Interview with Zunify Founder & CEO Juan Monge

Hi, my name is Dustin Betts. I'm the content editor at the Founder Institute, and I'm here today with Juan Monge. He's the founder and CEO of Zoonify. It's a Founder Institute Los Angeles portfolio company that provides end-to-end digital payment solutions for issuers. Juan Monge, thanks so much for joining us today.

Well, thank you very much. How are you?

So before we dive into your company Zoonify, can you tell us a little bit about yourself or your startup story first? You know, what were the experiences experiences of yours, professional or personal, that led you to founding this tech company focused on creating a more unified and fair financial system?

Well, definitely. I see, let's see, before founding Zoonify, I was, let's see, I'm from a technical background. I'm a mechatronics engineer. So I was an assistant to one of the fusion laboratories here in Costa Rica. I worked with the fusion reactor. The only one in Central America, by the way. And while doing an internship in Prague, by the way, I felt that actually that I would like to do like another change in my career path, right? And it seems like all these theoretical things physics and everything was like too abstract, you know? And I had this idea of doing like this payment network that really actually interconnects all the financial system with merchants and with people. Actually, from the very beginning, since like 5 years ago or more, I had like this issue of, for example, carrying around all this cash, money, cards, and also gift cards and loyalty program. And I think that, for example, by the acceleration of the technology today, why is there any option that actually can actually work without the need of this physical technology? And with that question, actually, I came out with Zoonify. I programmed the first version of our application. It was a very simple version. I actually— let's see, it displayed a QR code, right? And the user scanned the QR code and it simulated the payment, but it was like the very, very first stage of our platform. And it came out all of an idea of bringing like technology to the payment ecosystem, not only in Costa Rica but around the world.

Yeah, perfect, perfect. I love the founder story of kind of a career pivot, you know, being somebody of a technical background but just sort of looking for something different. Yeah, and your answer leads well into my next question because I mean, I know because I'm somewhat familiar with Zunify as a Founder Institute portfolio company that, you know, your mission is to promote a more unified, sustainable, and fairer financial system. But let's kind of hear it straight from you, the founder. Please give us For those who are totally unfamiliar, your short pitch, you know, what is Dunafy?

Well, we are a payment network that actually reduces the merchant discount rates while increasing the interchange margins of all the issuing financial institutions. However, we're also giving the financial institutions a tech sandbox, right, to actually digitally issue any payment product to their consumers on a direct way. So for example, microcredits, buy now pay later, microinsurance will now be able to issue directly and efficiently through our platform from basically any other, any kind of financial institution and even any other fintech that we are partnering right now.

Perfect. Yeah. And I want to dive kind of into all of those different features and how they all work together, but I guess to kind of zoom out, at the top here and put it in that kind of problem-solution framework. What are some of the biggest challenges that you see as a founder in this space, I guess within the broader digital payments landscape today? What are some of the big challenges?

Let's see. One of the biggest challenges that we faced last year, even in addition to the pandemic, right? Because it was like, you know, this global problem. We, as a very early-stage startup, getting introduced to the financial market, specifically here in Costa Rica, was definitely a challenge because we had to comply with all the regulations, right? We had to transform ourselves into a financial institution by ourselves. And all of these is a huge barrier, I think, that many non— let's say many non-financial companies should come into before entering the financial market. Thankfully, we got the license to operate as a financial institution here in Costa Rica. We also are a subscribed entity, a payment network provided at the Costa Rica Central Bank and also at the Superintendence of Finance. Compliance. And I think that we overcome this challenge by creating a very, very solid team, right? For example, from our operational side, Sofia, that is our co-founder, she had a lot of experience working with banking, in the banking industry. She also has expertise in internal processes and compliance. And also in the tech part, our old two co-founders, Javier and Luis, they have been also working with the financial institutions here in Costa Rica. So it was a very, let's see, it was smoother than we thought it was, even though it took around one year and a half to comply fully with the regulators and everything, but Mostly I think that we overcome this challenge by creating a solid team from day one.

Perfect. Yeah, so I want to kind of ask you about some of the facets next of your technology. You mentioned sort of— well, I know there's a range of different technology integrations that work together to enable Zoonify's full, you know, tech stack or how the user can experience the product. And I think you mentioned some of those different technology facets a little earlier, but Please tell us a little bit more about the various components of Zoonify's tech product scope.

