Could be formidable

New mobile payment contender looms as Rocket and PLDT team up

A few months before its lukewarm IPO late last year, Germany’s Rocket Internet took a $446 million investment from the Philippine Long Distance Telephone Company (PLDT), the largest telecoms operator in the Philippines. At the time, Rocket and PLDT said they were going to work together on mobile and online payment technologies – and now we know more about that arrangement.

On Tuesday, the companies said they will set up a payment services joint venture, with a 50-50 split and a focus on emerging markets. This is already a big area for Rocket, which now touts itself as “the leading internet platform outside the U.S. and China.” The firm made its name as a uniquely aggressive clone factory, rapidly copying established business models from the U.S. and elsewhere and rolling them out in new markets before the original companies had a chance to blink. That’s not to say that the clones don’t sometimes go on to follow their own path, though, and Rocket chief executive Oliver Samwer is these days talking about China’s rapidly growing web services company Alibaba as being the model.

Apart from providing its sprawling network of web firms across 100 countries, Rocket will contribute its “participations” in two of the payment operations it helped set up: Stripe clone Paymill, for giving e-commerce developers a simple way to integrate payments functionality, and Square clone Payleven, which provides mobile point-of-sale terminals. For its part, PLDT will throw in the operations and intellectual property of its Smart e-Money mobile banking and mobile wallet platform, which already has five million active customers and represents the largest “branchless banking” network in the Philippines.

Once the joint venture is created this quarter, subject to regulatory approval, Rocket and PLDT say it will be in a unique position to tackle mobile-first payment services worldwide, and particularly in emerging markets. I would take that as a plausible threat.

The genius of Rocket’s operation has always been the way in which it established operations in various spots around the world, then constantly rolled out new business models in them, seeing what stuck and quickly abandoning what didn’t. By doing so, it became the ultimate internationalization company – a field where rivals from developed markets typically struggle, and where Chinese companies such as Alibaba and Tencent (each of which has a budding payment service of its own) are only starting to dabble.

The combined financial services portfolio of Rocket and PLDT sounds fairly comprehensive, and PLDT has been in the mobile payment game for 14 years – long enough to develop a good understanding of how to use mobile to pull in people without traditional bank accounts (see the Smart Money service pictured above.) If this joint venture scales at typical Rocket speed, it will be formidable.