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PawaPay is raising $ 9 million in seed money backed by MSA, 88 Mph and Zagadat Capital from Mr. Eazi – TechCrunch

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PawaPay is raising $ 9 million in seed money backed by MSA, 88 Mph and Zagadat Capital from Mr. Eazi - TechCrunch

When companies develop digital payment solutions for African countries outside Nigeria and South Africa, it is important to build on mobile money. It is literally not a tough nut to crack.

The concept is ubiquitous in East Africa, but since mobile money is a telecom operator-led initiative, there are technical difficulties in creating a unified infrastructure for businesses that need it.

PawaPay, a UK-based and Africa-focused payment company, is one of the few companies that addresses this complexity. The company takes on the technical integrations of telecommunications providers such as AirtelTigo, Econet, MTN, Safaricom, Orange and Vodafone and bundles them in an API for companies.

Today the company announces that it has closed $ 9 million in seed funding to expand its operational footprint, attract talent, and expand into new markets.

A UK 88 mph fund led the round alongside China-based MSA Capital, with the participation of Zagadat Capital, Kepple Ventures and Vunani Capital.

PawaPay split off from the online sports betting provider betPawa last year. The enterprise is led by CEO Nikolai Barnwell, former betPawa head of New Markets, Africa. He also sits on the board of 88mph.

According to him, pawaPay was launched to help people send and receive money international with mobile money.

An interesting example would be freelancers in Ivory Coast trying to get payments for services on a global payments platform. Normally, You would to be required use a bank account or card. But in places like Ivory Coast, where mobile money is rife, this becomes a problem.

How big is mobile money in Africa?

According to World Bank figures from 2015, there are over 350 million people in sub-Saharan Africa without a bank account. Various inadequacies are responsible for these statistics, but from the banks’ point of view there is no incentive to actually fund these people.

Most people without a bank account rarely earn minimum Wages in their respective countries, so it is difficult for banks to make money from these people. Also, opening a bank account involves many KYC (Know Your Customer) processes for this population subgroup.

But one thing is certain: if you don’t have a bank account, you have cell phones, and there are over 850 million cell phone connections in Africa.

(Photo by Jekesai NJIKIZANA / AFP) (Photo by JEKESAI NJIKIZANA / AFP via Getty Images)

This huge market is why mobile money is prevalent across the continent. Telecom operators using proxies have bypassed the banks and created their own systems that allow people to transfer money for sure Use of cell phones for little or no transfer fees.

So people with phone numbers can get basic financial services like savings and transfers.

CurrentlyUp to 500 billion US dollars flow annually through the mobile money market in Sub-Saharan Africa via the accounts of nearly 300 million active monthly users. This alternative financial infrastructure is one of the largest in the world.

But it’s also one of the most underdeveloped because Each telecommunications operator with its own unique mobile money product has created a fragmented infrastructure. For traders, fragmentation means it can be exorbitant expensive to use on a scale.

Mobile money and card payment gateways

PawaPay wants to position itself as the market leader in the field of mobile money payments with high volume and at the same time offer reliability and transparency for merchants. Its API enables these merchants to access telecom operators’ mobile money systems to receive and send payments to millions of mobile money accounts.

“We are banking very heavily on the growth of mobile money and all the complexity that comes with mobile money and all the necessary infrastructure be built It’s all about mobile payments at its core, “Barnwell told TechCrunch.

“And the way we look at the continent, we see the adoption rates for mobile money growing at an insane rate. It is pretty obvious that this is a very significant financial infrastructure and much of it is missing if you want serious volume and mobile money business. “

Photo credits: PawaPay

PawaPay takes care of local operations, compliance, regulatory coverage and bank accounts, making it easy to get payments in a new market.

The company claims to have over 10 million transactions per week on its rails, with beta operations in 10 African countries – Cameroon, Democratic Republic of the Congo, Ghana, Kenya, Mozambique, Nigeria, Rwanda, Tanzania, Uganda and Zambia.

Barnwell told TechCrunch that while these transaction volumes look impressive, pawaPay would have done more if it weren’t for the regulatory hurdles and licensing approaches in each market.

“In each country, we had to start from scratch with the right data to understand how they view space. With the licensing sheets, what kind of company they want to license, what requirements they are looking for, how we can work entirely closely with them to make sure they are comfortable with us, ”he said.

However, the CEO says that while regulation slows down processes, it is important for pawaPay because many unregulated companies operate without licenses and unstable technology, some with the intent to commit fraud.

“WWe went in and decided we wanted to be completely regulated. We want to be fully covered in all markets with full licensing and be a very stable, reliable premium product in these markets, ”he added.

There are several payment gateways that facilitate payments for companies in Africa, such as Flutterwave, DPO Group, Yoco, MFS Africa and Paystack. but in terms of As a purely mobile money game, MFS Africa is a clear competitor of pawaPay. Both platforms are largely focus on addressing the unique challenges related to mobile money, while the others drive innovations around bank and card payments.

PawaPay

Photo credits: PawaPay

MFS Africa connects over 300 million mobile wallets and enables a number of banks, telecommunications providers, money transfer providers and other financial institutions to interoperate in Africa through a single point of integration.

PawaPay is not far anymore. According to Barnwell, the company is connecting to almost the same number of wallets and is hoping to go live with over 30 to 40 telecom integrations soon.

During East Africa (worn by Kenya’s M-Pesa) largely was the critical market for mobile money, West Africa is catching up Nice. Last year West Africa had 198 million mobile money accounts compared to 293 million in East Africa.

The West African region has also grown the most in terms of Transaction value up 46% to over $ 178 billion, and countries like Ghana, Senegal and Cote d’Ivoire are leading the fee, which presents a great opportunity for these payment gateway providers as opposed to the card payments market where two Countries are in the foreground.

“Although the greatest attention is paid to card payments, the great payment giant in Africa Yes, really is mobile money, ”said the CEO.

PawaPay’s focus on mobile money was one of the main reasons that Kresten Buch, founder of 88mph and chairman of pawaPay, led the way. He said that if 88mph active invested in Africa a decade ago, “was one of the main reasons that mobile money was a superior method of payment to credit and debit cards for online payments. ”

For Zagadat Capital, founder Oluwatosin Ajibade (also known as Mr Eazi, a singer-songwriter and entrepreneur popular in the African music scene), who is also on the board of pawaPay, has the following to say about the investment:

Be investors enormously focused on Africa and very familiar with the landscape, we believe that mobile money-focused fintech isn’t only one of the most exciting investment locations, but also one of the most important bridges to the financial inclusion of billions of people across the continent. That was the kicker for us we believe in the clear mission, vision and strategy and we are confident that the pawaPay team is the best team to achieve this.

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