duithape- facial recognition payments

We are committed to solve Financial Inclusion, but to solve it requires us to solve the problem of identification first. 

The majority of Indonesian adults, or over 130 million people, are unbanked. This contributes to significant social issues, such as loan sharks, corruption, urbanization and high income inequality. 

Duithape is fintech company enabling e-payments to the unbanked. We make this possible by reducing the requirements to the absolute minimum, by using their face as their ID by use of facial recognition. They only need to come to a local  micro store that is a duithape agent, show their face and enter their PIN to pay. They do not need to own a phone or card.

Our solution is scalable and can be useful for other countries that face similar problems. This would have the potential to increase the welfare of all these areas as it opens opportunities  & markets.

Financial inclusion is a huge problem in Indonesia. But to solve it requires us to solve the problem of identification first.  

The majority of Indonesian adults, or over 130 million people, are unbanked. With about 90% of Southeast Asia’s poorest found in Indonesia and Philippines, we deduce that a significant proportion of the unbanked  are also poor. Mass payments to the unbanked are extremely difficult, as it needs to be made in person. This is especially true for aid distribution that must be accountable, however most of the recipients are unbanked, don't own a phone and many don't even have IDs.

According to Statista (2020), smartphone penetration in Indonesia is about 30.5%. Therefore, there are still limitations in financial inclusion with smartphone-centric products produced by most Indonesian FINTECH startups. 

It is for this reason that Duithape sought to provide a facial recognition payment system operated through a network of community members (micro entrepreneurs who serve as agents) so that end users who do not own or operate smartphones can also receive/ make digital payments accurately. The adoption of agent networks across cities and rural areas creates the potential for low-cost widespread access for both Duithape and end users respectively.

Duithape impacts the bottom of the pyramid. Our current focus, digital aid distribution using facial recognition, enables anyone to redeem aid, even disaster victims with nothing but the clothes on their back.

Our Agents that serve as a redemption point are micro entrepreneurs. We create higher sales volumes for them as we traffic in new customers and increase income. Our system not only gives them access to financial services but also creates digital transaction history that can be used to take better advantage of credit and procurement opportunities. 

The Duithape system has been designed to serve the unbanked poor. It is so easy that it can service anyone from 5 to 80 years old and even the disabled. No bank, no card, no phone needed. This is very important as many people in Indonesia do not have phones and many don't even have ID cards.

Creation and access to the user accounts is powered by facial recognition technology, removing the need for manual imputation of account information or sourcing of information requirements for account management. Additionally, the network of small neighborhood stores scattered all across Indonesia that acts as agents ensures uninhibited access for end users and community.

Duithape is targeted to serve the bottom of the pyramid. In Indonesia, many people do not have phones and many don't even have ID cards. We are also a disaster prone area where often disaster victims have literally nothing. Understanding the situation, we have designed our technology to the absolute minimum requirement: their face as identification.

Our system uses facial technology to overcome the issues above. Users/ beneficiaries only need to show their face. Our Agents/ merchants simply use our app to scan the beneficiaries face, to identify them and enable them to redeem aid/ make payments accurately.

Our solution is unique as it is specifically designed for the unbanked poor and have reduced the requirement to the absolute bare minimum: their own face. As long as they have a face, they can have a duithape account.

Our e-payment competitors include banks (BRI, BTPN, etc) telcos (Telkomsel, Indosat, XL) and fintech companies (Gopay, Ovo, Dana). All of them require the user to have either a bank account/ bank card (which requires an ID card) or a phone (either basic or smartphone). However, this makes their services inaccessible to the unbanked poor who do not have any gadgets or cannot open a bank account.

We are currently actively using thefacial recognition method for digital aid distribution.  We have grown exponentially during the Covid-19 pandemic, as the traditional method of aid distribution is no longer possible during a pandemic. Our Gross Transaction Value (GTV)  in 2020 Q2 grew by 8X of Q1. And our GTV in the single month of July has exceeded the whole GTV of Q1+Q2. This includes aid distribution to thousands of people in more remote areas in Central Sulawesi where 60% of the recipients do not own phones. 

