PawaPay raises $9M seed backed by MSA, 88mph and Mr Eazi’s Zagadat Capital – TechCrunch
When businesses create digital payment solutions for African countries outside of Nigeria and South Africa, relying on mobile money is critical.. It is literally An evidence.
The concept is ubiquitous in East Africa, but because mobile money is a carrier-led initiative, there are technical complexities in creating a unified infrastructure for businesses that need it..
PawaPay, an Africa-focused UK-based payments company, is one of the few tackling these complexities. The company takes the technical integrations of telecom operators like AirtelTigo, Econet, MTN, Safaricom, Orange and Vodafone and consolidates them into a single API for businesses.
Today, the company announces that it has closed $ 9 million in seed funding to expand its operational presence, recruit talent and expand into new markets..
UK fund 88mph co-led the round with Chinese firm MSA Capital, with participation from Zagadat Capital, Kepple Ventures and Vunani Capital.
PawaPay separated from online sports betting company betPawa last year. The company is led by CEO Nikolai Barnwell, former head of new markets at betPawa, Africa. He also sits on the board of directors of 88mph.
According to him, starting pawaPay was to help people send and receive money internationally using mobile money.
An interesting example would be freelancers in Ivory Coast attempting to receive payment for services on a global payment platform.. Typically, they would like be required to use a bank account or card. But in places like Cote d’Ivoire, where mobile money is prevalent, this is becoming a problem.
How big is mobile money in Africa?
According to 2015 figures from the World Bank, there are more than 350 million unbanked people in sub-Saharan Africa. Various shortcomings are responsible for this statistic, but from the point of view of the banks, there is no incentive for them to actually bank these people..
Most unbanked people rarely earn minimum salary in their respective countries, so it is difficult for banks to make money with these people. In addition, opening a bank account involves many KYC (Know Your Customer) processes for this subset of the population.
But one thing is certain: unbanked people have cell phones, and there are over 850 million mobile connections in Africa.
This huge market is the reason why mobile money is prevalent across the continent. Telecommunications operators using proxies bypassed banks and created their own systems to allow people to transfer money safely use cell phones for little or no transfer fees.
Thus, people with a phone number can benefit from basic financial services such as savings and transfers.
Presently, up to $ 500 billion annually passes through the mobile money market in sub-Saharan Africa via bank accounts. almost 300 million monthly active users. This alternative financial infrastructure is one of the most important in the world.
But it is also one of the most underdeveloped because each telecom 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 large scale.
Mobile money and card payment gateways
PawaPay wants to position itself as a market leader in high volume mobile money payments while providing reliability and transparency to merchants. Its API allows these merchants to access the mobile money systems of telecom operators to receive and send payments to millions of mobile money accounts..
“We are betting very hard on the rise of mobile money and all the complexities that come with mobile money and all the infrastructure needed to to be built around payments with mobile money at the grassroots, ”Barnwell told TechCrunch.
“And the way we look at the continent, we look at the adoption rates of mobile money which is growing at breakneck speed. It has become pretty obvious that this is a very important financial infrastructure and a lot of it is missing if you want to work large volume and businesses on mobile money.. “
PawaPay manages local operations, compliance, regulatory coverage and bank accounts, making it easier to receive payments in a new market.
The company claims to process more than 10 million transactions on its rails per week, with beta operations in 10 African countries – Cameroon, DRC, Ghana, Kenya, Mozambique, Nigeria, Rwanda, Tanzania, Uganda and Zambia.
Barnwell told TechCrunch that while these transaction volumes seem impressive, pawaPay would have done more without 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 look at space, on the license sheets, what type of companies they wish to authorize, what type of requirements they are looking for, how we can work altogether closely with them to make sure they are comfortable with us, ”he said.
However, CEO says if regulation slows down processes it is important for pawaPay because many unregulated companies operate without licenses and unstable technologies, some with the intention of committing fraud.
“We decided we wanted to be fully regulated. We want to be completely covered in all markets, with a full license and to be a reliable and very stable premium product in those markets, ”he added..
There are various payment gateways that facilitate payments for businesses in Africa, such as Flutterwave, DPO Group, Yoco, MFS Africa and Paystack. Corn in terms of pure mobile money game, MFS Africa is clearly a competitor of pawaPay. The two platforms are largely focused on solving the unique challenges that come with mobile money, while others drive innovation around bank and card payments.
MFS Africa connects over 300 million mobile money wallets enabling a range of banks, telecom operators, money transfer operators and other financial institutions to interoperate at scale in Africa through a single point of integration.
PawaPay is not far away. Barnwell says the company is connecting to almost the same number of wallets and hopes to launch 30 to 40 telecom integrations soon.
While East Africa (supported by M-Pesa from Kenya) has largely been the critical mobile money market, West Africa is catching up good. Last year, West Africa registered 198 million mobile money accounts compared to 293 million for East Africa.
The West African region has also experienced the fastest growing in terms of transaction value by 46%, to over $ 178 billion, and countries like Ghana, Senegal and Cote d’Ivoire lead, which represents a vast opportunity for these payment gateway providers, unlike to the card payments market where two countries are predominant.
“Although the main focus is on card payments, the big payment giant in Africa really is mobile money, ”said the CEO.
PawaPay’s focus on mobile money was one of the main reasons Kresten Buch, founder of 88 mph and chairman of pawaPay, led the round. He said when 88mph actively Invested in Africa ten years ago, “one of the main factors was that mobile money was a superior payment method than credit and debit cards when used for online payment.. ”
For Zagadat Capital, here’s what founder Oluwatosin Ajibade (also known as Mr. Eazi, singer-songwriter and popular entrepreneur on the African music scene), who also sits on the board of pawaPay, had to say about the investment:
Be investors extremely focused on Africa and very familiar with the landscape, we believe that mobile money fintech is not only one of the most exciting places to invest but also one of the most important bridges to ensure the financial inclusion of billions of people across the continent. The kicker for us was that we believe in the clear mission, vision and strategy and we are confident that the pawaPay team is the best team to achieve this.