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Local mobile wallet is going social

In partnering with fastacash, Cellum hopes to cash in on social messaging and payment as a way to increase its penetration in Asia.

Cellum CEO János Kóka

A Hungarian firm that provides a mobile wallet is hoping that social media will help it expand its reach as it seeks to grow from hundreds of millions of customers to more than one billion.

Mobile wallet provider Cellum and fastacash, a company that facilitates mobile payment through social media and messaging apps, signed an agreement in February targeting a market of one billion users in Asia and Europe. The agreement combines Cellum’s secure platform with fastacash’s social experience, and its user base now concentrated in Central and Eastern Europe and also in South East Asia.

Social messaging and payment is becoming ever more widespread around the world, and that is especially so in Asia, where countries entered the mobile data market quite late, but have been growing at an unprecedented pace.

Cellum, a Hungarian startup founded about five years ago, has moved to the forefront of the competition to provide mobile payment systems. As a Cellum press statement explains, “Our flagship product, Cellum Mobile Next is a modular, end-to-end remote payment system that turns any smartphone into a virtual payment device capable of conducting transactions from any registered payment instrument, from bank cards and mobile phone account to loyalty cards and coupons.”

Currently, Cellum reaches 200 million customers, including Indonesia, where the company has partnered with Evercoss, a mobile phone maker whose devices will run Cellum apps as a default. With the planned expansion, its potential market may reach two billion users in three years, company officials say.

Commonly used by drivers

Two-thirds of Cellum’s users now use the company’s apps to pay parking and highway toll fees. Other remote payment options, such as pre-paid top-up, bill payment, e-commerce checkout, QR code payment, and mobile gambling, constitute the remaining third.

This is going to change though as parking payments, which will likely rise to 20% in total, will be overtaken by others, including proximity solutions, when you are physically present in a shop and touch your card to pay: This could increase by 100-200% annually. “We are at a very early stage to calculate; conservative estimates suggest that in three years’ time transaction numbers will exceed 100 million”, János Kóka, Chairman and CEO told the Budapest Business Journal.

The boom forecast in these Asian markets may never come to Hungary though. According to a GKI and FinTech Group survey last fall, only 150,000 of the 4.6 million mobile phone users in Hungary have downloaded some mobile payment apps. Kóka explains this with the availability of legacy financial services in Hungary. The market here is well developed; access to these services is easy. Internet penetration is high and one has no difficulty finding a bank or post office within short distances, he said. The situation is quite the contrary in Asia, where most countries Cellum is targeting entered the mobile finances market late. Indonesia, for example, is a huge market where internet and bankcard penetration are low, distances are long, and the proportion of the most susceptible young generation is high. All these, coupled with very advanced mobile communications – smart phones being virtually the only IT devices – means there is much more room to grow than in local CEE markets.

“Our last four years was about development: Annually we spent roughly HUF 500-600 million on it. We wish to introduce a contactless payment system and are working on other fascinating new products in our lab,” said Kóka. “It is up to the banks and MasterCard when this takes place, hopefully this year.”

But to help keep up growth and be the first in the newest technologies, Cellum wants to raise a couple of million dollars, Kóka said. Cellum’s group revenue was HUF 861 mln in 2015, and at least 20% organic growth is forecast – but far more is needed as market entry costs around $1-1.5 billion per country, whereas the upfront revenues coming from each client are much smaller. The company would like to establish representation in Japan, Singapore, Thailand and Australia’s Sydney, as well as in several European and U.S. cities. “Our major competitors have $10-100 mln budgets while, in the past five years, we raised €5 mln,” said Kóka. “We are much more efficient when it comes to innovation, but will still need at least another €10 mln to remain a frontrunner in Europe and Asia.”

The CEO is confident that Cellum will close a Series B round of market funding within a year.