An uplifting recent story of African entrepreneurial success comes from South Africa where Lipa Payments, a local fintech start-up, has secured a R10 million (just under US$660,000) investment from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank.
Developed in 2019, the company was one of the finalists in Capitec Bank’s Life 2.0 Hackathon in 2020.
Lipa Payments says it is bringing the ‘Tap to Pay’ experience to Africa’s informal sectors with a software solution that enables merchants to accept contactless payments directly from a mobile phone.
The Tech Financials news service explains that the company partners with banks and fintechs to enable affordable, accessible and fast payments for merchants, even if they don’t have point-of-sale (POS) devices.
With this approach South Africa’s many small-scale merchants don’t even need an NFC-capable phone. A low-end smartphone is enough for them to accept either phone-to-phone payments (using Bluetooth technology) or a bank card payment directly on their smartphones (if they do have NFC).
It’s clearly a good way of supporting small businesses that would like to take digital payments but can’t afford to buy POS devices.
However, it also fits in with the ongoing move away from cash since the start of the Covid-19 pandemic, accelerated, at least partly, by the fact that digital payment is safer and more hygienic than dealing in cash.
The two men behind Lipa Payment plan to roll out their software-as-a-service (SaaS) solution across South Africa and Nigeria in 2022.