Innovation offered by SIA JOOL PAY: non-cash tips

In March of this year, Latvijas Banka issued a payment institution operating licence to our company JOOL PAY. The licence is the result of intensive work carried out in close cooperation with the central bank. Our team has undergone a comprehensive review by Latvijas Banka and has earned its trust. Currently, there are only six companies in Latvia having such a licence.

Latvijas Banka has also awarded our service the status of an innovative product, which confirms the uniqueness of our idea and mission.

Innovation in the Latvian market

The service provided by JOOL PAY allows customers to pay tips without cash using their smartphone.

JOOL PAY makes a mobile app available on both iOS and Android operating systems for waiters, hairdressers and all other service providers whose profession provides the opportunity to earn extra income through tips or donations. Nothing is required from the tipper – the minimum action is to scan the QR code and choose the desired amount using Google Pay, Apple Pay or a connected bank card. The first registration on the JOOL PAY app takes only 30 seconds for both the tipper and the recipient! Subsequent use also takes just a few seconds. JOOL PAY allows you to tip not only one person, but also to create a team and split tips among colleagues. This allows waiters to do away with counting and distributing the coins among themselves each evening.

Origin of the idea

The idea of creating a convenient and modern service that would allow customers to thank a waiter or anyone else in the service industry came about because people, including myself, were gradually shifting towards paying for services by phone. In order not to find yourself in a restaurant without cash on hand to thank waiters, you should always make sure in advance that you have some banknote or coins in your wallet, and sometimes you have to specially look for an ATM. But it is an inconvenience!

Today, many people do not carry cash or bank cards with them. People now have their wallet, planner or any other tool that makes their daily life easier on their smartphone. Paying with a smart device is very easy and now commonplace around the world. However, the option to show gratitude by tipping someone using a smartphone has not been available in Latvia until now.

It became clear that the development of such a service in Europe is relevant and important. My 21-year-old son also supported my idea when I approached him for a vision of the new generation. His answer was quick and clear: "Yes, Dad, that would be fantastic, I never have cash on hand and it's a problem!" I believe that this reaction was my first driving force to start the journey of developing and implementing JOOL PAY.

As a financier, I know that such mobile apps exist in other parts of the world, for example in Asia and the Eastern countries, with their own specifics. It is not that there are no alternatives on the market – there are, but they usually have a number of serious drawbacks. The first and main disadvantage is that a cashless tip paid via a POS terminal ends up in the company's account, burdening the restaurant's accountant with administrative work and generating additional tax and administrative costs. To relieve both the company and the employee from unnecessary complexity, we have developed a product that focuses on the recipient of the tip. We have minimised the journey of the tip from the payer to the recipient and the payment time. When we created JOOL PAY, we contacted various companies and got a positive response to our idea, as companies want to distance themselves from the tip administration process.

One of the most important requirements I set when designing the new service was that the product must be as easy to use as possible, and it must be user-friendly. To put it bluntly: we didn't invent the bicycle, but the bicycle we have created is the simplest, easiest to use and fastest. This is the principle that most of the world's largest FinTech companies base their products and services on.

Obtaining a licence

At the start of the project, we were faced with a difficult choice – to work independently with our own licence or to approach a large financial institution with a proposal to develop this product under its umbrella. We saw the potential to develop our idea independently, so we decided to do everything ourselves.

We applied to Latvijas Banka with the intention of obtaining an operating license for a new payment service. During the licensing process, we sought the expertise of Latvijas Banka, who offered valuable consultations. Their guidance was instrumental in preparing our application for a payment service operating license. Latvijas Banka organized meetings to discuss our planned business model and activities, helping us refine and optimize our application before submission.

During the licensing process, a project team was established at Latvijas Banka. The team demonstrated a welcoming and supportive attitude as we prerpared and submittes the necessary documents to obtain a license. The cooperation was successful and in March of this year, we received a licence from Latvijas Banka to operate as a payment institution with the right to provide money remittance services. The decision to issue the license was made during the three month after the official application was submitted.

Latvijas Banka has awarded our service the status of an innovative product in the field of electronic payments in Latvia, so we had the opportunity to pay Latvijas Banka a reduced fee for examining the application and for a certain period of time, – also a reduced monitoring fee.

Development potential

We have done a tremendous job; the licence has been obtained and the product is on the market. The idea was implemented within an optimal timeframe. This makes us stand out not only in the Latvian market, but also in the European market. JOOL PAY is now used by employees in the leading companies in the Baltic catering services market.

However, during the implementation of our product, it became clear that the Latvian public is still very conservative and has difficulty getting used to using new tools, no matter how beneficial and convenient they may be. Therefore, our challenge now is to improve the market and teach it how to use innovative products. It is a serious and responsible process that requires a huge amount of patience.

Funnily enough, I was in a similar situation in the late 1990s when I worked at a Latvian bank. At that time, Visa and MasterCard payment cards and ATMs had just appeared in Latvia. My colleagues and I were pioneers in the emergence and development of the payment card culture. Today, payment cards are commonplace, but that's today. Almost 30 years have passed, and I am again at the beginning of something new and unusual in the Latvian financial market. But I'm not afraid to be loud and ambitious about positioning our new product, because JOOL PAY makes it possible for everyone to always thank someone else for the work they do.

Responsibility for the content of publication lies with the author.