Corner store owners, or kiranawallahs, are key to mBnk’s business model
With partners across the globe, the company has a few pals along for the ride
Digital payment apps are a dime-a-dozen, no matter where you are in the world.
It makes sense then, that Vancouver-based BlocPal International is leaning hard into those apps’ success in a cash-less future. The company, which develops digital platforms for merchants and enterprise consumers, is the technical engine behind transaction apps around the world.
It’s not an obvious business (or revenue) model because BlocPal isn’t quite consumer-facing as its own brand. Instead, it partners with companies based in specific local markets, provides a platform for them to build their apps on and helps with marketing and overall strategy.
Of course, building these kinds of partnerships across the globe requires some cold, hard cash.
“Any company needs capital to grow and every market we enter into, we supply a ton of business capital in requirement for that,” says BlocPal’s chief marketing officer Sushant Trivedi. For Trivedi, who spent 11 years at American consumer goods powerhouse P&G, being at the helm of BlocPal is a new kind of challenge, especially when it comes to sustainable mergers and acquisitions.
“The second (priority) would be building a team—like a dream team—to grow exponentially around the world,” he says.
CEO Nick Mellios hopes that the company will be publicly traded in Canada no later than “the end of the year.”
But before we get ahead of ourselves, and as any shrewd investor would want to know, how does BlocPal make their money? What exactly is their strategy?
To answer that question, we’re going to dive into their partnerships, and see why BlocPal is choosing to invest where they have.
The Indian story
Shashank Joshi, founder and CEO of mBnk is unperturbed at fielding questions about his business at 11 p.m. local time in India. He’s a self-professed serial entrepreneur who notices “gaps” in business spaces and seeks to capitalize on them. His latest venture—mBnk—is slightly different from other digital payment apps in India.
mBnk is the latest payment app to hit the Indian market, with a unique “phygital” strategy
Joshi says mBnk wants to occupy the “phygital” (physical + digital) space in India, where the company partners with local corner stores (known as kirana stores) to act as points-of-service for mBnk. In doing this, mBnk is pulling a kind of BlocPal: retailers—as the intermediaries of transactions—are mBnk’s real customers, and the people doing the transaction are the kirana store’s customers.
But how does this work?
In recent years, India has seen an overhaul in its financial inclusion space. Banking reforms, and rise of digital payment apps (turbo charged by cheap data rates) have helped significantly reduce the number of people left out of the financial inclusion net. With that comes the next wave: the torrent of digital payments.
The creation of the United Payments Interface (UPI), an industry-wide banking protocol that allows for transferring money via a phone number linked to a bank account, is key to this rise. UPI is a platform, and it allows companies to use the infrastructure for their own services, including bank apps as well as payment apps like Google Pay, and Walmart-owned Phone Pe.
All of this—and the series of lockdowns forced by the pandemic—led to UPI clocking in 1.8 billion transactions in September 2020, its highest-ever, according to a PwC report. The report (“The Indian Payments Handbook 2020-2025”) further estimates that the number of UPI transactions will grow seven times by 2025. The digital payment industry as a whole will grow two and a half times by transaction value, and four times in volume by 2025.
It’s in this lucrative but crowded space that mBank wants to make a mark. Google Pay, and Phone Pe (backed by Walpart) account for two-thirds of all UPI transactions (topping 7 billion in volumes in 2019, according to S&P Global). Add to that a host of other competitors, banking apps, the government’s own payments apps (called BHIM and Bharat Billpay), as well as other avenues of transferring money, including bank transfers and card payments, and one can see why mBnk needs to think out of the box to be relevant—and successful.
And Joshi’s strategy—"phygital”—hinges on three small bees in the bonnet of India’s booming digital payments space. One, S&P’s Global Financial Literary Survey estimates that only 24% of the Indian population is financially literate. Two, despite strides in increasing financial inclusion, the World Bank estimates that almost 190 million people—or 14% of the Indian population—is still unbanked and three, for the 86% that does have a bank account, over half are still inactive.
Joshi’s solution to this: make the corner store man or woman the outpost for digital transactions and empower them with his app, mBnk. In this scenario, if a customer needs to send money or do any kind of digital payment, but doesn’t know how to, he or she goes to their corner store owner, who does the transaction for them through mBnk. The customer then either repays the store owner through his banking card (if he has an active account) or by forking over cash.