Yeah, definitely. I think that, well, our product is really, really large, right? We all begin with the payment network. This payment network is something that the final user or the merchants will never see, actually. They only will receive the payments and everything. Behind all of this platform, there is a payment network that we are not only integrating with the central bank, but with all the banks that are affiliated to our network. Also, and when I talk about banks, also I'm talking about, for example, issuers, acquirers, right? And other fintechs, right? And Andy, a little bit later, I will talk a little bit more about the fintech component that we are bringing together to to our network. This is the first product, the payment network. Then we have a merchant platform and a consumer platform. From the consumer side, the consumer will have a digital wallet, very similar to what is today Apple Pay or Google Pay, for example. And then within the wallet, the consumer will have also a marketplace. This marketplace is not like a traditional marketplace where consumers can see, for example, end-to-end products of a store or of a merchant, but it is a marketplace that works as an issuing channel. So for example, if a bank is issuing a financial product, through Zunify, this financial product will be enabled to all the consumers in the marketplace. So the consumer will come in, will select the financial product, let's say a microcredit, buy now pay later, etc. It will choose it and it will request it directly to the issuing bank or to the issuing fintech or to the issuing merchant, for example, and it will be downloaded in the e-wallet and it will be immediately ready to use in any of the commercial affiliates to us. On the other side, on the commercial side, we have also a commercial, well, a merchant platform that is composed of a back office. It is a very standard back office where the merchant can see all the transactions, etc. And also we have a payment terminal. The payment terminal, we are using 3 payment channels, right? 3 payment channels right now. The first one is, um, the— a QR code, right, for, for inside payments. Um, the second one is, um, a, a link for remote payments. For example, if the merchant has only a, an Instagram, um, profile, you— the merchant is able to charge their consumers directly by only using their cell phone, their cell phone number, and it will send the payment request. And finally, for e-commerce, for example, these kinds of Stripe integrations, for example, these Amazon-like payment gateways, we're also using that channel for consumers to buy through Zunify just by using their email and a security pin. So it is very simple, and I think that even though the platform is very big, the core problem, the only way to solve the core problem that is reducing the overall merchant discount rates is to getting this overall platform that all our clients will have easy access to it.

Yeah, perfect. And I mean, even though it's obviously like a very complex like payment network when you start describing the different merchant aspects of the product, I think it's important to like emphasize that, you know, for on the consumer perspective, you know, using the virtual cards in the consumer side of the platform, as you say, like all the issuers, it's kind of all built in right there. So it's really easy for them to differentiate the different offerings, like you said, like a microcredit line or something that are available through the issuers within Zunify, right? So yeah. Financial products, like, complex kind of by nature, but on the consumer side, actually quite simple. Yeah. Yeah. Next thing I want to ask you about is sort of to frame this again around your impact. I mean, I know Zunify's mission, it seems very focused on fostering this, like, greater financial inclusion. You know, how do you see, I guess, you know, just from your perspective, like, the different components as we've sort of discussed that contribute towards enabling that more unified, sustainable, and fair financial system that you envision?

Yeah, I think that, well, our success only comes when all the people will be able to access financial products in a secure and easy way, right? In this, with this north, we have been working together, for example, with financial institutions, with big merchant chains here in Costa Rica, to actually not only promote from the profit perspective of our company, right, because we are a for-profit company, but also more than that, we are looking to create this value proposition of— or completing our vision of creating this this payment environment out of this physical infrastructure of cards and digital and physical terminals on the merchant. So, um, a data that I have right now, that around the world right now there are around 20 billion payment cards in circulation. And to, to actually, um, Let's see, to actually reduce or, yeah, or let's see, solve the CO2 produced by these payment cards in circulation, actually you have to plant like a territory very similar to Costa Rica to actually have the intake of this CO2 that is produced by the plastics that are right now in circulation around the world. So it is a problem, right? It is not only a user experience problem, but it is an environmental problem. Actually, if you see, today in the market, there are like very, very, a lot of, let's say, of components or a lot of companies that are coming right now that are producing, for example, wood payment cards or recycled plastic payment cards. But actually, the problem is not the material itself, it's the technology itself that depends on the payment cards and on the physical terminals for enabling the users to actually pay, right? So we are super focused on this, and actually we have the philosophy of building all of our platform in a hardware-free environment. If our technology needs a hardware different than, for example, a cell phone or a computer that the merchant already have, we are not going to build it. So that's one of the biggest, biggest, I think that Yeah, the biggest visions that we have for our product right now.

Yeah, yeah. And I think like at least some Apple iPhone users will be familiar with like at least the concept, as you mentioned before, of having it, you know, with the digital wallet, I guess, built into the application. And yeah, when you think about it, the sustainability issues aside, I mean, carrying around the 16-digit cards that are, you know, originally like the diner's club card, I mean, it is quite antiquated. Yeah, compared to the future, I guess, of digital, digital wallets and everybody already carrying around a device that presumably has functionality to be safer than 16 digits. Anyway, I want to ask you, and maybe I'm leading into it now, for you to make a prediction because I like to have founders go out on a limb. What do you envision will change most or be most different from the consumer experience standpoint of today in terms of the future of digital payments over, say, the next 5 years? Is it just like no more 16-digit credit card numbers, or what do you think will change most over 5 years in the payments space?

