Ödeal is one of the leading fintech starups in Turkey and currently raised a new series of investments
Ödeal is a fintech startup established 7 years ago. Having founded and run by Fevzi Güngör, it introduced CeptePOS, which is a disruptive step in the payments sphere that turning mobile phones into POS devices. Currently the company raised a new investment from SPG Holdings, a UK investor and sold 9.9% shares that costed TRY 28.7 million (around USD 3.3 million). “We will put these new funds into use in order to support our ongoing organic growth and for Ödeal API, which we can call our third phase. It is particularly important for us to receive investment from an institution experienced in investing in our field like SPG Holdings. Moving forward, SPG Holdings will make additional investments, and I believe, we will draw interest from other global investors as well,” said Fevzi Güngör, CEO and Co-Founder at Ödeal. I interviewed Güngör and here’s what he told me.
What is Ödeal? What are you doing exactly?
Ödeal is an e-payment company that introduced Turkey to Cepte POS 7 years ago. We both introduced our country with an important function that is the transformation of mobile phones into POS devices.
In response to the requests that had come over time, we launched Ödeal POS in 2017 –the first POS device in Turkey that can connect to desktop cash registers. For the first time in Turkey, our Cepte POS app had provided businesses with the facility to pay and collect on mobile phones with debit and credit cards while Ödeal POS allowed us to both bring a fresh look at the payment systems and expand our area of activity in the market. We started to meet the needs of businesses who wanted to make collections from cards with their cash registers.
And last year, we moved into the third phase and introduced our Ödeal API product, which allows for payment in the retailers’ aisle for the first time in our country, thus both making life easier for the consumers by preventing queues at the cash register and saving retailers from loss of customers and revenue.
What is Ödeal’s business model? How does it work?
As Ödeal, our main target audience since our inception has been individual entrepreneurs, small business owners and SMEs. Our basic business model is based on allowing them to reach at an affordable rate and solely by dealing with Ödeal the financial system they cannot otherwise access due to high costs and red tape. All our products serve to this end.
Furthermore, in addition to our products, we have also launched two important projects again to boost the access of individual entrepreneurs and small business owners to the financial system. First were the strategic collaborations we have initiated with banks and major institutions. We started our collaborations in 2019 when the Ödeal service started to be offered at Halkbank branches, followed by Türk Telekom and Şekerbank in 2020. Actually, this strategic project allowed us to give an answer to the question, “Can a bank and a payment institution work together?” in people’s minds by successfully achieving this in person.
Yet another one of our projects is our collaboration last year with ParamKredi –the first digital loan in our country– with TURK Finansman A.Ş. to help new entrepreneurs and small business owners to finance their Cash Register POS purchases.
Currently you raised a new investment from a UK investor, SPG Holdings. What are the details of the deal? How will you use the investment?
Thank you very much for this particular question. As Ödeal, we continue to draw international attention as well. UK-based SPG Holdings invested TRY28.7 million in Ödeal in exchange for 9.9 percent of our total shares. With this investment, Ödeal’s value reached TRY290 million. We will put these new funds into use in order to support our ongoing organic growth and for Ödeal API, which we can call our third phase. It is particularly important for us to receive investment from an institution experienced in investing in our field like SPG Holdings. Moving forward, SPG Holdings will make additional investments, and I believe, we will draw interest from other global investors as well. In today’s world, the mission assumed by foreign capital investments is undisputed and foreign capital investments in the Turkish firms and the Turkish economy have been on the rise, and we are expecting considerable growth particularly in volumes, however, unfortunately it is still a fact that as a country we are far from receiving the foreign capital investments we deserve.
How do you see the competition for payment fintechs in Turkey?
Let me first make a brief projection. Backed by the ongoing pandemic, digital systems will maintain their developmental momentum. Use of cash has been in decline due to concerns about hygiene while contactless payments increasingly stand out. We are particularly proud of the demand shown during this challenging period in Cepte POS, which we had introduced to Turkey 7 years ago, as well as our other products. Furthermore, I am expecting to see the developments concerning Open Banking to further heat up. We expect the working conditions of banks and payment institutions under the open banking legislation clarified in terms of pricing and technical standards. This innovation is essential for the expansion of open banking in our country.
As I just underlined, the path is extremely open for remote payment technologies and fintech. Investments will increasingly continue in fields including digitalization, remote working infrastructure, high speed Internet access, and health technologies.
In the meantime, in 2021, customers will see the barriers to access to their data and funds will be removed. This revolution will see innovative products reach considerable volumes. And we expect the foreign investor interest we observed in 2020 to continue in 2021 as well. I believe that our country will attain an ecosystem that draws increasing interest from investors, featuring world-renowned fintech firms.
Are you planning to expand abroad?
In the short term, we don’t have any such targets.
How did COVID-19 effect your business?
To be sure, the world entered into a challenging period with the pandemic. Furthermore, a rough start was made to 2021 with the new wave. But I think as Ödeal, we learned well how to sustain growth under challenging conditions, for we have grown significantly in the first quarter of this year. We also expect a similar result for the first half. We increased the number of our merchants by 24 percent year-on-year and exceeded 60,000 merchants. Furthermore, we grew the number of our transactions by 274 percent and our transaction volume by 124 percent.
Based on the financial data coming from our merchants, last year we observed a natural development in our industry by which “home-oriented” industries and products stood out due to the pandemic. We see this both in the volume of our merchants and the number of businesses that started to accept cards.
For payment systems, there were a lot of reasons for the concept of cash to be discarded, but hygiene made the strongest entry into the list with the outbreak of the pandemic. That’s why I can say that we are one of the most important industries of the future. Let me once again underline that the path is wide open for remote and contactless payment technologies. For instance, as of end-2020, contactless payments reached 40 percent from 20 percent compared to 2019, registering a very fast-paced, 100 percent growth. We expect these trends to last even after the end of the pandemic.
That’s all I want to know. If you have anything extra, please add. Please allow me to talk about our goals. We will maintain our pace in our strategic goal of collaboration with banks and major institutions. Exceeding the 70,000 mark in the number of our merchants is one of our top goals. We continue to develop our Kredi-POS product to help meet the cash needs of consumers during their major appliance and electronic product purchases. This product will make taking out loans easier, and expand the collection of solutions we generate for both merchants and their customers. Furthermore, we are also diversifying our methods to receive payments by including in our Cepte POS product different payment options such as payment with QR and payment with voice.
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