Duithape uses a B2B2C approach, distributing aid on behalf clients such as the Government, World Vision, Dompet Dhuafa, MuslimPro and even global banks & payments companies like HSBC and MasterCard. We distribute aid digitally to the people at the bottom of the pyramid in way that is massive, safe, efficient, highly accountable and traceable. We do this by enabling redemption of goods or cash at our network of Agents/ Merchants that act as distribution points. 

Previously, our Client organizations had to hand carry goods and/or cash and distribute them in person to beneficiaries. Now, with duithape, they just need to give the instructions and it distributed in minutes to the correct recipients, with clear accountability.

The beneficiaries simply shows their face, the Agent/ Merchant scans their face to retrieve the aid vouchers owned by that person. The beneficiary goes on a shopping spree and then enters their PIN, which authorizes real-time payment to the Agent.

By enabling a simple identification method and bringing it to the bare basic, our system enables anyone to be included and can gain not only an identification, but also enabling them to have access to financial services through duithape Agent who are also local community members.

Digital aid distribution is our acquisition strategy, however by having the duithape App, the Agents can make digital purchases/ payments as well as transfer funds to bank accounts. And they can provide their services to do these transactions on behalf the community members that do not have a gadget; very much like a bank teller would do for bank customers.

In the short term, this means that the initially financially excluded people are now able to go to their neighborhood store and make or receive payments, withdraw cash, make cashless purchases. It means they would now be able to make online purchases as well as receive payments from clients outside of their area.

In the medium term, producers in that area can increase their income by gaining a wider pool of customers that may be willing to pay a higher price than the people in their village. With these digital payment track record, they also start to create a financial history for themselves. This will in turn enable them to potentially gain loans with reasonable rates, rather than from loan sharks.

In the long term, this has the potential to increase the welfare of the people in that area, as they can potentially earn higher income and also have access to a wider array of goods an services.

We can use our system as an identification system and database not only for internal duithape purposes, but also other organizations and even the government. This will hopefully help solve the ID problem by having a digital database that is more inclusive. Since the requirement is simply that they have a face, this sistem can be used as an identification for marginalized and vulnerable groups. 

Also, by having it as a digital system, there is also the potential solving the issue of keeping data updated in a way that is almost like crowd sourcing by either the owner of data and/or local officials.

Our system is designed to be very user friendly. The users of or system range in age between 5 years to 80 years old and also include the disabled. And most of them are from the very bottom of the pyramid and the majority definitely not tech savvy. 

Our users have not faced difficulty in using our system. In 2020 (as of July 31), we have distributed over USD 357,000 worth of aid to over 12,000 families, impacting about 55,000 people.

All of these distributions are made to specific beneficiaries that have been identified. So not only is duithape a payment system, it is also a digital identification system that can ensure accurate payment simply by facial recognition.

Each transaction is verified and fully accountable. Our donor clients can know exactly who bought what, when, where. 

With the data collection we already have, we can implement an API that can be consumed by instances that need it.  To avoid data leakage, our API is equipped with data security access control that can filter data that is really needed by each instance.  The way to consume our API uses the standard that is most widely used today: REST API using JSON as payloads.

Our system has been designed to be operable with very low connectivity, and with very low literacy and numeracy levels and even for disabled people. 

In 2019, Indonesia completed the Palapa Ring internet backbone to increase internet penetration to all areas in Indonesia. So most villages (about 87% of 75K villages) have access to internet, but often it is only available in the village center/ head office. 

Duithape Agents have been simply bringing their phones near the center to do registrations or transactions. This is how we are distributing our digital aid in a village with very low internet connection. Since the Agents do not have internet connection in their stores, we made a bazaar in the city center for a few days. The Agent stores brought their merchandise there and the beneficiaries flocked there to redeem their aid.

As mentioned before, we service 5 year olds that cannot yet read and write, 80 year olds that can no longer see and also people who are physically or mentally disabled. For these people, we allow a member of their family to be a representative and can do transactions on their behalf. It could be their parent, their child or sibling. Their face will be recorded on the system as a representative and they have their own PIN to authorize transactions. 

Currently 25,000 people. Within one year 250,000, and 5 million within 5 years.

