racoma.com.phJ. Angelo Racoma on technology, economics, writing, problogging, and getting things done

Last Saturday, my wife and I had lunch at Makati Shangri-La’s Circles restaurant on the invitation of Ms. Karla Maquiling of Pinoycentric.com. Apparently, the people behind Aryty.com (said to be pronounced like “alrighty”), CEO Nils Johnson and Creative Director Daniel Neumann, were in town and they wanted to introduce their company and services to Filipino bloggers.

The concept behind Aryty.com is strikingly simple, but with lots and lots of potential, in my opinion. Aryty basically lets users send prepaid credits to Philippine mobile phones–be it Globe, Smart or Sun Cellular. They don’t even charge any fees in excess of the actual credit amount. Users just have to go to Aryty.com, sign up, and send load to any prepaid number in the Philippines using their credit cards to pay.

And why does it have lots of potential? Get this. While internet penetration rate in the Philippines is at a dismal 10% or less (most of which access at public access points like internet cafés), mobile penetration rate is around 50% of the population, or around 50 million people. And what’s even better for Aryty’s business is that a good majority of Filipinos have friends or family members living abroad either as immigrants, expats or migrant workers.

So that means Aryty saw great demand, and they’re now filling in that gap. The competition is not actually other companies doing the same thing, but the behavior of the consumers themselves. Here in the Philippines, a good majority of mobile users are on prepaid, and credits can be bought just about anywhere–including stalls or shops in the malls, small corner stores, convenience stores, gasoline stations, and even your next door neighbor. You can even ask someone to pass or share load from his cellphone to yours, if you run low.

The prevailing preference is for micro purchases (say PhP 50 or about $1 a pop), but larger amounts are available (like PhP 300 or 500–about $6 to $10). These are still cheap by US standards, mind you.

But Aryty says it’s tapping the remittance-sending market, meaning those Filipinos who usually send bulk of their earnings back to their families here. So instead of them having to worry about their relatives back here who might need a few bucks to buy credits, they can just send them load at the comfort of their own Internet-connected computers. Remittances aren’t instantly sent and received, after all, but load can be sent in a matter of a few seconds.

What’s even more convenient is that once a user is registered, he/she can send load to mobile phones in the philippines not only from their computers, but even from their cellphones thru SMS.

And taking into account that not all Filipinos abroad are professionals with bank accounts and credit cards, Aryty will be opening stalls (or affiliating with shops?) where Pinoys can pay cash for credits to be sent here.

The group (composed mostly of bloggers) fielded a lot of questions and suggestions to the Nils and Daniel, and these were mostly about how secure the system is, and whether there’s room to improve or expand to other fields, like remittance, and even micropayments using prepaid load. Nils said they invested a lot of money and over a year’s effort of working on the back-end, so the system is solid and secure.

And as to their business model? We wondered if they will be sustainable, given that they won’t be charging fees on top of the actual prepaid load. The answer: they’ve purchased the credits in bulk, so they must have bought these at a huge discount. Note that local retailers also rely on the bulk discounts to earn. So for instance small retailers probably get about 10% discount on the prepaid load they sell, so they earn about PhP 10 for every PhP 100 they sell. The more credit or cards they buy for resale, the bigger the discount (I hear the larger retailers get about 30% discount or larger).

A summary

Let me summarize the good points and the bad points I see with Aryty so far.

The good points

* You can send load via the Internet.
* First time users get a free PhP 150 or about US$ 3 to send to Philippine mobile owners.
* Users need verification using a US- or Canada-issued mobile number, so the potential for abuse (i.e., multiple sending of PhP 150 load) is lesseneed.
* Local users can send text to foreign mobile numbers to request for load. Foreign users (US and Canada for now) will then receive the request on their mobile. If the number is registered already, they can just respond to send the load (and debit their debit/credit card). If not, they can login to Aryty.com to send the requested load.
* As mentioned, both sender and requester can use their mobile phones to ask for or send load, so there is no need to have access to a computer (as long as the sender is already registered).

Things to improve on

* For now, the service is only open to the US and Canada, hence a limited reach. Pinoys live and work all over the world, and this would be a good market to tap (which Nils says they are planning to do soon).
* The service is yet to open here in the Philippines. However, whether there is a demand here is still debated, since there is a low percentage of Filipinos with credit cards, and most who do are not very comfortable with using credit cards to transact online.

Suggestions

* Prepaid credit as currency? Can be a legal/technical hassle, but it’s probably doable. “Vmobile”:http://www.vmobilesolutions.com tried this before. I wonder if they got any success.
* Of course, more countries.
* More payment options (like PayPal and even cash).
* Aryty as a remittance service?
* Have a button for bloggers/web publishers who might want to be “tipped” by prepaid load. Micropayments via PayPal aren’t here yet, but perhaps you can get rich by receiving thousands in prepaid load!

So if you Are in the Philippines and you have friends and relatives in the US or Canada, or vice versa, go try out Aryty.com !