Africa is still cash-based. There is a great opportunity to build new solutions that will take Africa’s payment space to new frontiers. International companies are now flying into the continent to capitalize on the continent’s growing digital economy.
In June 2022, Endeavor reported that Africa’s digital economy is estimated to be worth US$115 billion due to COVID-19 coupled with a young population and steadily rising rates of digital penetration.
- Ebanx, a Brazilian fintech startup, announced its expansion into Africa. By putting more of an emphasis on its digital payments side of the business, it expects to emulate its rapid growth in Latin America.
- The 10-year-old unicorn operates in 15 Latin American nations and has processed over US$1 billion in payments.
- One of the possible reasons behind this move could be that Africa is showing great signs of rapid digital transformation.
An international fintech startup called EBANX has declared aspirations to extend operations and its payment gateway solution to Africa. EBANX is launching in Africa with Kenya, Nigeria, and South Africa as its initial stops for its upcoming voyage outside of Latin America. The 10-year-old unicorn, which operates in 15 Latin American nations and has processed over US$1 billion in payments, wants to concentrate initially on mobile money in Africa.
It carved a niche by helping global companies like Spotify, and Uber receive payments from customers living in Latin America. Last October, it filed documents for an initial public offering in the US, though the process has slowed down due to the ongoing economic downturn.
Much like it did in South America, EBANX wants to centre its strategy on collaborations and partnerships with global merchants. The company processes payments for Uber, Airbnb, and over 1,000 digital companies throughout Latin America.
In a statement, the CEO and co-founder, João Del Valle, explained that although Africa’s digital economy is still nascent, its exciting potential motivated his company’s decision. “Africa’s fast-growing digital economy is only in its early days, and it’s projected to grow up and to the right for the next few decades. Together with local players, EBANX will be a catalyst to realize the many benefits of a digital economy even faster.”
“Expanding our solutions to African countries speaks directly to EBANX’s mission of creating access, and having Pipefy as a merchant makes this moment even more special to us, expanding solutions and services throughout regions full of opportunities,” Paula Bellizia, the President of Global Payments at EBANX, said in a statement.
“After studying the region and building a deep understanding of its local players, entities, and challenges, we are diving into Africa to provide local payments solutions that will help build the digital economy at a rapid pace, drive broader financial inclusion for its population, and provide greater access to a variety of goods and services from global merchants interested in building their market share there,” Bellizia added.
It may seem strange that EBANX focused on Africa instead of turning to Europe and North America for this launch. According to the Tech Republic, one of the possible reasons behind this move could be that Africa is showing great signs of rapid digital transformation.
“Africa is now bursting with growth potential,” explained Del Valle. “Digital adoption and consumption of online goods and services have accelerated rapidly within its countries, and investment capital has been pouring into the region.
“Africa’s fast-growing digital economy is only in its early days, and it’s projected to grow up and to the right for the next few decades. Together with local players, EBANX will be a catalyst to realize the many benefits of a digital economy even faster.”
EBANX further reveals that cloud adoption is rapidly penetrating developing countries, even faster than initially imagined.
According to Quartz Africa, beyond a flattering “next frontier” rhetoric, Africa appeals to EBANX because developing economies share similar challenges with brick-and-mortar financial systems designed for a past age. Indeed, some south American startups have become an inspiration for African startups in similar industries.
At least in its first year, EBANX will likely operate not as a disruptor of African fintech but as a student and potential partner of strong local players.
According to Tech Cabal, EBANX already started operations in Kenya, South Africa, and Nigeria in late August and chose these three countries because, together with Egypt, they account for 32 per cent of the continent’s population, 51 per cent of its GDP, and 73 per cent of the startup accelerators active in Africa today. Pipefy, a low-code platform for workflow management founded in 2015 in Latin America and operating in over 200 countries worldwide, is present in the Africa region with EBANX as its payments partner.
In Kenya, it will offer a mobile banking service that lets users store and transfer money and pay for online shopping through their mobile phones, much like M-Pesa.
In Nigeria, it will offer USSD and bank transfer services. The former will be a session-based protocol that travels over the GSM signalling channel to query information, trigger services, and enable customers to pay for their e-commerce shopping. The latter will enable customers to pay for online purchases quickly and easily without needing a credit or debit card.
Meanwhile, in a quest to address challenges facing companies in offering flexible payment options, EBANX launched a new high-value-ticket automated payments solution.
For companies seeking to sell cloud, enterprise resource planning (ERP), IT services, or SaaS subscriptions, processing high-value B2B (business to business) transactions that offer flexible payment options has been challenging. There are also challenges with how companies in these lines of service can perform high-volume transactions quickly and affordably through an automated checkout process.
The announcement was made at EBANX’s annual Latin America Summit in Mexico. The company announced that the automated payment process targets more companies seeking to sell cloud, ERP, and SaaS subscriptions across Latin America and other parts of the world.
From the announcement made by EBANX’s CEO and co-founder, João Del Valle, during the launch, this new solution is expected to automate checkout purchases from US$10,000 and above and handle large volumes of tickets in one swoop. In addition, the solution is also geared toward ensuring that the rapidly growing SaaS market in South America is provided with a payment processing solution that will streamline payments between SaaS companies in Latin America and other locations across the globe.