By using the trust that people have in their corner stores, and the trust corner store owners have in their frequent customers, Joshi wants to create a reliable, physical network of what will essentially be mBnk customers and salespeople. And he’s going one step further on this physical side, converting his kirana store comrades into mini-ATMs.
“Look at the size of this,” Joshi says, holding up a device that looks vaguely like a calculator, “it’s the size of your smartphone right?” And yet, the little black brick functions like an ATM. It has a slot where a customer can put in a card, and by connecting to an internet network—through a phone—can access their bank account and withdraw money. All of this, supported by the mBnk app.
“And it’s entirely secure,” Joshi says, reading off a litany of security certificates, “if it’s not connected to the internet, it’s a paperweight. It doesn’t store any card information. We also have a no-repair-and-only-replacement policy, so no one can tamper with it.”
But where does the cash come from?
“From the retailer,” answers Joshi, who points out that, as someone who runs a store, they will have cash on hand. In turn, mBnk refunds the money to the retailer’s account, and then sorts out a bank-to-bank transfer with customer’s original bank.
Joshi’s focus on mini-ATMs is not unwarranted. India has only 22 ATMs per 100,000 adults (compared to Canada’s 228 per 100,000) according to the country’s central bank, the Reserve Bank of India. And these ATMs are mostly concentrated in urban city centres and not the vast rural countryside.
Aside from digital payments and mini-ATMs, Joshi intends for mBnk to have a vast array of financial services that can be supplied through his kirana store partners. This includes access to unsecured microcredit and insurance by partnering up with non-banking financial institutions. As for the risk associated with these ventures, as Joshi points out, the exposure isn’t on mBnk’s balance sheet, it’s on the NBFC’s.
Now that we’ve sorted that out, how does mBnk—and BlocPal—make money?
Joshi explains with an example. For a 2000-rupee ($35) transaction, the bank makes ten rupees (17 cents), shares eight rupees (14 cents) with mBnk, who then shares between six and seven rupees (10 cents) with the retailer.
With a mini-ATM, mBnk also aims to serve those customers who still transact in cash
“It’s a high volume, low margin business,” says Trivedi. For each transaction, after the bank and the retailer take a cut, mBnk keeps the rest and—depending on the investment fine print—shares some amount with BlocPal.
The “high volumes” are then contingent on how many kirana store owners Joshi can convince to use mBnk.
“We’re currently at 42,000 retailers,” says Joshi, “and in the next 18 months, we’re going to have 300,000 partnered with us.”
The Canadian counterpart
Halfway across the world, and back at home in Canada, BlocPal has another, similar, local partner: OneFeather, an Indigenous digital solutions company focused on providing services tailor-made for Indigenous people.
Of those million, about 14 percent are Indigenous people, according to, Prosper Canada, a national charity dedicated to financial empowerment that works with governments, businesses and community groups.
In a report titled Financial Literacy and Aboriginal People, Prosper Canada highlights many hurdles to financial inclusion for Indigenous people, including lack of financial infrastructure on reserves (where 42 percent of people with registered First Nation or treaty Indian status live, according to Statistics Canada), low financial literacy, and being subjected to discrimination at mainstream financial institutions.
For Lawrence Lewis (a member of the We Wai Kai Nation), and the CEO and founder of OneFeather, these unbanked Indigenous populations are the reason why the company has launched the OneFeather APP.
“We want to provide digital solutions that level the playing field and allow Indigenous folks to participate,” says Lewis, referring to a Bank of Montreal incident in which an Indigenous man was handcuffed by the RCMP on unwarranted suspicion of fraud as an example of the kind of systemic racism Indigenous people face when they approach financial institutions.
Thus, a key focus of these “digital solutions” is to be able to open a bank account through the OneFeather APP without ever stepping foot in the bank.
“Let’s eliminate all the costs and time and labour associated with doing that—which is painful for all of us,” says Lewis.
BlocPal’s expertise—and relationships with banking partners—comes in use here for OneFeather. While Lewis’ company supplies KYC and status card information for identify verification, BlocPal handles the liquidity model where a OneFeather user can access a digital bank account, conduct online transactions, and even use a physical prepaid card (issued by OneFeather) which they can tap or swipe with at stores and groceries.
Trivedi terms all of this BlocPal’s “core banking solution,” geared towards the goal of making OneFeather a “one-stop shop” for financial services for Indigenous people.
