Fintech Spotlight: PayBox and Their Social Payment Network for Groups

In today's Fintech Spotlight, Finance Magnates speaks with PayBox to learn more about their fast growing social network payment app.

Attending the Citi Mobile Challenge this year, one of the themes that Finance Magnates reported on was that many of the presented products were ones that you didn’t immediately feel that you need, but after using it for the first time, left you asking, “how did I live without this?” Among the firms that fit this group is PayBox, which operates a social payment platform for groups.

Why would anyone need such a product? The popular example that is touted by firms like PayBox is a group of friends going on a road trip. Expenses are shared, but one person shells out cash for gas, another for food, another for concert tickets. At the end of the day, the friends can make an accounting of all the expenses and work out who owes what. But as we all know from personal experiences, this method rarely works well.

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With PayBox, the friends can create a group, with each one chipping in an equal amount to the overall expenses. When the driver pays gas on his credit card, this expense is uploaded to the group, and he is credited for his payment. As payments take place by an individual, PayBox ensures that the bottom line is that they only have to cover their share of the expense. For many users, the ability to efficiently have group payments calculated and credited or debited across all users, is that ‘wow moment’ that PayBox and other group transaction products are bringing to the market.

From Students to ‘Super Moms’

Speaking to Udi Liberman, CMO at PayBox, he stated that after creating the platform the group of four founders decided to initially market it to students. Liberman explained, “We thought that students would be our target audience since they are sensitive to expenses and are social.” While the segment seemed like a natural fit for PayBox, they quickly learned that their target audience was larger than they expected.

Among the most engaged groups that PayBox discovered were ‘super moms’, or also known as ‘soccer moms’ in the US. This group includes mothers who are active participants with their children’s schooling and extracurricular activities. The result is that they repeatedly encounter the need for group payments, such as when parents need to pay for extra supplies for their children’s basketball teams, buying gifts for pre-school teachers, and so on.

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Using Israel as its beta community, Liberman explained that PayBox has grown to have collected $1.59M in payment transactions, with minimal funds spent in marketing since launching the product in September 2014. More importantly, and why Liberman and the rest of PayBox believe their product solves an important problem for consumers, is that their app conversion rate is well above those of other payment related apps which are estimated in the 10% to 20% range. As such, with a large base of users who download the app, also connecting their credit cards, it relates that when a member of a group introduces PayBox to their friends, it has a high acceptance rate.

London Bound

Udi Liberman, CMO, PayBox
Udi Liberman, CMO, PayBox

Graduating from the Citi Innovation Accelerator in Tel Aviv, PayBox’s founders have recently made their way to London as part of MassChallenge UK. According to Liberman, arriving to London provides a new beta community for PayBox to learn from.

In terms of potential users, with their experience from Israel, PayBox will be targeting the ‘super mom’ category in the UK. In addition, based on creating focus groups to better understand the spending habits of the local market, Liberman explained that they discovered another potential audience; after work casual drinkers. According to Liberman, this group is composed of friends who will take turns ‘buying a round’ for each other after work. The fault with the system is that it isn’t very accommodating with late arrivals and early exits. Therefore, participants of focus groups described to PayBox that they would benefit from the ability to have individual rounds shared easily among the group.

Using the information, PayBox plans on launching their group payment platform to their UK beta community soon. Having developed their app and brought it to market with a seed round of $90,000, PayBox is currently seeking new investors to assist in their international expansion. This will include a wider UK rollout and entrance into Europe.

As part of their arrival in London, PayBox expects to work with local banks and payment firms to create the best solution to open up their app for UK transactions. Liberman explained that one of the advantages of being in London, and a reason they chose the city rather than participating in the Boston unit of the MassChallenge, is the UK’s connection with the rest of Europe. As a result, upon entering the UK market and partnering with local financial firms, it will be easier for them to open up their group payment platform to the rest of Europe.

Fintech Spotlight is a new column on Finance Magnates devoted to reviewing innovative financial technology companies and sector trends.

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