Definitely, I think that all the industry is moving to enabling all of these companies to have easy access to payment products, right? I envision an, for example, an industry where every single business or every single merchant will be a fintech, right? For example, I don't know, the merchant that you go for the grocery store, for example, will be able to issue a financial product, right, with any of the chosen banks that they actually want. I envision this versatility and also this dynamic environment when we're actually issuing a financial product will be as easy as posting, for example, a comment in Facebook or in Twitter, you know. So I think that this is a great moment for the industry and definitely the whole market, the global market, not only, for example, here in Costa Rica, will be going into that direction that all banks, all the financial industry, all merchants, all fintechs will be able to issue any single, any imaginable payment products as easy as posting, for example, something on Twitter or in Facebook.

I love that prediction because, yeah, it's quite to the point. And yeah, it really blends well with your thesis for just being hardware-free or the only hardware you need is the hardware you're already using. Already carrying around. So yeah, I really love that prediction of issuing fintech products as easily as posting a comment on social media. That's great. You've obviously done a huge amount to build Zunify to where it is today. You kind of mentioned a little bit of the challenges in the past year earlier. You want to recap any of those? What are the biggest challenges that you feel you've overcome so far as a founder in building Zunify to where it is today? Is it that big speed bump of getting the company recognized I guess as a fintech and speak to some of those. I would love for you to just dive back into that a little bit more and talk about the challenges in Costa Rica of a fintech versus a bank. And I'm sure those are together probably some of the biggest challenges you've faced so far.

Yeah, definitely. Let's see, when the banking industry or the financial industry think about fintechs, they are all like, oh, They are competition of ours, right? However, Zunify has come to actually give the tools to these financial institutions, to this financial market, to empower them to actually digitize a lot of processes that they already have, and they already have like very physical in a very physical situation, right? Let's see, one of the biggest challenges that we had as founders here in Costa Rica, from the perspective of turning our company into a financial institution, let's see, firstly and definitely investment, right? Definitely because we are in Costa Rica, it is a very small region. And all the investment, the venture capital investment normally goes to Brazil, Colombia, or these, or these Mexico, or these big markets. However, I think that from the perspective of investment and the support of, for example, networks as the Foundry Institute, we have been managing to to get into the investment from global investors that really believe in our vision and actually are excellent fit to our company. That was one of the biggest challenges that we have faced. The other one is, yeah, this kind of— well, we have spent $0 in marketing right now. So all of our, let's see, all of our speech has been directly focused to our customers. For example, banks, big merchants, also these partners like this Stripe-like partner that we have here in Central America that is called GreenPay. That have around half a million merchants subscribed to their network. We have been talking to them very directly and very personal to create this trust environment with us, you know. Because the other strategy was to push a lot of marketing and everything in our social media. But since we are talking about money, We prefer to make our speech more personal, more directed to these partners. And finally, when we already built the first two sides of our marketplace, that are the merchants and the banks, we are now launching in March to talk and to— yeah, and to generate the platform to the final consumer. So we are changing a little bit our speech right now from talking to the B2B component to now talking to the B2C component. But definitely our speech has always been we are unifying the financial system. Come with us. If you are a financial institution, focus on being a financial institution. Zunify will help you digitize your payment process. So that's basically it, I think.

Yeah, yeah, no, that's really interesting. I mean, it's always a challenge for early early-stage marketing for any business, but particularly for a marketplace, especially a financial marketplace where you guys have the complexity of like the regulatory hurdles as well, but then the messaging to each size of the different channels within the marketplace. Or yeah, definitely a complex challenge and particularly in the financial space. You mentioned GreenPay. So I know this is a big new partnership for you. This is kind of my final question sort of here as we wrap up, you know, just where is Zunify headed next, if you want to talk a little bit more about the partnership with GreenPay, or any other news or updates you want to share with the Founder Institute community, or any asks for the audience who might be watching.

Yeah, definitely. So let's see, GreenPay, it is a big partnership right now since GreenPay is all over Central America, from Guatemala to Panama, Costa Rica included. It is a Costa Rican company and let's see, they are managing right now around half a million monthly subscriptions with e-commerce merchants. So that's a big deal for us because this will enable our network to these e-commerce merchants in, let's see, in a global situation where all merchants are looking for these for reducing the costs, right, of everything. And I think that, for example, in our case, we're reducing the transaction cost from 4.8% per transaction to just 2.9% per transaction. So we're reducing almost 2% per transaction with our system. So definitely, I think that this year and maybe the next one, We will be creating this partnership, we will be launching not only in Costa Rica but hopefully in all Central America and giving the access to the financial inclusion to all of these merchants and people that really need to have like this one-on-one communication with the financial industry itself.

Yeah, definitely. Really, really congratulations again on the partnership with GreenPay. Yeah, and the progress. Been really interesting for me, you know, learning a bit more about the digital payments landscape and how it's evolving in Central America. And yeah, we're looking forward to keeping up with Zoonify and where you're headed next. Juan Monge, thanks so much again for joining us today.

Thank you very much, Dustin.