Paybby’s Empowering Black and Brown Communities

Providing people of color with the same quality of banking services as the white community is a fundamental human right. Turns out it is a sound financial venture too.

That has been the experience of Paybby, a digital bank designed to empower Black and Brown communities to build wealth and gain full access to the benefits of banking, CEO Hassan Miah said. Founded less than one year ago, Paybby aims to improve a situation which has not changed for a long time.

Mr. Miah said the underbanked market is 55 million people, with less than $10 billion out of $20 trillion US banking assets held by Black families. Black families do have capital, but it doesn’t recirculate like it does elsewhere, with more being gobbled up by banking fees.

Have fintechs tackled the problem? Not really, Mr. Miah said. While some pay lip service to the issue the stats tell another story.

Hassan Miah

“If they are serving the underserved and the gap is growing clearly they are missing the mark,” he said.

The business opportunity is growing, Mr. Miah added. In 2020, for the first time, the majority of Americans under 18 were non-white.

“Trillions flowing the system is making somebody rich,” Mr. Miah said. “Cash App, Square, Venmo – they made billions. Jack Dorsey became a billionaire primarily from Black and Brown communities.”

The opportunity is clearly there, so the focus then becomes how to recirculate more of that money. It’s a technological issue involving KYC assessments and scoring. And with many members of these communities working in the gig economy those assessment tools will need unique capabilities. Paybby bought a system. Wicket Mobile Banking by Paybby is available in Android and iPhone versions. Paybby also supports Apple Pay and Google Pay.

The issues in successfully serving Black and Brown communities are also social.

“The other big problem with companies like this is the consumer does not trust the banking system,” Mr. Miah said. “They don’t trust because they discriminate, turn them down, so the core is trust. Our whole thing is built around how do we improve KYC, KYB, scoring and build a trust dynamic that fundamentally changes our relationship with the community.”

There is little precedent to draw from in serving Black and Brown communities with these services, Mr. Miah said. Less than two per cent of venture capital flows to Black entrepreneurs and a small fraction of that small fraction go to business plans serving minority communities.

Paybby’s model includes elements of simplification and education. Mr. Miah said their research shows them people will use many digital services, but instead of showing them from scratch what every step is, if you want to foster adoption, you have to make its use second nature.

Building from that base you can also educate people about more novel concepts such as cryptocurrency for which there is a strong hunger in the Black and Brown communities he said. First get them users comfortable with it and Paybby has a novel way of doing that. They include a top-up option where users can round up their purchases to the next dollar and put those funds in a separate account, either in cryptocurrency or cash. In time those taking crypto will have avenues to invest that money.

“We’re going to teach them from the ground floor how these exchanges work,” Mr. Miah said. “Our goal is to add simplification then add pieces to it to educate them.”

Technology makes these goals possible in many ways, Mr. Miah said. In 2010 the Durbin Amednment, part of the Dodd-Frank Act, gave merchants a choice of networks to route a debit card transaction over. It requires issuers to enable at least two unaffiliated debit access networks. That helps smaller banks get a piece of lucrative exchange fees while providing them with a viable business model and at double the rate they would normally get from such fees.

Technology also makes it feasible to work with financially smaller clients. As onboarding and scoring capabilities improve, more institutions are willing to serve these communities and pay referral fees to do so. Customer acquisition fees are also lower.

Add it all together and a person running $800 each month on a debit card becomes a profitable customer, Mr. Miah said.

“That’s less than half of minimum wage spending,” he noted. “It’s a profitable model.”

Paybby has a long to-do list, including adding the capability to pay gig workers the same day. They also are developing remittance services for those customers sending funds to places like Nigeria or the Caribbean.

Provide people an opportunity and let them run with it, CMO Miranda Tan said, citing cryptocurrency as an example of a potential wealth generator many Black and Brown people do not have access to.

“‘Bitcoin’s surging to over $65,000. Oh there we go again we don’t have that chance to participate,’ people say,” Ms. Tan observed.

“For this community hope is a big thing.”

Paybby has a Regulation CF campaign live on Title 3 Funds. Learn more here.