AFT aims to digitise payroll processing in industries and remittances, as well as provide smart PoS devices, with the help of Akhtar Group’s industrial presence and a Chinese partner’s technological competence.
Akhtar Fuiou Technologies, an up-and-coming financial technology (Fintech) firm, has received in-principle approval for an Electronic Money Institution (EMI) licence from Pakistan’s top financial services regulator, the State Bank of Pakistan (SBP). This is the third fintech firm to receive in-principle approval from the country’s top financial services regulator.
With the new approval, the company plans to digitise financial transactions in Pakistan by launching an e-wallet to digitise payroll processing in industries, facilitating remittances using the wallet, and providing Point of Sale (PoS) terminals for processing digital payments.
“The SBP’s in-principle EMI clearance for e-wallets would enable AFT to connect with and extend its services to Pakistan’s massive unbanked population,” the business said in a statement. “AFT will successfully contribute to the advancement of Pakistan’s digital payments ecosystem, relying on its vast international reach and fast access to capital.
Akhtar Fuiou Technologies
Akhtar Fuiou Technologies is the result of a collaboration between Pakistan’s Akhtar Group and China’s Fuiou Pay to further digitise Pakistan’s rapidly expanding financial payments infrastructure by combining Akhtar Group’s industrial presence and knowledge with Fuiou Pay’s technological prowess. Another participant to this joint venture is JollyChic, a Chinese eCommerce site that has invested in the company with hopes to deploy the site in Pakistan in the future.
Akhtar Fuiou Technologies, founded late last year, is an old Pakistani business group’s first foray into the field of technology. Sugar mills, ethanol distilleries, and a CO2 facility are all owned by the Akhtar Group. Aside from sugar, the Akhtar Group is involved in the steel and textile industries, and through Lotte Akhtar Beverages, a joint venture between Korean Lotte Corporation and the Akhtar Group, it is the franchisee for PepsiCo in Lahore.
Shanghai Fuiou Payment Services Limited (also known as Fuiou Pay) in China, on the other hand, was founded as a financial technology company by employees of China Union Pay (CUP), a major Chinese financial services company that provides bank card services and is a globally recognised card scheme that competes with Visa and Mastercard. Fuiou Pay is a key player in China when it comes to processing inward digital remittances, e-wallets, and the delivery of payment hardware and software such as Point of Sale terminals.
“Our goal is to transfer top-of-the-line technology from China to Pakistan, and we will rely on our local partner, Akhtar Group, to set up the network and connections so that we can better serve Pakistani businesses, institutions, and individuals,” says Mick Wu, CEO of Akhtar Fuiou Technologies.
AFT has a $5 million initial investment and ambitious expectations for Pakistan’s payments industry, thanks to the combined efforts of the three companies.
E-wallet and digitisation of industries
In the field of EMIs, eight well-known fintech companies in Pakistan are attempting to digitise payments through e-wallets. Finja, SadaPay, and NayaPay are the most well-known, having all launched pilots, although EP Systems, TAG, and now AFT have only got in-principle permission, which will be followed by a pilot phase and eventually a commercial launch of the wallet. Within the next six months, AFT will begin its pilot programme.
According to a corporate statement, “AFT’s primary goal is to offer e-wallets for domestic sectors to digitise their operations.” The corporation claims that its participation into Pakistan’s new economy is in keeping with its concept of reducing poverty.
According to this vision, Akhtar Fuiou Technologies will begin with processing payroll for sugar mills. The goal, according to Qasim Akhtar Khan, strategy executive of AFT, is to target Pakistan’s unbanked rural population.
“AFT would be able to immediately deliver mobile wallets to the predominantly unbanked employees of agricultural commodity-based firms in Pakistan’s rural areas by starting with cloud-based payroll solutions,” he says. Qasim adds, “The idea is to digitise, document, and accelerate raw material procurement, which accounts for the majority of these enterprises’ manufacturing costs.”
“We’re going for the payroll wallet because we have a large workforce that works for a variety of industries and industries, and payroll is our primary revenue source. First and foremost, we will digitalize that segment of the business and enhance it with relevant capabilities, features, and value-added services,” said AFT CEO.
AFT will use the wallet capabilities of Fuiou Pay, which has a technological team based in China. Fuiou Pay is a technology company with over 250,000 employees that offers technology solutions to small businesses, such as corner grocery stores, financial institutions, and even big banks like HSBC. Despite the fact that the technology will be adjusted for the Pakistani market, it will be built on cutting-edge and innovative foundations that Fuiou Pay has strived to develop in China over the years.
“AG’s strong presence in the agricultural commodities, industrial chemicals, and FMCG sectors will help AFT build several use cases for its mobile wallet,” according to the company.
“The vast distribution network AG has established in its FMCG business will enable AFT to create merchant wallets for distributors and retailers and eventually result in a large agent network which will assist the company scale both in the PoS terminal acquiring business and in creating an unparalleled last-mile infrastructure for inward cross border remittances,” adds Qasim.
Fuiou Pay will provide the technology for the e-wallets; it already operates some wallets in China and has cooperated with big online companies like as Amazon, Payoneer, and Airbnb. The Akhtar Group will use its industrial presence to help launch the wallets for payroll processing in the sugar industry, as well as the projected digitalization of other industries.
