Pioneering Southeast Asia’s Payment Gateway Network

Technopreneur Chan Kok Long and his partners had only been working within the internet economy for a few years before they decided to venture into online payment gateways. But with FinTech being in its infancy in mid-2000’s, iPay88 faced a multitude of financial and regulatory challenges before managing to turn a profit.

Now a pioneer in Malaysia’s digital payments gateway sector, iPay88 is working with the Malaysian Digital Economy Corporation (MDEC) to expand its FinTech solutions’ reach across Asia to cultivate a safe and sustainable regional digital economy.

Empowering Asia’s underserved SMEs

Asia’s small and medium enterprises (SMEs) face a host financial hurdles on their path towards digitalisation. Many of them are credit-constrained as financial institutions disproportionately favour larger and more reputable companies – meaning that the penetration of more efficient digital payments solutions has been greatly uneven across the region.

One of the earliest and most successful payment gateway providers in Malaysia, iPay88 fosters a culture of innovation, trust and transparency with its customers and partners to become one of the country’s biggest and most accredited FinTech companies.

Established by veteran tech entrepreneurs Chan Kok Long, Lim Kok Hing and Chong Lee Kean, the firm has assisted thousands of businesses within the e-commerce and mobile commerce spaces and has expanded its portfolio beyond online payments to also include risk and fraud management as well as retail payment solutions.

Today, iPay88 is working to extend its suite of payment services to more Asian markets and is actively supporting the Malaysia Digital Economy Corporation’s (MDEC) vision to cultivate a sustainable digital economy ecosystem from the ground-up.

Connecting to the power of the internet

iPay88 was incorporated in 2006 when the founders were approached by Fujifilm to help set-up an online payments channel.

At the time, Chan and his partners were running an IDD calling card business and Mobile88 – an online magazine and review site discussing the latest news within the mobile phone industry which is still active to this day. Even then, however, the founders possessed a vision to leverage on the internet’s power to optimise their products’ sales and distributions channels.

Despite asking why Fujifilm (as one of the world’s foremost photographic film manufacturers) approached them instead of a bank, the company highlighted the difficulty of needing to navigate between the banks’ red-tape to explain their online payment gateway plan; as many local banks were still apprehensive of the concept.

Hence, Chan and co decided to enter the payment gateway market as they felt that, if even big multinationals such as Fujifilm found it hard to deal with banks, SMEs which are more cash-strapped and had less bargaining power would face even greater difficulty in implementing a similar move for their businesses.

But growing the fledgling business proved tricky, as Chan noted that iPay88 faced many challenges between 2006 and 2011. This was as they were pioneers in Malaysia’s online payment gateway sector and therefore had no forerunners from whom they could draw experience from.

“We needed to concentrate our investment to develop iPay88’s infrastructure, requiring us to go on for years without making a profit to the point that people doubted our survivability”, said Chan. “But these challenges can be overcome; provided that you have a strong management team and that your instincts tell you that you’re on the right direction to achieve your vision.”

Nevertheless, iPay88’s fortunes changed when Malaysia – with leadership from Bank Negara Malaysia (BNM) – began to venture more deeply into FinTech to bolster the country’s digital economy capacity. With greater national efforts concentrated on growing the domestic payments ecosystem, the stage was set for iPay88’s expansion.

Gearing up for Asian-wide expansion

Today, iPay88 has 10 departments comprising 250 staff in Malaysia. It is now also present in six countries: Malaysia, Indonesia, the Philippines, Thailand, Cambodia and Bangladesh.

In expanding its payment gateway services beyond its own borders, Chan explained that continuous enhancement and scalability is vital. “We needed to push ourselves to go forward constantly. We saw that merchant growth was high, so we needed to grow our system’s capabilities as well. So, we always needed to go through a consolidation period before expanding.”

Another challenge Chan noted was convincing banks to appoint iPay88 as their payment gateway provider. As such, the company made it its top priority to meet with the banks due to their control of the relevant licenses.

“No matter which country you’re going into, no central bank will just open its doors to you. Even in a small and emerging market like Cambodia, it took us two years to get a license. So, we chose to prioritise countries which we saw great potential in and which we had confidence in capturing its market.”

