ZarinPal; a port for internet payment.A port that like to be compared with PSPs or online payment ports of banks and it seems that it wants to compete with them.
About where they start from, their concerns, and current status of online payment, presence of investors like Rocket Internet, presence of PayPal in Iran and the future outlook of ZarinPal. When one of them didn’t want to give any information, we took it from another.
How can we be sure that you haven’t done that?
There isn’t any proof. We have prevented from suspicious activities during these 5 years and if someone has been filtered, maybe it’s because he/she has done something illegal or allowed some suspicious activities be done. We don’t have such power and no one can instruct the law.
Why not? Forget it… is there the possibility of money launderingin the field of electronic payment?
Yes. When purchase is done from hacker’s cards, money laundering happens. We have a regulatory system in ZarinPal and in the case of seeing suspicious activities, we call the buyer or seller and check the cards.
But in other 20 companies, even they have higher income from selling VPN which is prohibited and maybe it is the reason of filtering them.
Right now, it is possible to start a feint store and buy from other resources faintly, and circumvent bank system. You as a mediator of money transition can recognize money laundering. For example regulatory organization can say that this transaction is illegal and we want to cancel it. How is your interaction with regulatory organizations?
First we should answer this question that why the presence of ZarinPal is good. Money laundering is done all around the world in different segments.
One thing that should be done is to segment the customer based on information you have. But in bank systems, no one knows what the account owner is doing and from where the money is deposited in the customer’s account.
But our payment port can’t be where money laundering is done in large volumes because we get higher fees and that person prefers the lower fee.
Also if a big transaction enters our system suddenly, it is to our surprising and because we use bank system, it knows our transaction method. When there is a big transaction, questions would arise.
On the other hand, ZarinPal has had the duty to manage itself considering having 20,000 customers and the banks work with ZarinPal instead of 20,000 customers and it knows one person and we monitor these things and we have smaller segments that alarms weird transactions and we have spectroscopy system of transactions that shows the seller’s profile that for example what transactions it had during past two years.
We have a profile of the customer and we know what activities it has done and from which stores it buys and if it wants to buy something big with the information of that customer, this is an alarms for us so that we suspect if the information of purchase has been disclosed or something has happened, because it didn’t have a record of such a big purchase.
Now let’s answer your question. Our interaction with regulatory organizations is like that we have an individual window with which those organizations can check the information of our system directly and anytime. According to different spectrums we recognized, we keep each vague transaction and examine it.
Have you had such transactions?
Very much. During the day we are struggling with it. In order to keep the business, we have put spectroscopy system so that the whole system doesn’t ruin for one limited transaction.
How big is online payment? Is the market without PSP is so big that large number of E-payment companies are being founded, although they know getting PSV license may take a long time?
Any person may want to sell a product. For example, he/she makes a page through Instagram and guides followers and buyers to a page in Telegram and provides a card number.
This is a simple example of a service we have provided under the name of AsanPardakht. It doesn’t have a site and you would be connected to the port with one URL. This was the idea of ZarinPal to target social networks’ payment community.
Do you mean that PSPs can’t do such a thing?
They never can do it because PSP should receive a trust symbol in order to provide service. The customer is so small that it can’t launch a site.
You have made each person a store with this service; that is each person sells its products with a link under its posts in Instagram without having a site. How did you get its license? Because it needs vast and strict monitoring and it is possible that each Instagram user has an online store.
Here we have put the system we expanded two years ago and we consider a risk for each transaction. Because our company would be at risk due to these transactions, because it is possible that the company become closed.
Based on this risk, which would lead to employees’ unemployment who are now 22 people, we decide which risks a transaction would have for us. Is a product sold? If not, we follow the user. In fact we try to know the other party more.
What would you do if something happens?
We make decision in favor of the party we know more.
Is it possible that you block the account of cheating user?
Blockage is the first thing we do.
Can blocked accounts be opened again?
Yes. The only way is to make trust again through approving the person’s information.
You mentioned suspicious transactions and illegal products. Name us some of them. I want you to mention ZarinPal redlines.
When making the rules, we even act stricter than PSPs and we don’t allow for sales in large volumes. For example, about VPN sale, we have redlines for copyright of products that are produced by special institution for example films and series.
They even wanted internet sale of a series named Shahrzad but we didn’t accept, because it creates risk and there may be a third person in this field.
We say the payment should be done with the producing institution not with the third person. We work more per direct contract.
Strict redlines would lead to decrease of your share in the market. How much is you share in the market right now?
It isn’t a big market. Financial turnover of the whole E-payment field in Iran is about 3.000 billion tomans which includes all online sales and for example IranKhodro sales is considered in it.
Universities’ payment, charges and bills are also considered. 55% of payments done online belongs to charge sales and bills payment.
This market doesn’t have a big profit. From 45 percet remained, 20 percent is related to payments done by the government.
E-commerce share is 10 percent of online payments and near 5 million transactions are done in this field during a month which indicates its small segment and all E-commerce payments each month don’t reach 1000 billion tomans and maybe we have up to one percent share in this market.
To whom does the rest belong?
There are diversities in this market. But real payments are made from these startups like DigiKala whose whole market volume is up to 3 million transactions per month, while 10 percent of this market belongs to us.
