As one of the younger players in the BNPL space here, OctiFi is adopting a grassroots approach. “We help small businesses by empowering them with a customer financing solution, so they can offer interest-free instalments to customers anywhere,” says co-founder Ed Chin in an interview with The Edge Singapore.
OctiFi was founded in September 2019 and launched in July 2020. Chin considers it a milestone to have kickstarted operations at the height of the Covid-19 outbreak. “In terms of operating history, we’re fairly new… We did plan on launching a bit earlier because we were unable to make contact with merchants [during the circuit breaker], that obviously delayed it,” he says.
While others in the space may be gunning for large retailers and chains, OctiFi is looking to help sellers who may be struggling with the sudden need to digitalise, especially when shops were closed earlier at the outbreak of the pandemic.
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“A lot of merchants have difficulty transitioning to e-commerce. You can sell your products online, on Lazada, Carousell or Facebook, for example, but it’s still very hard to generate sales without spending a lot of marketing dollars on your listings, or on paid advertising to generate traffic,” says Chin.
OctiFi now has more than 170 merchants on its platform, and the company processed $850,000 in purchases in March. So far, the sweet spot for OctiFi has been merchants in sectors that are “not necessarily compatible with e-commerce”, says Chin. This includes offline merchants and sellers active on social media platforms, and service providers who are regularly on the move, like home maintenance workers.
The Hong Kong native, who is married to a Singaporean, moved here from the US in August 2019. Before his relocation, Chin had led a handful of start-ups, most recently serving as chief data officer at Sweeten, a New York City-based home renovation portal. Chin joined Goldman Sachs in 2003 as an analyst and left as a managing director in 2013.
During his time in the Wall Street investment bank, he witnessed the 2008–2009 subprime crisis where high rates, high leverage wrought heavy damage to consumers. “It’s not just devastation individually, but also a societal problem,” says Chin, explaining what motivated him to start OctiFi.
“My experience with ‘non-prime consumers’ is that not everybody is a bad loaner. Someone may have a low income, but they may be very responsible. There are very tight regulations around getting credit in Southeast Asia [and] it does hinder growth. Today, people are in the gig economy, they’re doing a lot of freelancing, self-employment. They may have the income, but may not necessarily qualify for a credit card,” he says.
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To encourage customers to be responsible about making payments, OctiFi is looking not just at penalties, but also rewards. A cashback system returns up to 1.5% to customers if they meet payment deadlines or complete payments in advance, says Chin. “By encouraging them to behave responsibly by paying on time, by paying more often, our customers can grow their credit history with us.”
Co-founder Amit Kumar Surendra brings with him years of experience in back-end engineering. Before founding OctiFi, the former head of engineering for payments at Grab was most recently engineering manager at Google. The duo leads a team of 12 full-timers across business development, sales and operations.
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“I certainly see this to be a future of credit. Part of the reason why I’m doing this is that I just don’t see how lending at 20% or 30% interest rates will ever lead to a good outcome. Because I’ve seen that in the US. Anybody who borrows at that kind of interest rate, it will always lead to financial ruin,” says Chin.
“I think the BNPL concept is key because it does make it more affordable. Somebody who cannot pay a 30% interest rate will ultimately default on it. If you give them a low interest rate, or 0% interest rate, all of a sudden, they may be able to pay it back.”
As numbers begin picking up, OctiFi is already looking beyond our borders. “I think building a company in Singapore does make you think outwards very immediately,” says Chin.
“Part of our goal is to go to more developing economies; countries like Indonesia and India are certainly on our wishlist.”