Another issue that Lewis is passionate about is GST exemption, which Indigenous people who live on reserves are entitled to. But it's a process that entails separate claims and declarations and verification of identity that, Lewis says, is simply not worth it for people living on the reservation.
“At the end of the day you ask yourself—are you going to waste the cost of a stamp, and all that time required, for a single GST claim that’s about $3.48?” He asks rhetorically, “it just doesn’t make any practical sense.”
OneFeather’s answer to this is to collect transaction information from within the app and then submit it on behalf of users to Revenue Canada on either a monthly or quarterly basis so that the GST claim is submitted as one single transaction and the benefit comes back to their accounts.
Lewis puts that into numbers. “If you’re a low-income family,” he says, “and you can access $50 a month in entitlements, that’s life-changing.”
But OneFeather is going beyond just the monetary scope of transactions.
The company is also also expanding into areas where Indigenous people will benefit from services specifically tailored for them. One of those features is a digital voting service that allows First Nations to conduct elections, referendums, ratifications—anything that requires a secure, end-to-end encrypted vote.
Another feature Lewis highlights is OneFeather’s Status Card Services, which allows Indigenous people to renew or replace their SCIS card (Secure Certificate of Indian Status) online.
“The status card is supposed to provide access to all kinds of services and benefits [for Indigenous people],” Lewis says, “but to renew it you have to go through a paper-based process.” Lawrence ticks off the multiple barriers in that paper-based process: forms, get a passport photo, postage fee, all of it for an application that “over 70 percent of the time is returned to you as incomplete,” Lewis says.
Through OneFeather, the app makes sure each application is complete and ticks all the check boxes so that users don’t have to face the frustration of redoing their paperwork.
Features and services aside, how does OneFeather make money?
Lewis says the company has “a couple of revenue streams” and their core business is actually “providing consulting and direct guidance in terms of governance and elections” to First Nations.
The other revenue stream is the licensing agreement OneFeather signs with First Nations to use their platform, which Lewis estimates works out at about “$1.34 per member per year.”
Some additional services on the platform also generate their own revenue. For example, for Indigenous people whose Nations are already clients of OneFeather, there’s no charge to apply for a status card renewal or replacement. If not, it’s a $30 fee.
The company also has a rewards program (called 1FT) which users can earn through transactions and then redeem their tokens on specific services fees and offers. There’s a catch though—while anyone, Indigenous or not can earn tokens, only Indigenous people can redeem them. Non-Indigenous people can transfer or gift their tokens back to the OneFeather Box of Treasures Foundation (a charitable organization aimed at transferring wealth back to Indigenous people,) which is where 2.5 percent of all of One Feather’s revenues also gets donated to.
OneFeather is determined to make sure their products respect and reinforce Indigenous sovereignty and identity
For the future, Lewis says there’s “no end to what the app can do,” from sending emails to using data to build out family trees, he points out that the eventual goal is to become a one stop interface for Indigenous people and the services that they need, focusing on how the company can remove barriers that—whether by accident or design—seek to marginalize them.
“It's about ensuring that Indigenous sovereign identity is respected and reinforced,” says Lewis of OneFeather’s organizational values, “that every transaction in that Indigenous person's life—whether it's banking or status renewal or participating in their local community voting event—the technology and services that those nations are using, redefine that experience. Through an Indigenous lens and lived experience.”
Back to the Bloc(Pal)
BlocPal’s strategy of investing heavily in local businesses—which is not cheap—banks on leveraging the expertise and relationships companies have formed with their consumers around the world, and they’re intent on repeating the process where they can.
“The beauty of the model is that it’s very scalable,” says Trivedi when asked how BlocPal can afford to make these kinds of investments: BlocPal is a majority stake owner of mBnk and owns “less than 50 percent” (Trivedi) of OneFeather (to keep the company Indigenous owned.”
Trivedi says that because the model is easily replicated in different countries, and tweaked depending on local demographics and requirements, the actual costs of expanding operations aren’t as high. “This way you take one or two strategic partners, and you grow.”
And growth is what’s on BlocPal’s radar—hence the public listing priority—and Trivedi says they’re already looking for opportunities in Mexico and Nigeria next.
Mellios says that they’re betting on riding the FinTech wave that’s currently overhauling banking, and unlike most of his contemporaries in the space, isn’t worried about having to beat out competitors.
“The way we work with partners,” he says, “we haven’t come across someone who is a competitor. In fact, if they’re a fintech solution, then they could be a potential partner for us to integrate and aggregate into our service.”