IOUPay to advance position in Southeast Asia with KA$Hplus and Islamic finance offerings

IOUPay is advancing two important projects as it aims to drive growth in new consumers and advance brand loyalty in Malaysia and Southeast Asia.

Malaysia focused fintech, IOUpay (ASX:IOU), has announced two important product updates which will expand its offering and enable the company to substantially broaden its customer base.

Co-brand myIOU KA$Hplus Visa Prepaid Card has been approved by Bank Negara Malaysia with stage 1 rollout starting in July with the official launch in mid-July.

Meanwhile myIOU Islamic is under development with Shariah compliance certification for myIOU BNPL scheduled for Q1 FY23.

KA$Hplus Visa Prepaid Card

The KA$Hplus Visa Prepaid Card is a reloadable prepaid debit card which carries the Visa payment features and is issued by Virtualflex Sdn Bhd in partnership with Fass Payment Solutions Sdn Bhd.

All KA$Hplus cards, once activated, may be used to purchase goods and services worldwide wherever a Visa card is accepted or to access cash at ATMs or financial institutions.

Features include prepaid loading, top-up, and debit card-style usage, with recharging via bank and e-wallet transfers.

IOUpay’s wholly owned subsidiary, IOUpay Asia is collaborating with Virtualflex to provide a co-brand myIOU KA$Hplus Visa prepaid debit card, available to selected myIOU customers in Malaysia under a collaboration agreement.

The key objectives of the myIOU KA$Hplus Card initiative include:

Access merchants not yet onboarded to myIOU
Provide additional value to myIOU consumers
Drive growth in new consumers and enhance brand loyalty
Generate additional revenue streams via potential future product enhancements
Expand myIOU product coverage to more merchants (local or international)

The myIOU KA$Hplus Card is to be rolled out in two stages.

Stage 1 – Initial Card Rollout

Stage 1 involves issuance of co-brand myIOU KA$Hplus Visa prepaid debit cards to selected myIOU BNPL customers who are currently approved for and actively using myIOU Credit+.

These are customers who have qualified for a myIOU BNPL credit limit of at least RM3,500 (~A$1,100) by satisfying an additional credit assessment.

Additionally, the myIOU KA$Hplus Card will also be issued to selected customers of I.Destinasi Sdn Bhd (IDSB), which IOUpay holds a 42% stake, as part of a cross-sell marketing initiative being developed.

The company has received from Bank Negara Malaysia (BNM), Malaysia’s central bank, necessary approvals for issuance of the myIOU KA$Hplus card, enabling the Stage 1 rollout.

The purpose of Stage 1, which will start in July, is to test card issuance and rollout, reward loyal customers, build brand awareness, and facilitate special marketing initiatives such as for selected IDSB customers.

Stage 2 – Integration with myIOU BNPL Service

The initiative aims to integrate myIOU KA$Hplus card into the myIOU BNPL platform.

This will enable customers to purchase goods or services using the card anywhere Visa is accepted and then choose to convert that purchase into a myIOU BNPL transaction seamlessly via their mobile device using the myIOU app.

The Stage 2 integration remains subject to BNM approval for the linkage to the myIOU BNPL service.

Upon central bank approval and completion of integration, approved customers will have the flexibility to manage their personal budgets via their myIOU KA$Hplus card, choosing which payments to cover with 100% cash and which to pay later over time by selecting one of three myIOU instalment payment plans.

The options will streamline customer account management and personal budgeting, and accommodate more flexible shopping patterns.

Importantly, using the myIOU KA$Hplus Card to make purchases and then converting those into short term BNPL instalment payment plans means that customers will not be limited in their shopping choice to merchants operating on the myIOU platform.

This feature will immediately expand myIOU product coverage to many more merchants, given the Visa Prepaid Card enables purchases with any Visa merchant participant globally.

Project 2: myIOU Islamic – Shariah compliance

Southeast Asia, and specifically Malaysia, have significant Muslim populations – the 2020 Malaysian MyCensus data shows its proportion of Muslim citizens at 60% and growing, which means finance options that are compatible with the principles of faith are essential.

Instalment based consumer finance products such as BNPL are naturally aligned with the Shariah principles of Islamic finance, given they are based on interest-free, unsecured credit.

The requirements to comply with Shariah principles go beyond not including interest charges in the calculation of loan repayments.

In Malaysia, to access Islamic financing and BNPL opportunities within industry best practice for Shariah principles, requires certification from a Shariah advisor licensed by the Securities Commission of Malaysia.

IOUpay has been working closely with a suitably licensed, independent global Shariah advisory firm to gain certification of Shariah Compliance for its myIOU BNPL service offering. Certification is anticipated in Q1 FY23.

Following completion of certification, the company will prepare to offer both conventional and Islamic financing.

Islamic financing will require a partitioning of the myIOU portfolio, integration with an Islamic payment gateway as well as separate documentation, policies and procedures, and an Islamic bank account for all Shariah-compliant transactions.

IOUpay plans to offer its Shariah-compliant BNPL service under the name myIOU Islamic with full brand guidelines being developed.

The company is currently finalising a collaboration agreement with a Shariah-compliant payment gateway and expects to complete integration within 30 days of signing.

The key objectives of the Shariah Compliance initiative include:

Enter the Islamic BNPL market, serving Islamic merchants and consumers
Provide an alternative to conventional BNPL
Increase brand standing in Malaysia and SEA
Prepare for territory expansion into other SEA jurisdictions with large Islamic populations

IOUpay independent non-executive Director Datuk Khairul Ismail says myIOU Islamic will position the company to access new communities of merchants and consumers, both in Malaysia and beyond.

“Certification from a licensed, independent global Shariah consultancy firm will assure the customers of myIOU Islamic that their transactions and purchases will be in accordance with Shariah principles and teachings,” Khairul says.

This article was developed in collaboration with IOUpay, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.