Payday logjam sparks fintech innovation

The idea of a uniquely homegrown credit card came to Danielle Cojuangco Abraham after experiencing a heavy traffic on her return to the country to visit family and friends.

Danielle, co-founder of Zed credit card who started her career in Silicon Valley, realized from that hassle that one thing must also change: Filipinos should be able to spend for goods and services easily but also responsibly.

“Coming from the airport to meet up with some friends, we got stuck in the most horrific traffic. It should have taken us 15 minutes to go where we were going but it took about an hour,” she shared with Daily Tribune.

“I remember that moment that it’s a thing here. The whole city comes to a halt because people are rushing to the ATM and lining up to withdraw their cash and spend their money on payday Friday,” Danielle, the daughter of Pangasinan Representative Mark Cojuangco, recalled.

Zed, a fintech firm, offers more accessible financing as its credit card has no interest, application fees, and foreign transaction fees.

Through its app, Zed also provides an unlimited number of virtual credit cards which enables users to set an amount to certain types of expenses and deactivate the virtual cards any time as they want.

Danielle said these mean users can plan their shopping better and stop criminals from withdrawing funds from their credit cards.

“The zero interest helps us ensure that you never pay for more than what you can purchase,” she said.

“With Zed, our credit limit is right-sized so that your everyday spending makes sense for that credit limit each month,” she added.

As a risk-prevention measure, Zed pauses accounts of cardholders with late payments while it works out ways to re-activate their accounts.

Powered by Mastercard, Zed cards can also be used globally.

Youth’s power

Danielle, who finished Bachelor of Science in Engineering Product Design at Stanford and worked with startups in healthcare and finance in the US for almost two decades, said Zed was created to cater to young Filipinos.

“The reason for this is that young people in particular are shut out early in their financial journeys from accessing this sort of product despite being well-employed,” she said.

“When we were out that night after experiencing traffic, I saw everyone we were around, as far as lifestyle goes, was just like us. They were enjoying the kinds of things that we would and yet they were so cash dependent,” she added.

Danielle estimates that possibly only 8 percent of Filipinos own credit cards that they are truly delighted with and use daily.

“Here in the Philippines, it’s personally exciting for me to be able to come home and say if I choose to work on this thing, I can actually have a much larger impact on so many people,” she stressed.

“It was a big aha moment because I was at the point in my career where I had started to feel like in the US anything you work on in tech at this point tends to feel like a small optimization of something,” Danielle said.

Globalization and technological advancements, Danielle said, has directed Zed towards the young market which is key to enriching the experience of all consumers in the country.

“Young people in particular are hungry for a better experience. They have the sensibilities around what a world-class technology product feels like,” she observed.

“If you build the product that meets their expectations, I think it will become the best product for all regardless of age,” she said.

Pilot phase

Zed is undergoing a pilot run authorized by the Bangko Sentral ng Pilipinas to ensure smooth and safe delivery of service as a requirement for a BSP’s full license.

This will allow Zed to distribute cards massively and maximize its technology as an independent company.

Danielle confidently said Zed is proceeding with the processes without much problem.

“We want to be independent in that we’re able to create a product that Zed wants it to be. It also gives us the technological and operational flexibility to deliver new and innovative features that the market has never seen before,” she said.

Danielle said Zed has been coordinating with the BSP for two years, and will be releasing a limited number of physical cards as the company ensures the best customer experience.

Zed already released a few cards and keeps its waitlist open to others who are interested in the product.

Over 34,000 people have signed up for the waitlist, Zed’s website showed.

Some of them will be invited to proceed with the application.

“We will be onboarding people at a pace that we can guarantee the best possible experience for everyone of our cardholders,” Danielle stressed.

“In order to become a licensed credit card issuer, you have to build the entire ecosystem from scratch,” she explained.

Tech-driven passion

“I love to make new things. In fact, before going to Stanford, I actually wanted to go to art school,” Danielle said.

However, she said product design as an engineering program and finance enabled her to combine her interests and also help people live comfortably until their old age.

Before Zed and after graduating from Stanford in the early 2000s as product designer, Danielle worked on a healthcare app.

“We were working on products that help people manage their chronic illnesses through tools that were app-based that help doctors and patients coordinate their care better,” she said.

“I started to realize at that time that there are two key aspects to life that can really fundamentally change someone’s life: the ability to live well is your health and your finances. If you do not have these two things sorted out, life can be very hard,” she said.

The technological revolution that started to emerge back then in the US, Danielle said, encouraged her to build a career in fintech.

Steve, her Zed co-founder and engineer husband who created a mobile payments solution, also inspired her to explore finance.

“At Stanford, digital, interactive and user interaction design was still a newer term before, and I was kind of in the middle of this shift and it was fascinating,” she said.

“Product design was a way to build things that served a purpose and it just lent itself to this whole era of Facebook launch when I was at Stanford. We were the second school after Harvard to get access to it,” Danielle added.

Through Zed’s in-house technology, the company is able to offer zero interest and fees to customers.

“Zed is able to not have the physical branches or the bloated headcounts, let’s say, of traditional card issuers. We’re able to pass these savings to our customers,” Danielle said.

Zed is backed by a venture capitalist created by Peter Thiel, one of the founders of Paypal and one of the first investors in Facebook.

Zed operations are done in the Philippines, while the product engineering aspects of the product are in the US.

Danielle and Steve aim to expand Zed in other Southeast Asian countries.

“We expect to grow in Manila over time. The idea is that we want to bring the world’s best engineers who have built the likes of Facebook, Google. We have engineers from those companies at Zed,” she said.

“One of my dreams for Zed is to be one of the most exciting places for a young computer engineer from the Philippines to want to work here immediately upon graduation,” she added.