Cross-border payments are essential for facilitating trade, remittances, and financial inclusion in Africa, a continent with diverse and dynamic economies. However, moving money across borders in Africa is often costly, slow, and complex, posing significant challenges for consumers and businesses alike.
According to the World Bank, the average cost of sending $200 to sub-Saharan Africa was 8.2% in the first quarter of 2021, well above the global average of 6.5% and far from the Sustainable Development Goal target of 3% by 2030. Moreover, cross-border payments in Africa often suffer from low transparency, limited interoperability, and regulatory barriers that hinder competition and innovation.
Fintech companies are emerging as key players in addressing these challenges and transforming the cross-border payments landscape in Africa. Leveraging digital technologies such as mobile money, blockchain, and artificial intelligence, fintechs are offering faster, cheaper, and more convenient solutions for cross-border payments that cater to the specific needs of African consumers and businesses.
Some of the ways that fintechs are redefining cross-border payments in Africa include:
– Enabling direct transfers to mobile wallets and bank accounts, reducing the reliance on cash and agents. For example, Remitly allows African migrants to send remittances to mobile money accounts and wallets in over 20 countries across Africa, including MTN, M-Pesa, Airtel, Vodafone, and Tigo.
– Providing access to multiple currencies and exchange rates through online platforms and virtual wallets, minimizing foreign exchange volatility and transaction costs. For example, VertoFX is a B2B currency exchange marketplace and multicurrency wallet product that allows SMB clients to convert money from one currency to any of the other 30-plus currencies on its platform and hold the new currency in their wallet until they are ready to make a payment.
– Leveraging blockchain technology to enable fast, secure, and low-cost cross-border payments that bypass intermediaries and traditional payment rails. For example, BitPesa is a digital foreign exchange and payment platform that uses blockchain-based settlement to lower costs and increase the speed of business payments to and from frontier markets.
– Partnering with banks, regulators, payment networks, and other stakeholders to enhance interoperability, compliance, and customer protection. For example, Ukheshe Technologies is a pan-African fintech enablement partner that provides end-to-end payment solutions for banks, telcos, fintechs, and governments.
Fintech woes
Fintechs are set to play a vital role in shaping the future of payments in Africa, as they bring new innovations, entrepreneurs, and capital to the fast-growing electronic payments market. However, they also face significant challenges such as regulatory uncertainty, infrastructure gaps, cyber risks, and customer trust. To overcome these hurdles and unlock the full potential of cross-border payments in Africa, fintechs need to collaborate with each other and with other ecosystem players to create inclusive, interoperable, and sustainable solutions that benefit all stakeholders.
Fintech is one of the most dynamic and innovative sectors in Africa, with hundreds of startups offering solutions for payments, lending, banking, insurance and more. In 2022, African fintech startups raised over $1.4 billion in funding, according to Disrupt Africa, and attracted global attention with acquisitions and partnerships.
Africa is a continent with immense potential for innovation and growth in the financial sector. According to the World Bank, more than 60% of the population in sub-Saharan Africa is unbanked, meaning they lack access to formal financial services such as savings, credit, insurance and payments. However, thanks to the rapid adoption of mobile phones and internet connectivity, many African entrepreneurs are developing innovative solutions to address this gap and provide affordable and convenient financial services to millions of people.
In this blog post, we will highlight five African fintech startups that are making waves in the industry and have the potential to scale up and impact millions of lives in 2023 and beyond.
Okra
Okra is a Nigerian startup that provides an API platform for connecting bank accounts to third-party applications. Founded in 2019, Okra has secured partnerships with major players like Access Bank, Interswitch and uLesson, and raised $10 million in a seed round led by TLcom Capital and Accenture Ventures. Okra enables businesses to access real-time financial data, initiate payments, verify identity and perform direct debits from customers’ bank accounts.
Moove
Moove is a Nigerian mobility fintech that provides revenue-based vehicle financing to drivers and transport entrepreneurs across Africa. Launched in 2019, Moove has facilitated over $200 million in loans for more than 10,000 drivers on platforms like Uber and Bolt. Moove leverages data and technology to assess credit risk and offer flexible repayment terms based on drivers’ earnings. Moove raised $68.5 million in a Series A round led by Speedinvest and Left Lane Capital.
