Analysis Featured

Solving the Data Problem for Prepaid Mobile Users With Microloans

AirFox

4 billion people, about 60% of the world, remain offline. Affordability is the biggest underlying problem in allowing the poorest to enjoy the power of the Internet. For 3 billion pre-paid mobile users in developing countries, data still remains out of reach. For instance, in Nigeria, 500 MB of data is costlier than health care or education. And in countries like Brazil and Mexico, you need to work between 8 to 40 hours to earn 500 MB of mobile data. This is too big of a trade-off.

Also, around 2 billion of the world’s population is underbanked. As a result, they have no means to transact using formalized currency. So this unbanked and underbanked population executes their daily transactions using other risky, expensive, and unconventional ways, which also hinders the economy.

Airfox is trying to solve both of these problems with its unique platform.

The AirToken Platform

AirToken is a new Ethereum ERC20 token that allows users to have free access to mobile internet through advertising and micro-spotting. AirToken thus becomes the currency representing mobile data, but the unique thing is that it can also be converted into digital goods and services, and even used for microloans.

The platform has been designed for low-income communities who have been underserved or have no access to banks. There are approximately two billion people unbanked and four billion underserved worldwide. These people are yet to receive mobile internet access due to lack of affordability. AirFox helps prepaid mobile subscribers get access to the internet and micro-finance products at much cheaper rates.

Advertisers and lenders sponsor the platform to gain access to AirFox users. AirFox has a lot of advertisers on board through its partnerships with ad networks like Rubicon and Facebook. AirFox has integrated over 500 carriers comprising nearly 80% of the world’s prepaid subscribers. Since its inception, its B2B platform has empowered more than two million unique US prepaid mobile subscribers to reduce their mobile bills and has facilitated mobile carriers in structuring flexible data plans. After gaining a foothold in the United States, the company is now launching its business in Brazil and subsequently Southeast Asia, starting in Malaysia, to target the underserved and underbanked.

AirFox Products

AirFox products consist of several seemingly unrelated items, but they are interconnected by the complete vision of the company founders:

  • AirFox Browser – The AirFox browser allows users a means to earn AirTokens by surfing the internet. These tokens can then be converted into air time, mobile data, and other digital goods. They can also be leveraged for getting microloans. When it comes to granting microloans to the mobile subscribers, AirFox will use ICO funds to develop a micro-lending program where they evaluate users on their mobile behavior, device data payments, and browsing history. The company will use this data for its proprietary algorithms to assign a credit score to users. Based on the score, AirToken holders will be able to borrow money against the tokens and build a credit history for themselves. AirFox charges 10% of the total transaction.
  • AirFox Mobility – AirFox Mobility is an easy-to-apply and cost-effective platform-as-a-service (PaaS) for mobile operators. This allows them to be nimble service providers who are able to provide tailored and flexible data offers to users.

The company provides three different kinds of plans for mobile operators.

  1. Sponsored plans – Brands pay the carrier and its subscriber by sponsoring data. It’s a win-win for all parties as the advertiser gets connected with real customers and in return subscribers get free data while the carrier gets to monetize its user base who earlier could not afford to buy data.
  2. Zero-Rated plans – AirFox offers a freemium business model where the carrier or any third party can sponsor the data usage of a particular application for a specific period of time.
  3. App Plans – AirFox also offers app-specific data passes for subscribers. For example, a one-day data pass for WhatsApp costs just 99 cents.

Maintaining an Upper Hand Over Rivals Through the Blockchain

Though there are multiple microfinance startups, and many harnessing the power of the smartphone for disseminating funds, AirFox is the first company to use the blockchain for that purpose. The Ethereum platform allows for uniquely customized smart contracts, which saves on infrastructure, a key pain point when dealing in loans worth only a few dollars. Its “AirFox Browser” business model is another critical factor in the company’s success as it allows for building credit models on real-time user data. Despite the competition, the developing world market is massive, and there is enough space for all players to grow.

Blockchain is disrupting the fintech sector, and many companies are starting to successfully integrate blockchain in their lending models. Not only would it allow lenders to serve borrowers more cost effectively, but it would also eliminate the need of the traditional credit-scoring ecosystem to assess the creditworthiness of borrowers. AirFox is a case in point as it will evaluate data to determine creditworthiness, data which is generated by borrowers as they browse the internet using AirTokens.

Who is AirFox?

AirFox was founded in January 2016 by ex-Googlers Victor Santos and Sara Choi, and has its headquarters in Boston, Massachusetts. Santos has been a technology entrepreneur with expertise in telecom, mobile, and adtech gained at Google and three different startups. Choi, a Harvard University alumnus, was product marketing lead at Google Partners before embarking on her entrepreneurial journey.

Last year, the company raised $1.2 million in seed capital from Project 11, Launch Capital, NXT Ventures, and TechStars. In August 2017, looking forward to its vision to launch the new blockchain platform AirToken (AIR), they raised $6.5 million in an ICO presale from a diverse investor set including crypto investors, angel investors, and early backers. AirFox plans to raise around $15 million through the token sale.

AirFox’s Partnership with Pareteum Corporation

AirFox has partnered with Pareteum Corporation, a leading international provider of mobile networking software and services to the mobile network and Internet-of-Things (IoT) industry. The aim is to deliver mobile data accessibility to AirFox’s customers.

Under the terms of partnership, the AirFox mobile platform was integrated and embedded with Pareteum Mobile Cloud Platform. Service revenue generated through users opting into advertisement and sponsored content will be collected by AirFox and paid to Pareteum. Pareteum will pay mobile operators their share of revenue.

AirFox’s Future Plans

AirFox is looking to close its ICO sale in 4-6 weeks. Moreover, the micro-lending platform is on track for launch by the end of Q1 2018. In Q3 2018 it plans to extend the use of AirTokens to a wider network of publishers and advertisers. The company has an innovative business model and a successful ICO will give it the funds to roll out the business aggressively across the developing world.

Author:

Written by Heena Dhir.

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Allen Taylor

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