e-Wallet app with ambition, Lorenzo Pellegrino, CEO, Kuady

By Robin Amlot

In September, payments service processor Open Payment Technologies announced the expansion of its digital wallet services, Kuady, into Argentina. Following launches in Peru and Chile announced in July, Kuady’s move into Argentina will be followed by other LatAm countries together with expansion into Africa and Europe to follow

Operating under an Electronic Money Transmission Services license granted by the Isle of Man Financial Services Authority, Kuady acts as a payment service processor for merchants and offers an e-wallet app for customers. The name itself reflects the Spanish word Cuadrilla, which means a group of people. “So, you understand the association with the sense of community that we want to create within our ecosystem,” said Lorenzo Pellegrino, CEO of Kuady.

Among his previous experiences, Pellegrino was the CEO of Skrill, part of global payments platform Paysafe. Pellegrino commented: “We were very much focused on offering digital wallet services across Europe and then we expanded into North America. When I moved to Kuady, we decided to replicate the same business model and expand in South America, where we believe there are many, many more potential consumers that are unbanked. [With a digital wallet] they can upload funds, or they can receive funds too.

“We are facilitating consumers to move money around by receiving money from friends and family, by sending money to operators online that are accepting our payment method, by applying for a simple prepaid card, which is attached to the balance of the Kuady wallet, and therefore spending the money wherever they prefer to spend the money, offline and online, without any bank account being associated to that specific prepaid card.”

So, I can have a prepaid card linked to a digital wallet, and I have the power of the digital wallet?

“That’s right. You need to register an account first, and then once you open the account, you can apply for a prepaid card that you receive within the following 3-5 business days. We are launching the service already in Peru, Chile, and Argentina, and the next markets that we are planning to open are Colombia, Mexico, and Ecuador. Brazil, which is one of the main markets in South America, is going to come probably at the beginning of next year.”

How are you managing the challenges of dealing with regulators in each different marketplace.

“We are an operator licensed in the Isle of Man. We managed to get a Class 8 licence, and this licence allows us to distribute our services across a certain number of countries.

A licence to carry on the Class 8 regulated activity of Money Transmission Services permits a business operating in or from the Isle of Man (within certain criteria and with specified exclusions) to:

• operate a bureau de change;
• provide and execute payment services either directly or as an agent;
• provide cheque cashing services;
• issue electronic money.

“On a country-by-country basis, we need obviously to stick to local rules. As a matter of fact, in Colombia, we had to open a representative office, and we are about to get that office open in order to open up our digital wallets. In Brazil, we will need to be fully licensed locally, and we have already got the licence in Brazil.

“From a transactions perspective and from a partner perspective there are limits that are enforced by the partners we are working with. It’s quite a complex setup, and that’s why we were not able to open lots of markets on day one, but we need to go one by one.

How complex are cross-border payments?

“That’s actually pretty easy because we are allowing consumers to send money to each other, although they might be registered in different countries. And on top of that, we’re also offering our consumers the minute they register, an account in different currencies.

“We are offering a local currency, and we are also offering US dollars. And in some countries, having the opportunity to exchange local currency with US dollars is actually a good benefit. Think about Argentina nowadays, considering the volatility of the currency.

“One of the services that we are very proud of is the peer-to-peer service that we are offering. One thing that I want to make clear, in order to receive funds from the sender, you need to have a Kuady account as well. We would not allow consumer to send money from their Kuady account directly to the bank account of the recipient – this would trigger additional compliance challenges and rules. But Kuady to Kuady is possible.”

How big an issue is fraud prevention?

“We have a very strong fraud management or anti-fraud management team that is working around the clock. We have a very large number of people working under this department. And these people are based both in Europe and in South America, because we need to have local knowledge and expertise. Obviously, we also have some third-party providers or vendors that are flagging transactions or behaviours or patterns in real time that we might not be 100% comfortable with.

“Everything goes through our anti-fraud tools, but also our compliance team is reviewing case by case what’s happening. It is part of the job. When you’re managing a business like this, you need to have in mind that you’re going to come across fraud sooner or later, and you need to find a way to handle it. It’s the cost of doing business.”

What’s next for Kuady? What are you going to do to enhance the digital wallet experience?

“On one side, we want to expand geographically. There are several countries in South America we are still not working in, but we are also planning to move ahead with some markets in Africa. And we will be applying for an EMI licence in Europe that will allow us to open in 17 markets in Europe as well. The geographic expansion is definitely priority number one, but at the same time, we will try to become more and more ‘local’. That means that we need to understand what consumers are actually asking for.

“We are talking to our consumers, and we figured out that in Brazil, they prefer to have certain services, in Chile they prefer other services and in Peru something different again. So, we will try to become as local as possible, which is a challenge because that means that you need to onboard from a product perspective, some skills and capabilities that are very, very specific.

Just to give you a little bit of flavour about Europe, definitely we will try to become a competitor to Revolut. We’re going to give the same opportunity to consumers that we aim to offer in Brazil – to open a Kuady account that is going to become a bank account. So, we would allow consumers to receive their salaries directly into their Kuady account in the near future.

“That means much more cashflow throughout our platform. That means that in terms of a consumer acquisition, we’re going to have more and more opportunities and so on. So, product development on a countryby-country basis and geographic expansion have to go hand in hand.”

You want to match consumer requirements and consumer expectations, not change them?

“Consumer behaviour and consumer expectations are not the same in Brazil as they are in Chile, are not the same in Mexico as they are in Argentina. Let me give you an example: I can give the opportunity to consumers in Brazil to buy and sell cryptocurrencies within the wallet. But perhaps in Chile, consumers are not interested at all in these kinds of services. They would rather pay their bills through Kuady.

“We need to discuss with consumers, talk to them. But not just about the services that we’re going to be enabling. It’s also about the user experience on the platform. In Brazil, the user experience has to be extremely intuitive. It’s a completely different approach that we need to have from a UX, UI perspective. It is a very complicated, very country-by-country approach that we’re going to have, but exciting at the same time.”