The Digital Aid Distribution strategy is our first vertical to financially include the very bottom of the pyramid, as it enables us to more easily convert micro stores to become duithape Agents. These micro merchants usually heavily prefer cash and view converting to cashless digital payments as something daunting. However, because we increase merchant sales, they love collaborating with us and do not mind to convert to digital payment.

We will then use Aid Distribution as a basis to expand to other verticals that have a deeper and larger impact for the normal day to day activities of the bottom of the pyramid. Below are the verticals that we will be pursuing in the next five years

1. Aid Distribution: Enable digital aid distribution for organizations & government
2. Lending payment: Enable banks and lenders to make digital disbursement and collection of micro loans to the unbanked
3. Commercial payments: Enable companies/ factories to make digital payroll to their unbanked staff or make digital payments to their unbanked suppliers
4. Data Play: Enable Data analysis of the unbanked for FMCG companies (for FMCG  data), banks (for credit scoring),  and Governments that can use it to apply data driven policies.
5. Remittance: Enable sending digital money, especially for migrant workers (domestic & international)

The main problem we currently face is funding. We have a solid plan, but in order to be able more effectively deploy our plans properly, we will need financial strength. We have achieved our exponential growth with very limited resources.  We are already revenue generating, but especially in the payment business, we will only reach profitability when we reach a certain volume. We need outside funding until we reach this stage.

Another issue is access to more high volume and high value projects, especially international development projects that need to make massive payments to the unbanked. Not limited only to aid distribution projects, but also lending to SMEs, farmers, artisans or payroll to informal workers.

A third issue, in Indonesia, there is a limited amount of tech talent and huge demand from a very vibrant tech startup scene.

In order to be able to survive until we reach profitability, we diligently search for investors. We have so far raised USD 315K from angel investors, Teja Ventures and Plug N Play. We are currently also are fundraising and in the final stages of gaining repayable/ convertible grant from multilateral organizations. 

For larger projects, we continuously seek for large scale projects from the government, by seeking existing lending projects to the unbanked that are still using a manual system, by seeking factories or plantations that employ a large amount of informal workers.

For tech talent, we plan to look for talent outside of Indonesia.

duithape is the name of the app/ solution, while PT Virtual Online Exchange is the legal name. We are an independent company and not part of a larger organization.

We have 22 staff in total; 15 full-time, 7 part-time. 

The C-level at our company all have over 20 year experience in finance,  banking as well as engineering and technology. And we have a very solid team that experienced in their role and is driven by purpose.

This is currently our fifth year of operation and although we have run out of cash multiple times, we continue to strive and even thrive. And it is only possible due to the strength of our team who all pitch in and are driven by purpose. The first time we ran out of funds, my staff requested for an 80% pay cut so the company can go for another 3-4 months until we get investor funds.

As the founder, my twenty years experience in managing funds, systems building and problem solving  is uniquely relevant. I had a ten year career at ExxonMobil, last as Head of Treasurers, which I left to be able to contribute to my country. I then became Finance Director at Millennium Challenge Account- Indonesia, managing a $600 million grant from US Government to reduce poverty in Indonesia. In both organizations, I built a new SAP financial system. I also worked at Booz Allen & Hamilton and Palladium, solving high level issues. In addition, my wide network in corporate, non profit and government also has opened many doors for collaboration.

My co-founder has extensive experience in banking, finance and investments. While my COO is an engineer who also has experience in founding his own successful startup,a coding school for children.

We partner with various organizations; public/ private, non-profit/for profit. 

For example, our first project was a pilot that we did with the National Team of Accelerating Poverty Reduction under the Office of the Vice President of Indonesia. 

We are now working together with World Vision to distribute Covid-19 relief funds to the unbanked poor. Our system is used to make digital payments even by corporations that are world experts in payment like MasterCard and HSBC.

However, we are not partnering specifically with any other organization for the purpose of this challenge. 

Duithape uses a B2B2C approach, enabling clients (e.g., Development organizations, government or companies)  to  be able to make mass payments to the unbanked in a way that is safe, efficient, highly accountable and traceable. Previously, they had to hand carry cash in bags and pay the unbanked in person. Now, with duithape, clients just need to give the instructions and have it distributed digitally in minutes to the correct recipients, with clear accountability.

