Fintech providers are reshaping the remittance market in Africa
Cross-border payments always play an important role in financial inclusion and growth in any globalized economy. The situation is no different in Africa. As mobile penetration continues its pace in Africa, there has been a substantial rise in the movement of funds through several digital platforms over the last five years.
Several fintech platforms are adopting strategies to improve the cross-border payments space leveraging new technologies necessary to unlock this massive untapped potential of the space. For instance,
- In July 2022, Zazuu, a cross-border and remittance platform based out of the United Kingdom, raised US$2 million in a funding round. This platform is basically an aggregator with around 17 service providers (money transfer companies serving multiple corridors) listed under it, catering to a large set of African customers. Zazuu was initially launched as a chatbot in 2020 and used to help users with daily remittance rates of various platforms through Facebook and Telegram groups. However, the fintech firm turned into a full-blown aggregator platform as the firm realized that Africans have pathological behavior, i.e., they love to shop, make comparisons and try different options. Interestingly, Zazuu allows customers to use its “Search and Compare” service and helps in finding providers that can transfer money from Canada, the United States and seven other European countries, including the United Kingdom, to Africa.
The main proposition of the fintech firm is to provide the customers a transparent view of the rates, all in one place, including rates, speed and also reviews, which helps the firm in customer acquisition. However, the firm is working on the onboarding process, making it more seamless and smooth for the customers. On the other hand, Zazuu also provides an opportunity for the companies on the marketplace to promote their brand and attract more customers.
Notably, the raised fund will be used by Zazuu to expand its in-app transaction feature, Pay with Zazuu and also to hire more employees to scale up the business. Since this Pay with Zazuu feature is only available to senders in the United Kingdom and receivers in Nigeria and Ghana, the firm will expand its offerings to more sender and receiver countries on its platform. Zazuu, which saw more than 2x growth in its business as compared to 2021, is expected to see significant growth with its cross-border mobility of money across the African continent.
- In July 2022, an African remittance start-up, Sendsprint, announced to launch money transfer and gifting services in the United Kingdom to three destination countries for senders, including Nigeria, Kenya and South Africa. The Send Money product of the company will be providing a flat fee of US$5 for all money transfers as compared to variable prices for various products from other players. On the other hand, Sendsprint Connect, the gifting service of the company, will be available for the users to spend at about 3,000 retailers, namely, Shoprite, Game, Jumia, Filmhouse Cinema etc., in recipient countries. Apart from these two products, the firm also prioritizes real-time transaction monitoring and customer service support. Therefore, Sendsprint, which aims to solve the financial problem for the Africans by connecting them to their homes at a flat fee, is expected by PayNXT360 to see strong adoption amongst the users over the longer run.
- In July 2022, NALA, a remittance payment processing platform licensed in the United Kingdom and the United States, announced to partner with Lender Equity Bank Kenya. Under this partnership, Kenyans residing in the United Kingdom and the United States will be able to send money directly from their banks, with the help of the NALA app, and also to the Equity Bank Kenya accounts and other mobile wallets. In turn, NALA will also be able to serve its users in the United States and the United Kingdom for savings and investment in Kenya through financial infrastructure. Therefore, PayNXT360 expects this partnership will not improve cross-border payments in Africa but also enable these platforms to witness growth over the long run.
With digitalization, more African consumers are turning to digital payment solutions, and as a result, there has been an acceleration in demand for online money transfers across the continent. These technologies, such as digital wallets and payment gateways, are being capitalized on by the fintech providers to simplify the complex cross-border payment process. At present, dropping the cost of remittances is the biggest opportunity in the African market. Therefore, fintech platforms are investing in avenues to provide solutions that are seamless, interoperable and easy to use, at the same time solving the cost challenges of the remittance space, making the biggest impact on African customers.
To know more and gain a deeper understanding of the remittance market in Kenya, click here.