Tabby
Tabby is an Egyptian startup that offers a buy now, pay later (BNPL) service for online and offline shoppers in the Middle East and North Africa. Founded in 2019, Tabby allows customers to split their purchases into four interest-free installments or pay after 14 days with no fees. Tabby partners with over 2,000 merchants across various sectors, including fashion, electronics, beauty and travel. Tabby raised $50 million in a Series B round led by Global Founders Capital and STV.
Wave
Wave is a Senegalese startup that provides a mobile money service that allows users to send and receive money instantly and securely via their phones. Founded in 2018, Wave aims to make mobile money more accessible and affordable by charging no fees for transactions and offering competitive exchange rates. Wave operates in Senegal, Uganda, Gambia, Mali, Burkina Faso and Ivory Coast, where it claims to have over 5 million active users and process over $2.5 billion in annualized payment volume. Wave raised $200 million in a Series A round led by Sequoia Heritage and Stripe.
JUMO
JUMO is a South African startup that operates a technology platform for building and running financial services for emerging markets. Founded in 2014, JUMO partners with banks, mobile network operators and fintech companies to offer credit, savings and insurance products to underserved customers. JUMO has served over 20 million customers and disbursed over $3 billion in loans across 15 markets in Africa and Asia. JUMO raised $55 million in a funding round led by Goldman Sachs.
Visa is partnering with Flocash to introduce Flostore to help small businesses across Africa accept digital payments. It will also allow the businesses to manage supplies and access financial services across Africa. The Flostore solution consists of an integration of the Visa digital wallet and Flocash’s pan-African payment platform.
In addition to Flostore, Flocash and Visa will bring the element of analytics, bookkeeping and reconciliation to small businesses. Through Visa’s dynamic underwriting capabilities that include buying now pay later structures.
“Visa is committed to expanding the digitization of payments across Africa. With partners like Flocash, our goal is to enable African businesses to access our payments ecosystem and technologies to enable them to innovatively and efficiently serve their customers. This partnership with Flocash, as well as the launch of Flostore, are important steps towards achieving this goal.”
Corine Mbiaketcha, Vice President and General Manager for East Africa at Visa.
SMEs according to the International Finance Corporation (IFC) account for 90% of all businesses in Africa. But they have an annual financing gap of over US $136 billion. A digitized SME sector will unlock the huge market potential of the African continent underpinned by rapid population growth.
Through digitization, SMEs can use their digital footprint to tap into both traditional and alternative sources of funding. To expand commerce while banks lower operating costs as they increase their revenue base. Digitization of the lending process enables banks to streamline their inefficient processes for SME lending and deliver value to their customers. 82% of small and micro business respondents to Visa’s annual outlook survey in 2022 indicated a preference for digital payment options.
With a Flostore Tap2phone, small businesses will be able to turn their existing mobile devices into payment acceptance terminals. Tap2phone is an essential and cost-effective mechanism for developing digital payment infrastructure in developing markets.
“Flocash has grown significantly as a travel payments processor over the last few years. We are thrilled to partner with them to build innovative payment solutions that reduce friction in commerce for merchants in East Africa,” Mbiaketcha adds.
On the other hand, the CyberSource Payment Gateway technology incorporates all the safety protocols in place to give customers peace of mind as they transact online. With a design to provide increased fraud protection, minimize cardholder friction, and increase the completion of sales, leading to a better experience for all parties involved. This helps both merchants and issuers detect and avoid fraud more effectively.
“Visa is a great partner to scale Flocash’s pan-African payment platform and develop this critical area of African commerce that can offer enormous continent-wide economic development opportunities.”
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Flapmax is launching Fast Accelerator, a startup incubation program in partnership with Microsoft to help strengthen and scale Africa’s digital ecosystem. The accelerator program targets startups building cloud and artificial intelligence (AI)-enabled technology products and services. It is currently accepting applications from entrepreneurs and innovators to participate in the first cohort.
