Ameya Upadhyay
Principal, Investments

Why We Invested: Flutterwave

January 19, 2017

Digital payments are one of the most exciting economic success stories in Africa. Over the last decade, more than 100 million Africans have opened accounts, mostly through mobile money services. However, the ability of merchants to accept digital payments has not kept pace with consumers’ ability to pay digitally. This severely limits the ways in which consumers can use their digital accounts. By volume, 66 percent of mobile money transactions globally are still used for airtime top-up. By value, 72 percent of transactions are person-to-person transfers. Merchant payment makes up less than 4 percent by both measures.

In Africa, merchants and the financial institutions which serve them are hamstrung because the digital payment ecosystem is heavily fragmented. Compared to the widespread card acceptance in developed markets, less than 1 percent of the $380 billion in non-cash payments in Africa are made through cards. In fact, Africa is a maze of more than 276 mobile wallets, more than 500 banks, and 12 card networks in 54 countries.

This forces merchants to integrate with multiple payment service providers (PSPs) and banks to accept payments across the board, which is too expensive for all but the largest businesses. Even then, transactions can take days to clear, and merchants incur fees accepting payments or when withdrawing or transferring money. This encourages them to default to cash.

Because merchants’ acceptance of payment methods is limited and fragmented, so is the utility of consumers’ digital accounts. Often, when paying for taxi rides, clothes, groceries, travel tickets, and other goods or services, consumers are unable to use the stored value in their mobile wallets. This slows adoption and the potential for expanding financial inclusion.

That’s why we invested in Flutterwave and their innovative payment processing technology. Flutterwave provides APIs that make it easier for merchants to pay and get paid digitally. Merchants integrate a single and secure API they receive from Flutterwave’s network of financial institution partners into their consumer-facing web or mobile application. Consumers can then pay for goods and services in their local currency using mobile wallets, credit and debit cards, and bank accounts. Flutterwave also empowers Fintech Innovators like Payme and Thrivesend building products for less tech savvy merchants and individuals looking to make payments to do so as well via its open, public APIs.

Starting with a great team of proven entrepreneurs, Flutterwave has built a strong product that’s already processed more than $200 million in less than 8 months of operations.

Flutterwave fills a critical gap in the digital payments ecosystem in Africa. If successful, the company has the potential to significantly accelerate the growth of digital finance in Africa by, simply put, making it more useful to the everyday consumer.

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Discussion
Marsha Wulff Director at Loftyinc Capital Management

Within the week, Flutterwave is expected to reach the $1Bil mark for Total Processed Volume. This success is shaping the destiny of Africa, but it is people who are doing this. Iyin's devotion to his vision is doing this, and LoftyInc principals have shared and supported his vision from its inception. Let's join the village that is backing Afropreneurs like Iyin and support more Impact Investments like Flutterwave, which are from and for Africa!

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