We do this through our network of Agents/ Merchants which are local micro stores in the community that act as distribution points. Micro merchants who are mostly reluctant to accept digital payments are eager to become our Agents, as we traffic in customers and increase sales. We develop these Agent stores to become financial centers for the community, providing digital payment services; from money transfers, loans and even payroll disbursement.

Vertical 1: Aid Distribution: Enable digital aid distribution for organizations & government

Vertical 2: Lending & Commercial payment: Enable digital disbursement and collection of micro loans to the unbanked. Also enable companies/ factories to make digital payroll to their unbanked staff /  unbanked suppliers

Vertical 3: Data Play: Enable data analysis and provide credit scoring of the unbanked to banks & lenders, consumer insights for FMCGs, and enable data driven policies for Governments. 

Vertical 4: Remittance: Enable digital money transfers for migrant workers 

Our main revenue stream are fees from clients, Merchant Discount Rate (MDR) from Agents, as well as fees from users.

We are already starting to generate revenue, however it it not yet enough to cover our expenses. So we are currently fundraising from outside sources, these include equity funding from investors as well as grants (either basic/ repayable/ convertible grants). 

However, we have a clear path towards profitability through our growth strategy, expanding our services vertical by vertical. Aid Distribution serves as a low cost acquisition strategy, which will enable us to target other types of payments to the unbanked. Revenue streams for each Vertical is as follows:

Vertical 1: Aid Distribution: Fees from Donors/ organizations and MDR from Agents

Vertical 2: Lending & Commercial payment: Fees from Banks/ Lenders/ companies

Vertical 3: Data Play: Fees for Consumer insights from private companies, Fees for credit scoring information from banks and lenders and fees for analyzing potential data driven policies from Government.

Vertical 4: Remittance: Fees from users to transfer and withdraw money

We are already generating revenue, but are still mainly relying on outside funding. We have raised a total of USD 345,000; $300K as equity investment from Angel investors, Teja Ventures, Plug N Play and  Beyond X, plus $45K grant/ repayable grant from UNCDF and a USAID Program.

We are currently fundraising USD 1 Million, a mix of equity funding from investors as well as grants. We have secured several commitments, but still need to fund raise the rest.

USD 373,000

Financial exclusion is a huge and very real problem. My dream is for everyone in Indonesia to be able to have access to financial services and be able to make and receive digital transactions easily, regardless of where or who they are. I fully believe that this will be a major factor in boosting the Indonesian economy and reducing income inequality.

As  I ran my startup, duithape, I have met many people from other countries that have stated that their countries face similar issues and need a solution like duithape as well. This drives me even more, as I know we can expand and generate impact on a greater scale.

However, this will only be possible with sufficient resource and partners that will be able to push usage of duithape on a larger scale.

We have a solid plan, but in order to be able more effectively deploy our plans properly, we will need financial strength. We have achieved our exponential growth with very limited resources.  We hope that by applying to this challenge, we can obtain funding to be able to reach greater scale.

We also hope that this challenge can provide us access to more high volume and high value projects, especially international development projects that need to make massive payments to the unbanked. Not limited only to aid distribution projects, but also lending to SMEs, farmers, artisans or payroll to informal workers.

And finallly, we hope it will open access to global tech talent.

In order to pursue all of our plans, we will need additional funding. We hope that this challenge will increase the funds we raise. But most importantly, the partnership with World Bank may open doors to a global presence and creating greater impact. If our solution could be adopted to be implemented in World Bank projects across the globe, we will truly be able to impact billions of people.

We also continuously seek new talent, and we hope the partnership with MIT will open access to better tech talent outside of Indonesia.

First and foremost, Word Bank to execute their projects and also government and other organizations such as  USAID, DFAT,  especially for projects related to aid distribution, financial inclusion and SME empowerment.

We would propose to World Bank to use our solution on their projects that involve any kind of payments to the unbanked. This could be aid distribution, but also lending to the unbanked (e.g. for SMEs, for farmers, for artisans), payroll to low-end workers (e.g. unskilled workers, manual laborers, factory workers, construction workers), big data analysis of the unbanked or remittances for migrant workers.