Lessons in how to keep stakeholders in the loop when a pivot hurts the bottom line.
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Every startup pivots, and doing so is an essential business strategy. Airlift went from moving people around in buses to now delivering groceries. Krave Mart went from guaranteeing deliveries in ten minutes to coming to its senses after funding.
To pivot is to adapt to change, and change is inevitable.
It is an essential business strategy, and scores of thought leaders will point out that while there is value in staying true to an idea, one must never lose sight of growing the industry profit pool nor lose sight of being in love with solving problems.
Entrepreneurs are advised to fall in love with the problems they want to solve, not fall in love with the solutions or tactics they have in mind. Yet, sometimes, a pivot can backfire.
Such is the case with QisstPay, the buy now, pay later (BNPL) market leader in Pakistan, when it pivoted hard towards a one-click checkout solution.
Ironically, QisstPay had launched itself on the shoulders of its merchants which includes a leading eCommerce Marketplace, using the brand equity and trust earned by its merchants to sign on a host of vendors and value creators in Pakistan’s technological ecosystem.
Alas, a series of events has resulted in QisstPay losing market trust due to a series of issues stemming from a weak communications protocol with their customer service and merchant relations team.
In a blog post from September 2021, bSecure co-founder Adam Dawood noted that the one-click checkout market leader had improved its integration with Qisstpay by adding a visual aid for customers.
“Customers will now be able to see the calculated price for installments right below the checkout button,” said Dawood. “This will help increase your checkout conversions by displaying a 4-month installment plan for an easy and quick price check.”
On 1st October 2021, a tweet from QisstPay shows that the BNPL service was now an option on Telemart, one of the top 10 largest e-commerce marketplaces in Pakistan.
Telemart x QisstPay 🤩. It's Smart Shopping 🔥.@Telemartstores is now LIVE in-store in 15 franchise branches across Pakistan with QisstPay! Buy Now, Pay Later in 6 or 4 easy payments.
Click here to view the 15 Telemart store locations across Pakistan -> https://t.co/dM7B38a74q pic.twitter.com/UowlRDF35F
— qisstpay (@qisstpay) October 1, 2021
11th November, one alleged customer complained about their customer service.
But unfortunately bad Custoemr service . There was some fraud on my card and it was used on Qissatpay. I tried to contact the team but couldn’t get through
— Bilal Ehsan (@BilalE96) November 11, 2021
On 15th November another alleged customer complained that the BNPL service was no longer on MI Pakistan and all attempts to reach the customer services team were in vain.
no idea, the Qisstpay option isn't available at Mi Store anymore and I can't get a reply from their customer service for the past 5 days. Really strange.
— g h a u r a (@ghauraghaura) November 15, 2021
11th December, a user commented that QisstPay is not available on Telemart’s website anymore.
@qisstpay y it's not working on telemart
— Abdullah Shahid (@Rootstian) December 11, 2021
22nd March, a tweet from a former Google executive also stated that a leading BNPL player has a bad debt rate of more than 50% across their books. This was followed by a reply which stated that this can be the reason behind the pivot to a one-click checkout.
Heard today that a “leading” BNPL player in Pakistan has a bad debt rate of 50%+ across their book.
Buy Now, Pay Never indeed.
— Raza Matin (@raza_matin) March 22, 2022
2nd April, a tweet stated that QisstPay is not available now on Samsung’s Website whereas he had seen it a day before.
Recently I have seen @qisstpay as payment method on Samsung Pak online store and today its not there. Why @qisstpay has been removed?
— Waqas Dilawar Daha (@waqasdaha) April 2, 2022
One merchant’s tale
Speaking with Founder Pakistan under the condition of anonymity, a leading player in the eCommerce marketplace space, whose website is ranked in the SimilarWeb top 20 websites for consumer electronics in Pakistan, shared a story of betrayal.
“The founders of QisstPay contacted me via LinkedIn well before their product had launched,” he said. “My first call was with a senior executive while the second call was with Jordan Olivas, the co-founder of QisstPay brought in from Klarna.”
