In a country where only 20% of transactions are made with payment cards, using artificial intelligence to facilitate mobile phone payments “is science fiction”, says NETOPIA mobilPay founder Antonio Eram. Nonetheless, the Bucharest-based company has developed its electronic payments wallet with the limitations of the Romanian market in mind, and users are steadily increasing.

Netopia started out as a provider of mobile marketing services, but Eram came up with the idea of an e-wallet back in 2009. At the time – just a year after the launch of the iPhone – no one he pitched to was interested, so the firm decided to build it themselves. When NETOPIA launched the mobilPay Wallet in 2013, it was one of the first in Europe.

It was also designed specifically for Romania, an emerging market in terms of electronic payments. Eram points out that while wallets had been designed for markets such as the US, the UK and China, replicating them for other markets proved to be difficult. Even more so for Romania where, he points out, “we don’t have the technology, the infrastructure or the mentality”.

He gives the analogy of a truck designed to cruise along well-maintained highways that is suddenly transported to a country with no roads at all. “We went in the other direction, starting in a country that has no roads, that is rainy and muddy. When our truck hits a road, it’s going to work perfectly well because it was designed for much worse conditions.” NETOPIA hasn't yet launched mobilPay in other markets, but Eram is confident it would be able to do so.

Impulse buyers welcome

One of the key differences between mobilPay and major platforms like Apple Pay or Samsung Pay is the way it interacts with merchants, according to Eram. Typical mobile payments platforms replicate what the traditional card does, where the merchant knows very little about the buyer. “We moved one step further. We know a lot about our users and the merchants. We connect them. As well as facilitating payments, we also facilitate communication and understanding between them,” he says.

This means, for example, that merchants can make on-the-spot decisions about whether to issue credit to their customers – something that is common in developed markets but which tends to be a lengthy and cumbersome process in emerging markets. As a result, merchants in many countries can’t take advantage of impulse buyers. “We have extensive knowledge about our users’ profiles and behaviour, and we are working with financial institutions so that when our customers apply for a credit they can get approval within seconds. We replicate what is in the US market… [and] for emerging markets this is a game changer.”

This is where artificial intelligence (AI) comes in. NETOPIA started exploring how AI could help its business to overcome limits imposed by the lack of data. “We are moving into the field of neural networking machine learning, which is basically the only tool that will allow us to grow and have understanding [of our customers] without having too much data,” Eram says, describing this as the firm’s big breakthrough and adding that, “this is very new for us, very crazy, very futuristic”.

Another feature of mobilPay is that it’s currency agnostic; the customer can pay with any currency for which there is an exchange platform and the merchant will receive payment in Romanian lei or their preferred currency.

This isn’t just limited to actual countries’ currencies. “You can go to the supermarket and pay with bitcoins, you could pay with airline miles… to some abstract point you could pay with goats if there was an exchange platform for goats,” says Eram. “This is the billion-dollar idea – the supermarket doesn’t know or care what you are using to pay, as they will receive their payment in lei.”

The mobiPay Wallet can already be used to make payments in Romanian supermarket chains including Carrefour, Cora and Selgros. Rather than investing in expensive POS terminals, NETOPIA provides small plastic cards fitted with a near field communication (NFC) tag. The cards cost around €1 each and the tags just a few cents. Customers scan the tag on their mobile phones and the payment is made through the cash register.

NETOPIA mobilPay processed 3mn electronic payments in January-September, up 15% compared to the same period of 2015. Growth is forecast to accelerate, with the firm expecting a total of 4.5mn transactions with a total value of €175mn will be processed this year.

There are now plans to roll out the service at other supermarket chains as well as fast food outlets, coffee shops, restaurants, public transport and petrol stations. In future, NETOPIA will target clothes shops, pharmacies and other vendors. Recently, the company also started to provide meal cards, a benefit given to many Romanian employees, via the wallet. This has opened up a new line of business for meal card providers, since the wallet can be used to pay at vending machines. It’s also possible to split a supermarket bill into food and non-food items.

Eram believes the firm will continue innovating, as so far it has “barely scratched the surface” of mobile payments. “Now we are doing AI profiling; we had no idea we would reach this. Probably in another few months we will open another new thing,” he says.

To Mexico and beyond

At the same time as developing its service in Romania, Netopia has also started its international expansion with a move into Mexico. Its offering in the Mexican market is different from its Romanian product; in Mexico its focus is on giving credits to people based on their Facebook profiles. After downloading the company’s Mobilender app, users can apply for and receive a credit within 15 minutes. Developed by NETOPIA’s teams in Bucharest and Silicon Valley in 2013, the app received its first big round of investment, $2mn from US and Mexican investors, in January 2015. Mobilender is now worth more than $10mn, according to NETOPIA.

“We are now moving towards becoming a mobile-only bank in Mexico. We want to bring banking services to younger people that are not very comfortable going to banks, sitting in a queue… they prefer using their mobiles,” says Eram.

The leap from Romania to Mexico might seem an unlikely one, but Eram explains it is based on both cultural similarities and the opportunity in the Mexican market. “Western Europe is crowded and Romania is kind of an island in CEE with a different culture. [The rest of CEE] is very hard to penetrate. Instead, we decided to go somewhere closer to our mindset and culture – Mexico,” he says. “It is a market of 120mn people where very few companies from the US or Europe are going, which makes it very interesting.”

Perhaps most important, Eram views Mexico as NETOPIA’s gateway to Latin America – the next step in the company’s plans for global expansion.