Covid-19 is changing the mobile payments landscape, with cash no longer king for wary consumers who are switching to contactless payments in droves. Sensing an opportunity, a new wave of fintechs are building next-generation mobile payments solutions with one eye fixed on solving pandemic-related problems.
Founded by 20-year-old University of York student Yao-Yun (or Yoyo) Chang, KodyPay is one of them. The ambitious startup is on a mission to make shopping safer and more convenient for consumers while boosting business for SMEs. It has developed an innovative platform that is completely hardware free, allowing businesses to take payments from shoppers at a distance using nothing but KodyPay’s smartphone app.
Yoyo bootstrapped the company with £120,000 of his own money earned through trading on the stock market as a teenager. Following a successful trial conducted to prove that KodyPay could facilitate mobile payments between two devices, the company raised a £1.8m seed round to roll out its platform across stores located on the university’s campus.
Entrepreneurs commonly seek purpose in their work, and Yoyo is no exception. “Over the years I realised that trading is just number manipulation and that I wouldn’t make a difference to the world,” he says. “Having come up with my core vision of hardware-free mobile payments when I was 18, I want to finish what I started.”
KodyPay is working with a number of companies including IBM partners TES Enterprise Solutions and Cognition Foundry, in addition to Visa-owned Cybersource. It has spent the majority of its investment on R&D, hiring developers in the UK and Bulgaria to develop the platform. Yoyo has also received backing from the University of York’s Enterprise team.
Making a point
KodyPay is pitching its software point-of-sale (POS) solution as a more affordable and convenient alternative to hardware-based POS systems – including fixed and mobile POS terminals popularised by companies such as iZettle and Square.
SMEs that need to process a wide range of payment options are sometimes required to buy multiple hardware terminals with accounts that need to be individually managed. Being hardware free, KodyPay requires no upfront cost and accepts a wide range of payment options – from e-wallets and pay-later providers to credit and debit cards.
Yoyo, who grew up in the UK and speaks fluent Chinese, is particularly excited about KodyPay’s ability to process payments by China-based AliPay, the world’s second-biggest payments company. He discovered that international students are unable to use AliPay in the UK due to many SMEs being unwilling to buy an AliPay-compatible POS terminal.
“When we developed our platform, we felt that we could offer a solution to the problem and meet the demand that is out there,” Yoyo says. “It is one of the many accidental things that we have found out while undertaking this project.”
“Having come up with my core vision of hardware-free mobile payments when I was 18, I want to finish what I started.”
KodyPay’s app offers several customisable digital checkout solutions that have been tailored for the retail and hospitality sectors, with support planned for more business verticals down the line. One provides SMEs with a ‘Self-Checkout’ service that allows customers to walk into a store, scan a product barcode and pay using KodyPay’s smartphone app without having to queue.
Staff can see the transaction taking place on their own handset in real-time, so there is no physical contact and social distancing is maintained. Because KodyPay can either replace or work alongside retailers’ existing POS, storing products in its database, customers automatically receive the latest prices and in-store offers.
Another digital checkout solution provides retailers with ‘Click & Collect’ functionality that lets customers buy products from anywhere using KodyPay’s app. After paying, they can head into the store to pick up their goods at a free time slot. Yoyo hopes that it will help to level the playing field between SMEs and supermarkets that have already offered Click & Collect services for some time.
Yoyo’s lightbulb moment came when he stuck was in a long queue for lunch at his school, which only accepts cash payments. “Buyers have the power and should not have to queue, which sometimes causes people to wait so long that they leave the store,” he says. “Why should businesses need to invest in specialist hardware when a smartphone is powerful enough to take payments?”
Restaurants too can take advantage of KodyPay’s app, which lets diners browse a digital menu before ordering food and drink directly to their table. Here, the company is aiming to help smaller eateries compete with more established competitors such as JD Wetherspoon already offer a similar Covid-friendly experience.
Yoyo praises York as a location to start a fintech company due to its “close proximity to London and access to northern connections”. He admits that people called him “bonkers” when he explained his vision to them and says that he draws inspiration from Steve Jobs and Jack Ma when times get tough.
“KodyPay has been the most challenging thing I’ve ever undertaken as I have had to sacrifice my social life and work through sleepless nights,” he says. “It has been a remarkable journey and I would not have been able to do it without the people I have around me.”
With a level of maturity beyond his years and a laser-focused vision for the future, it feels like the best times for KodyPay are yet to come.
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