Establishing trust via key partnerships

According to Chan, iPay88’s acquisition by NTT Data helped raise his company’s credibility during its forays across Asia – seeing as NTT is a Japanese government-linked system integration company which was instrumental to the development of the country’s finance services infrastructure.

“NTT’s credentials gave us the credibility and confidence to expand. Yet, unlike other NTT acquisitions, we worked to maintain our brand as iPay88. This is because we’re very proud to show to the world that we are a Malaysia-born company that can someday grow to challenge companies like PayPal.”

He is also proud that his company’s technology has been adopted by NTT’s subsidiaries in North Asian markets such as Hong Kong. Now, the company has also been working to apply its payments solution within Japan’s infrastructure.

“Japan’s payments infrastructure is highly complex, so the government tries to not allow people to connect to it directly. iPay88 is acting as a third-party – sort of like a bridge from the rest of the world to Japan. So, anything that’s subjected to fraud or untoward incidents can be curbed by this new layer of protection we’ve created.”

At the same time, Chan believes that the element of trust should also be cultivated internally.

Apart from ensuring that its payment gateway possesses strong fraud detection protocols, iPay88 trains its staff to be transparent with clients and not overpromise what the company can do for them. To help entrench these values between its staff, Chan promotes an open-door policy and implemented a flat structure at the office to remove hierarchical barriers.

By ensuring iPay88’s credibility with its customers, Chan believes that iPay88 can grow sustainably throughout the region and to effectively reach out to regulators across different markets in Asia.

Backing MDEC’s objective to grow a sustainable digital economy

iPay88’s relationship with MDEC has spanned over a decade. Previously, however, he viewed MDEC as just another government department merely facilitating his company’s MSC status needs.

Yet he has been impressed with the MDEC’s evolution since MDEC CEO Datuk Yasmin Mahmood took over the agency’s reins.

For Chan, one of his best experiences in working with MDEC came about when iPay88 wanted to join the agency’s Global Acceleration and Innovation (GAIN) programme; particularly after meeting with the head of MDEC’s Enterprise Development Unit, Gopi Ganesalingam.

“I was in Bangsar and was pushed for time, so I asked Gopi if we could please meet over refreshments after 5pm instead. Back then, like with most government agencies we’d need to be the ones to head to their office, which in this case is in Cyberjaya”, said Chan.

“Instead, Gopi readily agreed to meet me at my convenience instead and joined me at a restaurant in Bangsar after work. He took the time to discuss MDEC’s aspirations and to explain the GAIN programme to me in such a casual manner. As an entrepreneur, it made me feel comfortable and more willing to join the programme.”

For Chan, this showcased MDEC’s newly open and flexible nature of its current leadership, which he sees can help endear promising Malaysian tech companies to cooperate with the agency more closely.

He also appreciated MDEC inviting iPay88 to join other companies under the GAIN programme for a mission trip to the Silicon Valley. During then, Chan met with Datuk Yasmin and was quickly impressed with her leadership and affability when talking to the invited companies about their growth challenges.

“She’s a different kind of CEO. She’s open-minded, well-spoken and listens to your problems. It was very different from what I was used to, as she doesn’t overpromise things and wasn’t afraid to say that she’s only human too.”

On the GAIN programme, Chan said it has been very helpful for start-ups wishing to raise their regional visibility. This is as MDEC, apart from providing expert mentorship, regularly organises networking events where they invite overseas investors and government delegates. Because of this, Chan believes that this strategy can help companies participating in the GAIN programme to speed up their marketing processes.

However, Chan believes that MDEC can do even more if it is delegated greater authority to drive Malaysia’s digital economy growth plans. This is as he believes that MDEC’s leadership will be key in helping foster a bottom-up approach with homegrown digital innovators; particularly as Malaysia needs to raise its comparative advantage within the global tech market.

With increased success in MDEC’s initiatives, Chan hopes more companies will consider adopting tech solutions from homegrown innovators to grow Malaysia’s digital economy presence internationally.