impossible things, possible!
It is this catalyzing spirit, combined with a wide grasp of the latest technology and intimate market knowledge that has driven Puzon in all his entrepreneurial activities – several of which resulted in pioneering innovations in the field of telecommunications and mobile commerce.
This industrial engineer was among those who pioneered in the data encoding era, the precursor of today’s IT-business process management industry in the country. They were into the back-end IT world digitizing all sorts of voluminous data from the US. This era, however, was suddenly interrupted when the energy crisis hit the country and American companies shifted the work to China, even if they do not know any English word at all.
His restless soul brought him to Japan where he took up another MBA in International Business Strategy at the Hitotsubashi University Graduate School of International Corporate Strategy in Tokyo being a Mombushu full scholar. He finished his first MBA in Business Administration at the Ateneo Graduate School of Business.
When he came back, he again joined the IT world specializing in platforms for big enterprises like the telcos, the financial institutions and working for e-wallets and e-commerce. But the applications mostly cater to urban living.
“The platform we built over the years brought financial technology to many communities, but still, only the big businesses were able to realize the advantages,” said Puzon.
“Five years ago, it dawned upon us why don’t we make technology that we’re doing available to little entrepreneurs,” says Puzon. The concept was a challenge as they have to cater to the sachet type of business, but his team was up to the challenge.
They integrate all their learning when they were still working with big telcos and put these into a small package, a small box. They aggregate all bills payments, money services, and mobile loading systems, among others, in one box. This also explains the name POS!BLE, which first three letters refer to ‘Point Of Sale’. But the word was completed to POS!BLE because that small box is seen to evolve eventually, signifying endless possibilities.
Puzon has partnered with Star Mobile, a local phone maker with an OEM in China, for the manufacture of the device. The machine may not cost that much, but the system inside the gadget entails heavy financing. An angel investor, who believed in their idea, caught up with them and infused capital for this tech startup.
“We tapped Star Mobile to help us so we can use their service network and service center nationwide because we are not a hardware company,” says Puzon. For two years, Puzon and company just concentrated on building the contents and systems inside that box.
Now POSIBLE.NET is one of the country’s biggest business-to-business-to-consumer (B2b2C) networks in the country. It is also the country’s fastest growing community based digital transactions platform providing financial and digital access to underserved communities.
This fintech and digital services provider is anchored on the vision of financial inclusion, catering to the rural folks, who have no access to banks even if they have money. It acts as a marketplace where vendors sell their services to people with no connectivity to Internet and no access to the formal banking system.
POS!BLE aims to provide additional income to micro enterprises from sari-sari stores, small hardware stores, neighborhood bakeshops, barbershops and beauty parlors.
“Our goal is to bring the innovations to the broader base of Filipinos, a type of inclusion wherein every Filipino enjoys the convenience and benefits of emerging technology,” says Puzon.
“So, we designed this product with people in the remote barangays in mind, not tech savvy so we started with very light transactions, work on 3G, with SIM Card and all the security features in place, everything to make this transaction safe and secure.”
Now, there are already 80 vendors onboard on its system. These include Meralco, Davao and Cebu electric companies. Water, cable and insurance firm are in. Likewise, some national government service billers are now onboard.
Passport payment is not yet in, but Puzon said it is possible as long as the Department of Foreign Affairs allows a third party payment. POS!BLE is also working with provincial electric cooperatives and water districts because these are the usual payment worries of rural households.
There are already 1,900 retailers of POS!BLE, half of them are traditional sari-sari stores. In the urban areas, there are also offices, condominium administrators and pure home-based entrepreneurs using POS!BLE for the convenience of their clients and tenants.
The way it works is the entrepreneur buys the small device for R35,000 plus a monthly service fee of R125. The retailer buys load from POS!BLE, the wholesaler. The load is credited into his wallet where all payments made by his clients are deducted from.
For instance, a neighbor’s payment for his electricity bill will be inputted in the machine and will be charged against the wallet or the load of the sari-sari store owner. The payor gets the confirmation slip of payment, just like the transaction receipt when one pays in any of the bills payment centers. The cash goes to the sari-sari store owner or the owner of the machine. The owner also gets a certain percentage of the transaction depending on the vendor’s structured rate. The owner of the machine has also a dashboard that he can check online to monitor his transactions. All transactions are processed real time and monitored by POS!BLE at its Makati base. Once the wallet becomes empty, the owner can replenish it at any of the POS!BLE partner banks.
Deposits can also be made through to any Bancnet member banks. Right now, there are already 4 Bancnet members and four others are in the pipeline. Security Bank is ahead among the banks through its E-Give Cash Remittance program where money can be withdrawn from any Security Bank ATM cardless.
POS!BLE is also tapping schools so parents from the provinces can pay directly their children’s tuition. In addition, bus tickets for provincial buses can be bought through POS!BLE.
“Right now, we have 7 bus companies going to Bicol. The buses going to the North are still being prepared. We are also talking to RORO ship operators since some of them are not yet tech ready,” he adds.
“This technology equalizes and levels the playing field.”
This technology is seen to improve the financial literacy of the neighborhood, raise the technical capability of the micro businesses and in the end improve the barangay itself because they are empowered by technology.
“Neighbors do not just pay bills through their neighborhood sari-sari store because it is convenient and less cost, but because they trust this neighbor because they know each other and calls each other by first name,” says Puzon.
While there could be some trust issues that maybe raised, Puzon said the system has built in safety security features to ensure that payments are secured and well documented.
Puzon cited some figures indicating the viability of this business model.
