Financial solutions startup NextPay has recently begun informing its users about discontinuing its payment acceptance services beginning January 15, 2024, as well as a transition to a subscription-based pricing model.
Founded in 2019 by Aldrich Tan, Don Pansacola, and Artie Lopez, NextPay functions as a digital bank for Filipino small and medium-sized enterprises (SMEs). The startup offers various financial services such as sending invoices, collecting payments, payroll, and paying bills. The startup is notably backed by investors including the Sy Family’s Gentree Fund, Ayala Group’s Kickstart Ventures, Silicon Valley-based startup accelerator Y Combinator, and Singapore-based VC firm Golden Gate Ventures.
According to a Q&A posted on the NextPay website, the company has decided to close its payment acceptance services such as Payment Links, Invoices, and PocketPay, to focus more on its disbursement solutions including NextPay Deposits and Disbursements.
NextPay’s new emphasis on disbursement solutions entering 2024 marks the startup’s second overall pivot. NextPay first started as a financial wellness app that not only enabled businesses to pay their workforce but also helped employees set aside money towards specific savings goals. Then at the onset of the pandemic, the company shifted to helping SMEs avail of financial services like replacing the need to open a corporate bank account.
According to Co-Founder and Chief Operating Officer Artie Lopez, NextPay’s most recent pivot is the startup’s direct response to market shifts and customer behavior changes.
“Today, due to macroeconomic conditions that affect the Philippine economy as well, we had to decide to make another pivot to switch focus in terms of product offering and business model. It was a difficult decision for us to make those changes to our platform. Still, it was a necessary move to provide the best experience for existing customers who rely on our product, and for ourselves in building a sustainable business to continue to address and move towards our North Star, which is to ‘improve the financial wellness of every Filipino’,” explained Lopez.
Lopez also points out that the latest changes were also a practical decision. “Due to the current macroeconomic situation, the costs to maintain that service and acquire customers were also very high. Upon careful evaluation, keeping those products active would take significant time and resources from the team. This is why we decided to focus on what we are best at and what our customers have been really happy with, which is our disbursements and money-sending features,” he said.
Finally, Lopez revealed that NextPay’s latest pivot will bring a new batch of products and services to the platform. Anticipated releases in 2024 include Advanced Approval processes, Payroll and HRIS solutions to help employees get paid more easily and on time, payables management to help businesses pay their bills and suppliers easily and consistently, and more services that are aligned with its currency Money-Out functionality. Furthermore, the company is set to leverage the power of AI to enhance its core processes and product offerings.
NextPay’s new shift and potential release of new solutions coincide with the steadily increasing adoption of fintech solutions in the country. Fintech adoption in the country was previously forecast to hit 72.2% by end-2023, according to a report from consumer credit service Digido. The significant expansion is expected to be driven primarily by the Payments & Transfers segment, which is projected to surge by 17.6%.
Demand for improved disbursement solutions has also risen globally with a report from payments news site PYMNTS noting as many as 26% of consumers would be willing to pay extra for faster disbursements. This high demand holds across varying verticals of disbursements, with 39% of consumers willing to pay a fee to instantly receive instant income and earnings disbursements.