Koko, a payments app backed by Sri Lanka’s largest e-commerce enterprise Daraz, is offering two months of installments on transactions for Sri Lanka’s 18 million bank debit cardholders. Users must first download the app and register their account. Any adult with a bank card can instantly obtain a spending limit at the time of registering. The algorithm will review their behaviour and their creditworthiness rewarding customers that payback in time through dynamic spending limits.
Koko’s target audience would be Sri Lanka’s debit card users. Statistics show that out of the 20 million cards issued almost 90% are debit cards.
You launched Koko during the pandemic. What was challenging about that?
The pandemic has and still is making considerable shifts in consumer preferences and buying behaviour. We viewed it as an opportunity and not only as a challenge. That was our approach from the beginning. Koko, a first-of-its-kind payment method, was launched in Sri Lanka during the pandemic. It’s a Buy Now Pay Later app, as such it can be integrated as a payment method with online, offline, and social media merchants.
Although Koko is digital at heart, we were keen on making our presence felt offline as well. And one of the challenges that we had to overcome was the lockdown and the closing down of physical stores. Our onboarded offline merchants were unable to use us. For our traction, it was important that we coordinated quickly and moved online, integrating with e-commerce websites quickly, all the while working remotely.
Koko had a great social media launch thanks to a dedicated team that worked around the clock to make it successful. Since its inception, Koko believed in supporting small businesses and connecting with SMEs that operate sales channels on social media such as Instagram and Facebook. Koko was the first app that allowed these types of merchants to have an easy digital payment method. Doing prepaid orders, improved their delivery success rates and increased the sales at a time they needed it most.
Who is the target audience and what market need is the product addressing?
Koko’s target audience is Sri Lanka’s debit card users. Statistics show that out of 20 million cards issued almost 18 million are debit cards. Debit card penetration, in Sri Lanka, stands at approximately 75% of the population. Compared to other countries in South Asia, such as Pakistan (17%) and Nepal (32%) this is exceptionally high.
Apart from that, these numbers show that access to credit is still a challenge in Sri Lanka. We bridge this by providing almost instant liquidity to all adults that have a debit card.
In the end, it’s going to be a win-win for customers, brands, and retailers. Koko pushes traffic from the app to our partner’s websites and stores. These customers who already have credit at their disposal are more likely to purchase. Brands and merchants benefit from increased order values and a high conversion rate, in-store and online.
What is Koko’s longer-term strategy?
Currently, we are concentrating on digital payments adoption. We are growing our merchant base and are in the short-term focused on adding merchants offering healthcare, travel, and tourism.
Our goal is greater financial inclusivity, whilst driving growth for our merchants. At the same time, we want to ensure that people appreciate responsible spending. In the longer run, we intend to introduce Koko to other countries by leveraging the best of Alibaba’s technology and Daraz e-commerce. We hope to take Koko, which was developed entirely in Sri Lanka, to other south Asian countries. Within this year we are launching in Pakistan, Bangladesh and Nepal.
How have you overcome digital payments infrastructure gaps in Sri Lanka? What remains?
Koko’s instant spending limit at registering is not an option debit cardholders had previously. We’ve noticed that people, in general, fear a security risk with digital payments. Another perception among customers and merchants is thinking ‘cash is king’. Koko’s here to assure everyone that without physical cash it’s possible to purchase and sell smoothly and conveniently.