Pathao, a ride-hailing app in Bangladesh, plans to launch its own mobile wallet next year to reduce consumer reliance on cash payments.
"Payments is a big challenge. Bangladesh is a cash-based economy and most of the transactions happen over cash," Pathao's CEO and co-founder, Hussain Elius, told CNBC's "Street Signs" last week.
"However, we are very excited to move into the e-transaction space and just next year, we are launching our own wallet," he said, adding that switching to e-payments would take time as people are "still very attached to cash."
The sluggish pace of mobile banking in Bangladesh is also due to a stark urban-rural divide. Of its 165 million inhabitants, more than 70 percent live in rural areas where there are little to no basic banking services. Other factors include changing regulations and slow adoption of new payment methods. Payments, therefore, are still predominantly made in cash despite government initiatives to boost mobile financial services.
Nonetheless, Pathao has made inroads in tackling Bangladesh's commuting problems. The World Bank estimated that traffic costs 3.2 million working hours each day and hits the economy by $4.6 billion every year in Dhaka — a city with over 18 million people and no mass transit system.
As the first mover in the motorcycle-taxi industry, Pathao quickly gained popularity by allowing people to conveniently and economically beat congestion.
"Before us, there were no motorcycle taxis in Bangladesh, unlike other neighboring countries. So, we built the ecosystem and the consumers loved it because Dhaka is a very dense city," Elius said.
Pathao's success reflects how customized on-demand platforms backed by large economies of scale disrupt the way people traditionally use transport. Ride-hailing company Go-Jek, which has invested in Pathao, reportedly reached a valuation of about $5 billion based on its work in Indonesia.
Source: CNBC