According to the Bangko Sentral ng Pilipinas (BSP), up to 36 percent of towns and cities in the Philippines still do not have access to banks and it takes 21 minutes on average for a consumer to go to the nearest financial access point. Given this, Puzon believes POS!BLE.NET plays an important role in attaining financial inclusion in the Philippines by bringing digital transactions closer to all communities.
POS!BLE may not be the main source of income of the micro entrepreneur, but it can add somehow to his cash flow with the modest margin that he gets from every transaction.
“This machine can also draw customers into your business because all else being equal, a customer can pay his bills and buy other items perhaps in the store, generating additional sales,” he adds.
Already, there are 1,900 micro retailers nationwide who are investing in POS!BLE. “This is a gauge of good acceptance level,” says Puzon.
“You just have to sign up and attend a one-hour training to familiarize yourself and a one-on-one discussion about the business,” he adds.
“So far, the average monthly load or revolving capital of a retailer’s wallet is already R200,000,” says Puzon. Return of investment is within five to six months, depending on the location and the owner’s ability to market the service.
But for POS!BLE, Puzon said they have to meet a certain number of retailers to break even. “We don’t have that volume yet,” he says. Profitability is assured when they hit between 3,000 to 4,000 retailers, which Puzon hopes to achieve this year.
With its 1,900 retailers after two years of building and operating the system, POS!BLE expects sales to hit R2 billion worth of transactions this month.
“We have engineers working on adding services into the system and a small sales team,” adds Puzon of the company’s 50 workers.
“We have to do a lot of customer service and that is one area that we pride ourselves in continually building relationships with retailers and vendors,” he adds.
They have to work closely with the vendors because POS!IBLE is dependent on their system. The human element has been considered in this business, thus, all the security features have been installed in that small box to ensure all transactions can be reviewed and monitored through the retailer’s dashboard online.
Most of its retailers are located in CALABARZON area, but the company is slowly expanding to the provinces, targeting local billers in the Visayas, Mindanao and Northern Luzon.
They are looking at home-based entrepreneurs and local chain businesses like regional pawnshops and convenience stores.
According to Puzon, they initially sold the gadget for only R4,000 hoping the small investment will catch fire in the market, but it did not fly because the buyers were not really entrepreneurs but were attracted only by the small working capital so the gadget ended up underutilized.
“So, we recalibrated and we came up with R30,000 to R35,000 package, which made sense to small but serious entrepreneurs,” adds Puzon.
“I believe it should be a staple in every retail store,” says Puzon of their machine, adding that the target is to have one POS!BLE in every barangay with 100 to 200 households.
“In urban areas, there are several options but those are not our target. We are looking at the community level where there is no access to technology. Our retailers are the extension arms of our vendors as it is impossible for them to put up a branch in each of these local communities,” says Puzon.
It is like having 1,900 branches spread out in various local communities. “For instance, we are making it possible for Security Bank to have 1,900 branches without a single physical bank branch in these remote areas,” he points out.
The long-term prospect is that this small gadget can do more than its current capabilities as they develop and integrate newer technologies into the system.
Puzon sees endless possibilities with POS!BLE, including promotional activities of companies, raffle tickets, survey tool, airline tickets, and lottery. It can even serve as vote counting machine.
“Things are now possible with manufacturers having direct line down to the sari-sari store. A lot of tasks can be done here, anything is possible,” says Puzon as he never closes any possibilities for his little black box.
The low-key and humble Puzon has a penchant for the tech world, but it is in POS!BLE that he finds technology most fulfilling.
“There is satisfaction here. Hopefully, the monetary aspect will come, but when we interviewed people we found out this is of big help. I think we are in the right direction. The financial reward will come later,” he adds.
Until 100 percent of the countryside have access to formal banking system, POS!BLE will continue to serve as an equalizing tool. “I think less than half of the population are unbanked or underbanked, that is where our satisfaction comes from and the fact that you are connecting people to level up and in turn the community grows as well,” he adds.
“Never mind the urban areas – the generation connected on the phone – that is not our market, but we will run after the unbanked sector so they can also benefit from this new technology,” he adds.
Already, POSIBLE.NET has been recognized as one of the Top 15 ventures in Asia at the DBS-NUS Social Venture Challenge held in Singapore last September 2017, an annual competition to determine the most innovative ideas and enterprises. It was the sole Philippine entry in the Enterprise category.
Puzon also believes the Philippine economy is doing good that is translating to the private businesses also doing well.
“Despite the political noise, business is doing good. The noise is getting louder but somehow business is just doing their normal course,” observes Puzon, who as a manager also espouses empowerment to his people.
“Empowerment is clearly reflected in our management philosophy,” says Puzon of his unorthodox management style. “Here you are empowered, but the downside is if you are not a self-starter you might get lost because we are results-oriented so your ability and skills are important in this environment. We don’t have no new handbook, but we give you long latitude to do your tasks. No bureaucracy, it is just your creativity to accomplish things,” he adds.
POS!BLE’s young team maybe tech savvy, but they always want to be associated with the “jologs” crowd. Puzon himself belongs to the upper class, but chose to be part of the ordinary.
Puzon also believes that there is money in the rural folks nowadays and that will draw them into the digital world. They had long been physically and technologically isolated because growth was slower then, but as the economy expands, Puzon believes there is money out there in the hinterlands.
“Some barrio folks still keep their money under their beds,” he adds noting that most rural folks are deemed simple because they were never informed about financial access. Some are still intimidated by the formal banking environment, there are forms to fill up and sign up. To avoid all these hassles, the local businessman gets their financing from the loan sharks during planting season, when crops are destroyed by natural calamities, and during enrolment period. Some of them are victimized by the miller, making them indebted to these people forever.
With POS!BLE, financing can go straight to the barrios.
“With POS!BLE, we can all level up and partake in that digital world,” concludes Puzon.