He told Founder Pakistan that the commission slab touted by QisstPay ranged from 7 to 8% depending on the volume of sales by the merchant. He secured a three-month deal with QisstPay.
“We promoted Qisstpay on all our social channels which gave a huge boost to their services,” he said. “We deployed them from the first of October 2021, with integration taking a month, and we were live for 45 days.”
The source told Founder Pakistan that QisstPay was delivering the next day payments as promised up until November 2021, however, at some point payments due to the eCommerce marketplace stopped coming in and the senior executives at QisstPay began making excuses about issues in their software.
“After I was in touch with Jordan, he was apologizing that there were some funding problems as all their funds come from the United States and there is a delay in that,” the source said. “He also mentioned that the fund’s worth upwards of Rs. 20 million will be paid back in 45 days.”
The eCommerce marketplace executive told Founder Pakistan that he asked Jordan to justify how his company could hold payments owed to the merchants listed on their marketplace, to which Jordan reportedly informed him that QisstPay had a change in their business model.
“After that, they also started pushing their one-click-checkout solution, and were forcing us to deploy their solution,” said the source. “He mentioned that by doing so, the payment cycle would decrease to ten days. However, it didn’t make sense for us at all as we already had our solution.”
The eCommerce marketplace executive told Founder Pakistan that this was all just a cheap play by QisstPay to lure marketplaces and merchants with BNPL and then force merchants to deploy one-click-checkout.
“This is not beneficial for merchants at all this just increases the expenses per eCommerce order and lets Qisstpay charge merchants per transaction and then different processing charges, where the merchant discount rate was Rs. 300 per transaction, thereby leaving us with less and fewer margins and also making us go into loss.”
He said that QisstPay has lost trust among leaders in the eCommerce marketplace business, primarily because the world over BNPL is considered a debt trap and on top of these antics it became clear that QisstPay wanted to start as a merchant-friendly service. Aftermarket penetration, he said, QisstPay acted unethically as there is no direct competition to them that blends BNPL with one-click checkout.
“Payments to merchants are governed by the contracts between QisstPay and the merchant,” said a lawyer attached to the startup ecosystem that asked to remain anonymous. “QisstPay is obligated to pay the merchants within the time specified in the contract for these payments. Without having seen the contracts I can’t comment on whether there has been a breach by QisstPay or not.”
QisstPay responds
Speaking with Founder Pakistan on the record, QisstPay co-founder Jordan Olivas said that merchants used the BNPL market leader to finance their supply chain so they would delay shipments to consumers, thereby hurting the consumers so initial payments are being pushed out to ensure that they are not doing this to consumers.
“As a note, this is typically only t+7 for well-known-business (KYB) merchants, maybe longer for some merchants that aren’t as established,” said Olivas. “Sometimes there were returns so there was a negative balance, ie: someone buys something for Rs. 100, we pay it out to the merchant, then the consumer returns it so it means they owe us money.”
He added that as a regulated lender, QisstPay works on protecting the consumer as best as it can, and sometimes it can affect things like this so some smaller merchants may not like it but the BNPL leader must protect the consumer.
“We do not forcefully have people install anything, but a benefit of the one-click checkout is that because we can help a merchant manage multiple payment types, there are benefits that come with it like reduced payment cycles since we can help across a variety of channels,” he said. “[As far as the allegation that we were] holding payments for three months, this is not the case, what you’re referring to is two different product offerings but it sounds to me like a merchant or two is upset they don’t qualify for our funded model.”
He added that funded means that QisstPay pays out at once in a t+x (ie: t+1, t+7, t+15, etc), whereas unfunded means that QisstPay will pay out according to a payment cycle over the three months since the money is lent to the consumer, but the merchant is always guaranteed the payment.
“Overall, it sounds like a few merchants are upset because they don’t have the size to have the funded model,” said Olivas. “We are very strict on KYB and have to ensure they treat consumers well, as consumer security is of the utmost importance.”