The first cohort will prioritize business to business (B2B) startups across all industries. With a special interest in healthtech, fintech, edutech, industrial and agritech, sustainability, and deeptech companies. FAST Accelerator startup applicants must be based in Africa. They must have an established product-market fit, be ready to expand within the continent. Applicants must also be available to participate in the full program between March 7 and May 27, 2022.
It will provide direct investment in African tech leaders, says Gerald Maithya, SME and Startups Lead, Africa Transformation Office, Microsoft. Adding that Africa is poised to become the next international technology hub.
“We are excited to partner with Flapmax in our mission of empowering every person and every organization on the planet to achieve more. The FAST program will provide direct investment in the technology leaders of tomorrow in the region, helping build key infrastructure that uses artificial intelligence as the basis for solutions development.”
The FAST Accelerator program will combine business development, technology integration, funding and community building opportunities. Participants will work with Microsoft engineering team members on co-innovation projects ranging from product integrations to new offerings. Whilst the Flapmax engineering team will help startups apply new technology solutions, including Measure, Coral Imaging, and Fast Portal. Additional perks include up to $250,000 in Azure credits, access to Founders Hub, Dynamics 365, and Microsoft 365 (including Teams).
“At Flapmax our mission is to enrich the lives of everyone on the planet and make the world more sustainable, using accelerated AI technology,” says Dave Ojika, founder and CEO, Flapmax. “We are proud to partner with Microsoft to make that dream a reality for startup founders committed to strengthening the digital ecosystem in Africa“.
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Fintech company Accelerex is set to offer Ghanaian Customers more Digital Payment Options with the introduction of RexPay and RexRetail.
This comes after the company recently received an enhanced Payment Service Provider (PSP) licence from the Bank of Ghana (BoG). As well as the ISO 27001:2013 and PCI-DSS certifications. Enabling Accelerex Ghana to open the Ghanaian market to more electronic payment and transaction possibilities across different platforms and channels.
Buoyed by this milestone Accelerex Ghana is eyeing the retail segment with its new revolutionary products – RexPay and RexRetail, set to launch in Q2 of 2021. These products will help the company deepen its footprints in Ghana and cement its position as a leader in the e-payment space.
RexPay
RexPay is an online payment gateway that helps social media sellers and corporate organizations receive payments in a fast, convenient and secure manner, even without owning a website. Customers enjoy multiple payment options and can make payments seamlessly wherever they are. Sellers can sign up easily to the RexPay platform in less than five minutes, then begin to receive payments instantly.
RexRetail
RexRetail, an all-in-one solution for small and medium-sized retail shops, helps retailers automate their everyday operations. It is a superb tool for inventory management, customer relationship management and seamless accounting. More importantly, RexRetail supports business owners with a reporting and analytics tool that helps them keep track of the performance of their business.
“Through our continuous product innovation and impeccable attention to customer needs, the company has gradually emerged as the financial technology company of choice for Ghanaian businesses”, notes Sebastian Yalley, Chief Executive Officer and Managing Director of Accelerex Ghana
He further stated that “at Accelerex, standardization and compliance remain the bedrock of our operations across all subsidiaries in Africa. We believe that having this licence from the Bank of Ghana is a demonstration of our commitment to the Ghanaian market, and serves as the foundation for rolling out simple, secure, and convenient e-payment and digital transaction solutions for all customer segments. We intend to use this as leverage to deepen our existing relationships with our bank clients. In that same spirit of collaboration, we are open to working with other fintech companies to deliver superior value to customers.”
Accelerex
A member of the Accelerex Holdings Group, with footprints in Nigeria and Kenya, Accelerex Ghana commenced operations in the country in 2019 as a financial technology company offering offline and online payment services to its target markets. Its parent company, Accelerex Holdings, recently secured a US$20million investment from African Capital Alliance to drive new product development and expand to South Africa, Cote d’Ivoire and Tanzania.
Accelerex Ghana has a strong bias for innovation, world-class technology and excellent customer service. It intends to extend the availability of its products and services to different categories of businesses in Ghana with the aim of spreading accessibility of financial technology and digital payments. Visit www.GlobalAccelerex.com.gh for more information.
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