ZunguZ: SA’s Facebook payment solution
A decade ago, Rob Sussman and Lance Fanaroff started IT group Integr8. Now they’re back with a new venture, ZunguZ, a payment system that allows anyone on Facebook to pay anyone else, directly from within the social network. They’re hoping it’ll give shopping a social element and, if they’re fast, it could become the first serious payment platform on the world’s largest social network.
Talking to TechCentral from ZunguZ’s Cape Town office, Sussman says although he and his partner remain heavily involved with Integr8 as co-CEOs, ZunguZ is a separate and self-funded entity. The service has only been live for a few weeks, having first begun its testing phase in December.
“We’ve been looking for a payment social-based platform and system for a decade,” Sussman explains. “With Facebook taking off, we started to see the opportunity to place people at the centre of the payments ecosystem.”
ZunguZ’s proof of concept was ready in 2010 and beta testing began in 2011. “We took the idea to Facebook in Palo Alto [in California], to Citibank in New York and other companies involved in social media or banking to better understand the payment perspective.”
Sussman says the aim of the service isn’t to compete with PayPal, or with Facebook’s existing credits system where users can buy virtual goods with a virtual currency. Rather, ZunguZ is concerned with transferring real currency between people or from people to retailers, charities or anything else with a Facebook presence.
The service came out of closed beta in December 2011 in what Sussman calls a “soft launch” and the response to date has been “well beyond expectations”, with interest from banks and African telecommunications operators.
ZunguZ is a multi-tiered platform, the first tier of which is the person-to-person payments facility. Users simply install the ZunguZ application in Facebook and can then transfer money to one another.
“The beauty is that it’s not credits or tokens,” says Sussman. “It’s rands, dollars, pounds, whatever.”
For now, those looking to take money out of the system can only do so through one of SA’s four big banks. But as the service expands into more countries, it will make deals with other banks, too.
Sussman admits the hardest part of launching ZunguZ was getting local banks on board. “Payments are hard. You realise gaps in your knowledge quickly. We decided not to do the payments ourselves; we wanted the banks to do that”.
ZunguZ promotional video (via YouTube):
The second tier of the ZunguZ service allows users to create what Sussman calls a “Z-button” that can be configured for a purchase of an item, or a collection of funds for a group birthday present, or for donations to charities. “Like Amazon’s ‘1-Click’ [ordering system], there’s intelligence behind it. So if I want to sell an iPad, for example, I can build a button with a picture of it and, when a purchase is made, the money comes straight to my bank account.”
ZunguZ also gives users the option of sharing information about their purchase on social networks. In some instances, should a user share a purchase and someone else makes it they could earn a small cut, or a rebate, or a reward like airtime, for every subsequent purchase.
It’s here that ZunguZ intends to make its money. Vendors will pay it a small fee — the quantum of which is yet to be determined — for each successful sale using the service as the method of payment.
“The Z-button is currently a collection button. It’s perfect for charities or people doing collections for sports events,” Sussman says.
Aside from using Facebook credentials for verification, ZunguZ requires users to enter their cellphone number during registration so one-time passwords can be sent to them when they make purchases. “This is called second-factor authentication,” Sussman explains. “We also serve a unique link to the phone which can be used instead of the Pin by following the link.”
Sussman says in a meeting he had with Reid Hoffman, the founder of business-focused social networking site LinkedIn, he was reminded that “if you’re not embarrassed by the first version of a product, you launched too late”. He says ZunguZ will continue to refine its service and expand its offering.
The third tier of ZunguZ platform is its application programming interface, allowing developers to create plug-ins for the service. These could be anything where a developer wants Facebook integration and the ability to make or receive payments.
Sussman says the company plans to launch offerings in the US, Mexico and India soon and, although it has an office in Silicon Valley, that’s “mostly about business development”. The company intends to remain based in SA. — Craig Wilson, TechCentral
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