Authorities claim that statistics show the high penetration rate of internet among people in Iran. How much do people use internet sales?
The truth is that even payments of many of startups in the field of electronics are done no-electronically, for example many of DigiKala payments are done using COD or with POS which are not online payment.
What volume of online payment market does belong to startups?
Considering COD payments, startups have 3 million to 4 million transactions per month.
How many is the whole transactions in Iran?
All transactions registered in Shaparak each month, is up to 60 or 70 million online transactions and startup share is about 5 percent.
What is the biggest Iranian startup in terms of turnover?
CafeBazar is far ahead of others in terms of numbers but I estimate that DigiKala and CafeBazar are at the same level in terms of turnover.
How much is the distance between you and your competitors?
We should see which businesses they have taken in terms of market. We have a determined share of the market but competito
rs have progressed and they have acquired those businesses we didn’t acquire. Even products and services that are not legal; for example VPN is being sold online and each day 1500 VPNs are sold.
But in terms of market volume, our whole transactions equal the whole transactions of three providers who are our competitors.
Don’t you feel danger?
We came to this question again that is foreign models like PayPal enter Iran market, what would be the reaction of ZarinPal? I think you would feel danger.
We are designing our own strategy in order to compete with them.
Do you think of competition?
We are preparing ourselves so that if they want to merge with us for any reason, we know what mergence it would be. But in any case our strategy is competitive strategy.
We fee danger because at least one year later PayPal would enter Iran but at first it should know the market and maybe it works with us that are local business and know the market.
On the other hand, we act unlike the world in Iran. In all around the world the person who receives a service pays the costs but here there is a competition between banks to attract resources, that leads to this situation in which the seller doesn’t pay any money for selling the products that is there is no fees.
When PayPal faces these issues, it should know this model and because there isn’t any profit in this model, it tries to improve the rules and work without cooperation with businesses like us.
Would ZarinPal survive in the presence of PayPal?
In all market those who are local have a stable status.
If ZarinPal become closed, what would happen?
PayPal would enter Iran with no doubt and in the absence of startups like ZarinPal, we wouldn’t have a business that competes with it. Like what happened for weblog and social network service providers.
You mentioned that PayPal may work with you and this means that it invests on your company. On the other hand, there are two insights in the field of Iran startup; one that we should welcome foreign investors and the other that investors should come but the government should support Iranian startups or make limitations for foreigners. Do you agree with this insight or do you believe that you should work in an equal situation?
If they come with large amount of money, we can’t compete with them and they would eat us. Like what happened with the entrance of Rocket Internet.
Many of businesses couldn’t compete with ZoodFood and Bamilo because money was entered into the market with unknown methods and if it was known, the government could get tax guarantee.
What do you mean by unknown methods?
They entered money by ship illegally.
On which startups has Rocket Internet invested?
Bamilo, Mozanlo, and ZoodFood, PintaPin, Skano and Snapp; some of which have been stopped and some are working. After entrance of BodoFood, ZoodFood is eaten.
But those companies you mentioned to say that they don’t have any connections?
They certainly have connections.
Why are you saying that?
Rocket Internet is in USA exchange. According to Middle East Investment Group, it says that it has Romak office in Iran and MEIG is a common investment between South Africa and Rocket Internet and Bamilo and ZoodFood are named in this report.
I had direct contact with MEIG and the model is not an Iranian model. No one would launch a startup for example Skano with high capital and then close it.
This is the model of Rocket. Rocket brought 10 million dollars for its three main investors for the first time.
You had foreign investment as well, but you said that it wasn’t certain. Why?
We had capital attraction for example for creating standards, those standards that we don’t know and we should know and we can’t execute them alone.
But right now we are looking for injecting up to date knowledge more than capital so that we can confront foreign competitors.
We didn’t look for making money from multi venture and we wanted their knowledge. We had a contract with the office in Tehran, but our needs weren’t met and maybe we cancel the agreement because they didn’t stick to their commitments.
The focus of startups is on capital attraction now. Does Iran startup need knowledge more than capital?
I think no one needs money. When the capital is attracted, team’s expectations increase and capital attraction would increase expectations.
What about for development of the company?
Because the market has a specific capacity and having more money doesn’t add a new person to the cycle of internet buyers, the ultimate market growth per year is 10 to 15 percent.
In fact, big capital doesn’t contribute to the growth and development of market. That is the market is not that big enough that for example Rocket is injecting money in it.
On the other hand, there is big difference between internet penetration rate and internet usage. Because the number of people in Iran who buy online is less than the number of internet users in social media.
But in order to educate and inject knowledge in the market, we need capital and that’s not our job. Just mass media and government can do it or a big investor can educate the market.
In the end I want you to tell us the work process in ZarinPal and that how long it takes to reach what you want?
While starting, we aimed to have one-million-toman transaction each day and we reached this aim after 20 days.
Then we changed our metrics and we consider 10 million transactions each day and we reached it during nine months.
What is you outlook for the future?
We have prepared ourselves to have 100,000 transactions per day. Considering a tactic, if the average of each transaction is 22,000, it would become about 2.2 billion tomans per day and this is the future outlook of ZarinPal.