Nigerian fintech startup, Wallets Africa, has raised an undisclosed round of investment.
Founded in 2018, Wallets Africa makes it easy for users to transact across Africa with an app and a card. According to founder and CEO, John Oke, the startup wants to be Africa’s foremost borderless digital financial platform.
The idea for Wallets Africa first crossed the founder’s mind in 2016 when he was a software engineer at SureGifts, a gift voucher company. While integrating the company’s core backend with Kenya’s mobile money service, M-Pesa, he noticed one could make use of a SureGifts voucher to pay at an M-Pesa till at a mall or to get tickets at an IMAX cinema in Nairobi.
“The epiphany I had was that very soon all financial transactions would be done through digital wallets. If it could happen on the Internet with PayPal and offline in Kenya, it could happen here in Nigeria,” he says to Techpoint Africa.
Personally, Oke also noticed how difficult it was for platforms like Quickteller to handle reversals when his transfers or bill payments failed. According to him, when a transaction went wrong, he’d have to visit his bank after spending hours on the phone with the platform’s customer care representative.
“Most times, I just forget about the money and repeat the transaction. However, I figured that I could build a wallet, like PayPal to link all my cards and do all my electronic transactions here in Nigeria easily. When my transactions fail, I can buzz the provider directly without involving my bank.”
Over the next 18 months, Oke started working and consulting for banks and fintech companies like Interswitch, gaining some experience in how things work in the financial space.
“I spent the next year building relationships and integrations with cards, banks, and switch providers in Nigeria,” he adds.
In January 2018, Wallets Africa released its beta. With the platform, users could pay bills, buy airtime, and make money transfers. It also began issuing prepaid virtual dollar cards to people who wanted to make payments on platforms like Amazon or Netflix.
Oke says the startup has been able to build trust with customers over the years and that’s what has kept it going.
“We promised that when a customer’s transaction fails we will reverse instantly. What you see is what you spent; no hidden fees. And wherever you contact us online, we will respond there, no redirects.”
Y Combinator and growth
In March 2019, along with six African startups, Wallets Africa made it into Y Combinator (YC).
According to Oke, business took an interesting turn at the accelerator.
They soon discovered that the platform could be useful for startups and small businesses. African startup founders at the accelerator began using the platform for employee payroll, customer payouts, and Airbnb bookings, as well as Uber trips.
“We launched our product for businesses and so far we have signed up 1,400 businesses. They particularly use our product for bulk transfers, payroll, and expense cards.”
Additionally, Oke says these businesses can now send money to up to 1,000 people in less than five minutes. There’s also the option to create wallet accounts for employees, as well as receive money over NIBSS Instant Payments (NIP) from their customers.
Before joining Y Combinator, Wallets Africa had 17,000 users and processed about ₦900 million ($2M) monthly. Post-YC, it is currently doing more than ₦3 billion ($6.7M) monthly, a figure it did for the whole of 2018 and has surpassed this month. Also, the two-year-old startup has over 43,000 users.
“We processed ₦3.2 billion ($7.1M) last month and we have already surpassed that this month,” Oke says enthusiastically.
Backed by local and international investors
After investing $150,000 in the fintech startup in exchange for 7.5% equity, Y Combinator participated in this fresh round. Other participants include Mozilla Corporation, 9Yards Capital, Samurai Incubate, and Michael Seibel, Y Combinator CEO.
With the funding, Wallets Africa will ramp up its efforts to acquire customers. Last year, it launched its Internet banking solution for businesses and the funding will allow it to gain market share in the space.
“We are providing corporate banking for businesses. This investment, which is basically an impact investment, will be used to help small businesses scale. We are becoming the first bank account for businesses as they can sign up on our portal and get an account in three minutes.”
Wallets Africa will also be helping these businesses and developers issue wallets the way most of them issue cards these days.
In December 2019, the startup rolled out international transfers to mobile money wallets and agents in Ghana. It did this because of Nigerians travelling to the neighbouring country for the Afro Nation and Year of Return celebrations.
Since then, the startup has rolled out its services to Kenya and now operates in three African countries (Ghana, Kenya, and Nigeria). According to the CEO, the plan is to include up to ten destinations by the end of the year.
Oke adds that physical prepaid naira cards will be rolled out this week. The concept behind this is to allow customers to easily withdraw cash at ATMs and pay offline at POS terminals.
As with most Nigerian fintech startups, Wallets Africa is working towards becoming a digital bank and is bracing itself for competition.
“We are becoming a 360-degree payment instrument for businesses and consumers. We’ll continue to work with banks and organisations across the world to build digital financial channels for the next billion Internet users.”
Featured image: Founder and CEO, John Oke and his team. Source: Supplied.
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Nigerian startups raised $55.4m in Q1 2020; over 99% of which came from foreign sources. Find out more when you download the full report.