Simma: B2C fintech in Iraq
Simma is building fintech in Iraq by prioritizing customer trust.
Biography
Samer Tarazi is the co-founder of Simma, an Iraqi startup digitizing the country’s payment infrastructure. Simma’s current product is an e-commerce platform, which it uses as a proxy to encourage digital payments. This is Samer’s 3rd startup.
In 2024, Simma had around 120,000 monthly active users. Since inception, over $12.3M has transacted through Simma, of which $1.3M were transacted digitally through the Simma wallet.
What problem are you solving and why hasn’t it been solved?
We’re pioneering digital payments in Iraq, a country still overwhelmingly reliant on cash.
The problem hasn’t been solved before because it’s harder than it seems. Tech is only part of the answer. It’s a deeper-rooted trust problem Iraqis have with bestowing their money to a 3rd-party. Iraqis have gone through wars and dealt with incompetent local banks. They’d rather keep their money at home, in cash, under the mattress, should anything happen. That trust component is much harder to solve than the tech aspect.
And then there’s the fact that we’re building in Iraq, a market with terrible PR (which hinders foreign capital inflows). Given a choice, most of the region’s founders would rather build for the Saudi market.
The bright side is that for all of those reasons, we’re operating in a blue ocean environment. Or rather, a deprived desert. All digital verticals in Iraq are yet to be adequately served by startups, despite the market being large and decently moneyed. From our own data, average order value (AOV) on Simma’s wallet orders was $210, which is very high compared to the region’s e-commerce AOV.
What did your MVP look like?
I first wanted to understand the state of Iraqi digital payments. Was anyone developing something relevant?
I stumbled upon Ghassan (now my co-founder), who ran a dropshipping business designed for Iraqi customers. Due to international banking restrictions, Iraqis couldn’t use their local card to buy from sites like Amazon, Ikea, Shein… Ghassan had a foreign credit card, so people would send him the Amazon links they wanted to order, he’d order it for them and then get paid by them locally. The business made over $1M in GMV despite Ghassan running it entirely by himself.
I asked Ghassan why he didn’t scale: he said he didn’t have the expertise and didn’t feel comfortable with outsourcing his work. I convinced him to start a company together, to productize what he was manually doing.
Our MVP consisted of paid ads on Facebook and Instagram, telling people they could order something from Shein and receive it at their home in Iraq.
Over the course of 6 weeks, we received over $130K worth of orders for a $350 spent on ads. This isn’t demand, it’s deprivation. The Iraqi consumer is yearning to access international brands but the infrastructure to do so doesn’t exist. This wave of initial activity represented invaluable, first-hand market research.
How have you chronologically developed the Simma product since then?
We designed three phases.
The first phase was acquiring and understanding users. We launched a mobile app, which acted as an e-commerce site replete with foreign brands. We productized our MVP, essentially. We were still buying for users manually on the back-end. For the first 12 months, all orders were paid via cash-on-delivery (COD). That phase was necessary: if we entered the market from day 1 with a digital payment solution, no one would’ve trusted us and we would’ve flopped.
This positioning is powerful in another way: we’re not coming in as a “financial institution”, but rather as a useful, reliable purveyor of digital services that happens to offer more and more digital services, including financial ones.
The second phase was moving people away from cash and introducing digital payment.
We built a Simma wallet, which users could top up by buying a physical voucher online. They’d have it physically delivered, pay the delivery driver in cash, and the wallet was topped up once the driver collected the cash. The voucher system fits into one of my theses about Iraqi society: if people give you cash, they expect something physical in return. The voucher plays that role. Today, around 25% of Simma’s transactions are done via the wallet.
The third phase, which we are about to enter, is the introduction of digital financial services, such as a buy-now-pay-later (BNPL) option. These new financial services won’t be launched in the void. They have to serve Simma’s value proposition, which is helping Iraqis buy stuff from abroad. If the new financial product doesn’t power that value proposition, users have no incentive to adopt it.
RO insights: building an e-commerce platform to power BNPL
In markets where credit scores are scarce, launching an e-commerce platform is a valuable way to collect initial customer data, which can be turned into credit scores later on. These credit scores can then help the company underwrite credit products.
This is what Zood did in Uzbekistan. Here’s how Zood’s CIO, Laurent Sciboz, explains it:
“Our goal is to provide credit for the masses. In countries like Uzbekistan, the lack of credit histories, coupled with inefficient capital distribution by local banks, foster low credit penetration. Before offering local credit, we had to build up local credit histories.
A good way to do so was to build an e-commerce marketplace, which, opportunistically, Uzbekistan lacked when we launched.
The marketplace allows us to aggregate consumers and merchants while gathering valuable data on both. Marketplace consumers can purchase items using interest-free Buy-Now-Pay-Later (BNPL), akin to a product-based loan. Their repayment patterns enable us to credit score them and usher them into interest-bearing, longer-term loans. Today, interest-bearing loans constitute the vast majority of our loan portfolio.
We aren’t an e-commerce platform. We’re building an ecosystem geared towards lending products for the vast majority of consumers traditional banks don’t want to serve. Adjacent ventures, such as the marketplace, fuel our consumer acquisition and refine our credit scoring processes.”
Excerpt from “Zood: reviving the Silk Road”, originally published in The Realistic Optimist
What is SimmaX and what have been lessons learned from the launch so far?