Nigerian consumer fintech startup, CredPal, has announced its raise of $1.5 million in a recent funding round.
The investors that took part in this round include US seed-stage accelerator, Y Combinator; Lagos-based fintech investment holding company, GreenHouse Capital; Tangerine Life, a digital insurance company; and other VC firms.
Founded by Fehintolu Olaogun and Olorunfemi Jegede in 2018, CredPal started with of providing point-of-sale consumer credit to lower-to-middle class income earners in Nigeria.
That same year, the startup was able to gain recognition at Visa Everywhere Initiative for Sub-Saharan Africa. It won $25k and the Merchant Payments Challenge for allowing individuals and businesses to pay for purchases in instalments across online and offline merchants.
March 2019 saw CredPal get accepted into the Y Combinator Winter batch alongside other African startups like Wallets Africa, Schoolable, and 54gene. They received $150k in the process.
In June this year, CredPal was also selected for the fifth edition of Google for Startups Accelerator Africa. A three-month-long programme, CredPal alongside 19 other businesses were said to have access to mentorship, funding, and PR support, among other incentives during that period.
Innovating beyond point-of-sale payments and expansion plans
With this new investment round, Olaogun says CredPal has the firepower it needs to accomplish its mission. In Nigeria, using credit cards is not widely popular and with what CredPal has done so far, there's enough market to be tapped.
That said, CredPal is looking to drive adoption and usability of credit cards in the country.
Like the West African country, the majority of other African countries are cash-driven economies. And since customers in these countries find it hard pay outright for products due to low purchasing power, and also access credit for purchases, this leads to low sales for merchants on the continent.
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It is for this reason CredPal wants to the financial backbone for consumer credit on the continent. Here's what Olaogun said in relation to that.
“We’re building the American Express of Africa. And our goal is to make credit cards mainstream across Africa as is obtainable in the United States and other advanced economies. With this funding, the growing market demand for consumer credit, and our recent product launch to solve these needs, we know that we’re on the right track.”
The product launch the CEO is referring to is the company's credit cards.
While CredPal has been providing consumer credit infrastructure that allows banks and other financial institutions to deliver consumer credit in real-time across POS channels, their customers didn't have access to actual credit cards.
It made use of ATM cards which served as credit cards for users at POS channels. But with plans to expand outside Nigeria, CredPal is trying to launch and take its credit cards as mainstream as quickly as possible.
According to Jegede, the company needed to be proactive in responding to customers' requests for services where they can access credit rather than process payments at point-of-sale.
“With our current raise and the launch of our credit cards, we’re confident about meeting these customers’ needs,” he says.
For Olaogun, the work begins with providing useful information and educating the average Nigerian youth about credit cards and why they are important.
"We are obsessed with the desire to see that working professionals no longer have a thing to worry about as it concerns dealing with their financial needs, a world in which every working person is rewarded with a CredPal card that has their back.”
