Every startup pivots, and doing so is an essential business strategy.
Airlift went from moving people around in buses to now delivering groceries. After raising funding, Krave Mart went from guaranteeing deliveries in 10 minutes to rethinking its value proposition.
To pivot is to adapt to change, and change is inevitable.
Entrepreneurs are advised to fall in love with the problems they wish to solve, not with solutions or tactics.
Yet, sometimes, a pivot can turn sour.
Such is the case with QisstPay, the buy now, pay later (BNPL) market leader in Pakistan, when it pivoted hard towards a 1-click checkout solution.
QisstPay was launched on the shoulders of its merchants, including a leading e-commerce marketplace. This allowed it to onboard other e-commerce marketplaces that felt the need to be part of what QisstPay was building.
But recently, many brand-name merchants have stopped supporting QisstPay after initial onboarding with the platform.
In a tweet, QisstPay had proudly announced its partnership with Telemart, one of the top 10 largest e-commerce marketplaces in Pakistan.
On 11th December, however, a Twitter user commented that QisstPay was no longer available on Telemart’s website.
Upon further probing, I was able to confirm this. QisstPay is no longer an option on Telemart.
On 15th November, another customer complained that the BNPL service was no longer on Mi Pakistan, and customer service was unresponsive.
And very recently, a tweet stated that QisstPay is not available on Samsung Pakistan’s Website, whereas it was a few days back.
Merchants that initially signed up with QisstPay are no longer supporting it on their platforms. I wondered why.
I reached out to a few merchants and was able to get some clarification from one of the merchants.
Let’s dig deeper
Speaking with me under the condition of anonymity, a leading player in the e-commerce marketplace space, whose website is ranked in the SimilarWeb top 20 websites for consumer electronics in Pakistan, shared a story of betrayal.
“The founders of QisstPay contacted me via LinkedIn well before their product had launched,” he said. “My first call was with a senior executive while the second call was with Jordan Olivas, the co-founder of QisstPay brought in from Klarna.”
QisstPay offered him commissions of 7 to 8% and a three-month deal depending on the sales volume.
“We promoted Qisstpay on all our social channels, which gave a huge boost to their services,” he said. “We deployed them from the first of October 2021, with integration taking a month, and we were live for 45 days.”
According to my source, QisstPay delivered the next-day payments up to November 2021, but then payments stopped coming in, and the senior C-level executives at QisstPay started making excuses about a software glitch.
“After I was in touch with Jordan, he was apologizing that there were some funding problems as all their funds come from the United States, and there is a delay in that.
According to my source, he asked Jordan to explain the company’s position on holding merchant payments, to which Jordan replied that QisstPay had changed its business model.
“After that, they also started pushing their 1-click-checkout solution and were forcing us to deploy their solution,” said the source. “He mentioned that by doing so, the payment cycle would decrease to ten days. However, it didn’t make sense for us as we already had our solution.”
My source believes that this was just a cheap ploy by QisstPay to lure marketplaces and merchants with BNPL and then force merchants to deploy 1-click-checkout.
“This is not beneficial for merchants at all this just increases the expenses per order and lets QisstPay charge merchants per transaction and then different processing charges, where the merchant discount rate was Rs. 300 per transaction, thereby leaving us with less and fewer margins and also making us go into loss.”
Leaders in the e-commerce marketplace business have lost trust in QisstPay because of its antics, primarily because BNPL is widely considered a debt trap, and on top of that, QisstPay wanted to establish itself as a merchant friendly service.
He said QisstPay acted unethically because no direct competition offered BNPL and 1-click checkout.
“Payments to merchants are governed by the contracts between QisstPay and the merchant,” said a lawyer attached to the startup ecosystem that asked to remain anonymous.
“QisstPay is obligated to pay the merchants within the time specified in the contract for these payments. Without having seen the contracts, I can’t comment on whether there has been a breach by QisstPay or not.”
The other side
When I reached out to QisstPay co-founder Jordan Olivas, he said that merchants had used QisstPay to finance their supply chain so they could delay shipments to consumers, hurting consumers, so initial payments are being pushed out to prevent this from happening.
“As a note, this is typically only t+7 for well know your business (KYB) merchants, maybe longer for some merchants that aren’t as established,” said Olivas. “Sometimes there were returns, so there was a negative balance, i.e., someone buys something for Rs. 100, we pay it out to the merchant, then the consumer returns it, so it means they owe us money.”
As a regulated lender, QisstPay works on protecting the consumer the best it can, and sometimes this can affect smaller merchants, but QisstPay must protect the consumer.
“We do not forcefully have people install anything, but a benefit of the 1-click checkout is that because we can help a merchant manage multiple payment types, there are benefits that come with it like reduced payment cycles since we can help across a variety of channels,” he said.
“[As far as the allegation that we were] holding payments for three months, this is not the case, what you’re referring to is two different product offerings, but it sounds to me like a merchant or two is upset they don’t qualify for our funded model.”
He added that funded means that QisstPay pays out at once in a t+x (i.e., t+1, t+7, t+15, etc.), whereas unfunded means that QisstPay will pay out according to a payment cycle over the three months since the money is lent to the consumer, but the merchant is always guaranteed the payment.
“Overall, it sounds like a few merchants are upset because they don’t have the size to have the funded model,” said Olivas. “We are very strict on KYB and have to ensure they treat consumers well, as consumer security is of the utmost importance.”
I, for one, want to give the benefit of the doubt to QisstPay. There’s the usual he-said and she-said.
But pivots are complicated, and QisstPay is in a market where both know-your-customer and know-your-business are complex problems to solve.
However, I believe that QisstPay needs to define who its customer is clearly. Is it the merchant who delivers the product or the consumer who purchases it?
An honest answer to this question can help it go back to solving the problem instead of chasing a solution that is looking for a problem.
