Why AirAsia’s Tune strikes accord with Juvo

Dixon Wong, head of corporate and financial strategy at Tune Group in Kuala Lumpur, says the company wanted Juvo’s telco product called Pay Later to help it differentiate itself from other telecom companies.

Malaysia’s Tune Group’s partnering with San Francisco-based Juvo is part of the company’s broadening effort to make its mobile e-wallet more competitive.

“We want to give our customers a new experience,” he said.

One of Tune’s consumer businesses is Tune Talk, which sells mobile prepaid services. It tried to attract users by offering top-ups that could be paid for later (for a fee), but users preferred to simply buy these directly, sometimes by purchasing new SIM cards.

At the same time, Malaysia has been engulfed in a price war among telecom companies, with many of them heavily discounting data usage. The price war hurts Tune Talk, which as a mobile virtual network operator (MVNO) must pay a land-based carrier wholesale rates for data bandwidth. If these carriers were giving data away too cheaply, Tune Talk had to pay to cover the difference.

So Tune Group decided it needed a more compelling offer. With Juvo, it found a company with the pay-later technology Tune wanted.

Asia debut
For Juvo, the deal offers its first entry to Asia. The company has an established business in Latin America and Eastern Europe as a financial-inclusion play. The most frequent transaction by people in emerging markets, other than buying food, is topping up mobile-phone accounts, says John Esrey, COO.

Juvo works with telcos to offer customers small loans for airtime, and uses computer science and gamification tools to identify reliable borrowers. The data creates a loyalty program that is used to develop micro-loans to let people buy fancier handsets, for example.

In the process, the service helps telecom companies get to know their users, who otherwise buy data via SIM cards bought in stores. “We generate the KYC that leads to a full credit profile,” Esrey said. And from there, more small lending and insurance services can emerge, backed up with virtual debit cards using VISA and Mastercard networks.

“We help telecom operators extend their reach and move into financial services,” Esrey said. “Telco networks can leverage the fact that they have an established subscriber base with cash-in/cash-out operation.”

The fintech announced in January 2018 that Samsung NEXT Ventures had taken a stake in it. The details were not disclosed but came on top of an existing $54 million in funding, according to TechCrunch.

Juvo has just opened an office in Singapore to further its ambitions to enter new markets and find partners in banking and insurance.

Fintech ambition
As for AirAsia, it too is looking to expand its fintech offering by leveraging its ties to AirAsia: AirAsia CEO Tony Fernandes is Tune’s co-founder, along with AirAsia chairman Kamarudin Meranun, who serves as Tune Group’s CEO.

The Juvo deal with Tune Group is separate from a broader strategy by AirAsia to transform itself into a sort of airborne competitor to rideshare player Grab, which has extended financial services across food delivery and retail; or to Touch And Go, an e-wallet backed by CIMB, which has become the country’s biggest thanks to its ease in paying highway tolls. The primary instrument is BigPay, the airline’s card with a mobile app.

AirAsia is starting with cheap foreign-exchange offerings – putting it head to head with Revolut, which will go live in Singapore. Revolut’s business is also based on cheap FX rates, but it has extended that into lending, insurance and crypto brokerage, areas that BigPay won’t be ready to embrace. (Tune Group has a general insurance arm that covers for travel and other risks, but it is not part of BigPay.)

BigPay, though, has something that Revolut lacks: an airline with lots of passengers.

In the meantime, Tune Group is pursuing its own ambitions as an entertainment and consumption company. “We’re focusing next on SIM cards for travelers,” Wong said.

Its e-wallet, called BitPay (formerly branded as TuneMoney), allows top-ups for selling services before, during and after a flight, and using geolocation tools to push marketing content. In the works: peer-to-peer money transfers, and budgeting apps for travel expenses and itemized spending. Mastercard is providing the payment infrastructure.

AirAsia is even using the SIM card for some operations, such as staff expense claims. “We want to practice what we preach,” Wong said.