This is also the point of differentiation between AFT and other fintech firms: AFT is attempting to digitise industries in which it has knowledge and influence; it possesses the technology that it previously used to assist in the digitisation of the world’s second-largest economy; and it possesses the technology that it previously used to assist in the digitisation of the world’s second-largest economy.
Scaling wallet for remittances
In addition to payroll processing, AFT will endeavour to build an ecosystem for inbound and outbound remittances, in accordance with the State Bank of Pakistan’s goal of integrating Pakistan’s diaspora into the country’s home banking system.
“By leveraging AG’s footprint and clout across various industries, AFT hopes to build a large base of merchants and consumers in Pakistan who use its mobile wallets, allowing AFT to reach out to exchange companies, fintechs, banks, financial card operators, and other alternative remittance systems to facilitate home remittances from overseas Pakistanis sending money back to AFT wallet users.
Simply put, remittances would be received into AFT customer wallets, from which cash could be withdrawn using China Union Pay branded AFT debit cards. Similar arrangements exist for wallet users in the Middle East with Fuiou Pay, and AFT intends to begin with remittances from the Middle East.
If cash withdrawals aren’t enough, wallet users will be able to make a variety of payments, such as school fees and utility bills, as well as QR payments, using remittances received into the wallet.
“We completely understand the remittance sector, and we have seen a lot of news that Pakistan’s inward remittances have increased dramatically. We have a cross-border payment licence in China, and we are quite familiar with cross-border payment because that is what we do there. We have the technology and market knowledge to do so,” Mick explains.
“We can achieve use cases and a client base to further broaden our technology and services with many more value-added offerings,” he adds.
However, AFT’s push to digitise remittances comes at a time when the State Bank of Pakistan (SBP) is promoting the adoption of the Roshan Digital Account (RDA), which does everything the AFT wallet does and more, and remittances received through RDAs have surpassed $2 billion, owing to aggressive government marketing.
Does this make things more difficult for AFT, given that it is pitted against the central bank and the government? While Qasim acknowledges RDAs’ role to improving remittances, he rejects it as a cause for concern because the remittances received through RDAs are still a small portion of total remittances, and the actual potential is significantly higher.
“Foreign remittances are the single largest source of international cash in Pakistan, surpassing exports and foreign investment,” Qasim explains.
“Remittances have increased by a whopping 30% in the last year and are expected to reach $30 billion this fiscal year, while experts believe an additional $10 billion flowed into the country via illegal channels over the last year, so AFT believes that while the SBP’s RDA scheme and other private sector players are entering this space, it is still big enough and will continue to grow,” says the report.
PoS and QR codes for payments
AFT wants to use the financial technology hardware competence of Fuiou Pay in China to deliver PoS terminals in Pakistan, in addition to establishing e-wallets. To be clear, AFT will not be a new acquirer for point-of-sale terminals. Through an exclusive distribution arrangement with a major Chinese payments hardware provider, it would be a distributor of PoS terminals for acquiring banks in Pakistan.
Mick reveals that AFT wants to introduce smart PoS equipment in Pakistan that will be capable of processing both bank card and QR transactions on the same machine. “At first, smart machines would be able to process bank cards. In the coming years,
In addition to building e-wallets, AFT plans to employ Fuiou Pay’s financial technology hardware expertise in China to supply PoS terminals in Pakistan. To be clear, AFT will not be a new point-of-sale terminal acquirer. It would be a distributor of PoS terminals for acquiring banks in Pakistan thanks to an exclusive distribution agreement with a large Chinese payments hardware vendor.
Mick explains that AFT plans to provide smart point-of-sale technology in Pakistan that can process both bank card and QR transactions on the same system. “At first, intelligent machines would be capable of processing bank cards. In the years ahead,
“In Pakistan, there are currently just 50,000 PoS Terminals but SBP aims to increase that number ten times to 500,000 over the next three years. Bearing in mind Fuiou’s relationships with the leading PoS manufacturers in China and with UnionPay which Is the world’s largest financial card operator, AFT is uniquely positioned to capitalize on this lucrative opportunity to digitize Pakistan’s payment ecosystem by providing smart PoS Terminals and issuing UnionPay Debit Cards to its wallet users,” says Qasim.
AFT wants to use Fuiou Pay’s financial technology hardware experience in China to supply PoS terminals in Pakistan, in addition to constructing e-wallets. To be clear, AFT will not be a new acquirer for point-of-sale terminals. Due to an exclusive distribution arrangement with a prominent Chinese payments hardware provider, it will be a distributor of PoS terminals for acquiring banks in Pakistan.
AFT wants to deliver smart point-of-sale technology in Pakistan that can process both bank card and QR transactions on the same system, according to Mick. “In the beginning, intelligent machines would be able to process credit cards. In the coming years,
“Fuiou’s yearly transaction volume in China is $200 billion, which is roughly two-thirds the size of Pakistan’s GDP. Given that only 12% of Pakistan’s population has access to payment cards, AFT predicts that, like China, Pakistan will move from a cash-based economy to one in which QR codes will become the primary payment mechanism, bypassing financial cards,” adds Qasim.“Fuiou’s yearly transaction volume in China is $200 billion, which is roughly two-thirds the size of Pakistan’s GDP. Given that only 12% of Pakistan’s population has access to payment cards, AFT predicts that, like China, Pakistan will move from a cash-based economy to one in which QR codes will become the primary payment mechanism, bypassing financial cards,” adds Qasim.