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Issue 181
Sep 25 - Oct 01, 2023

Hi there,

This week, we publicly announced Virtual Terminal, which helps businesses accept fast, in-person payments at scale, and with ZERO hardware costs.

With Virtual Terminal, you can assign unique bank accounts to each of your sales agents. When a customer pays via bank transfer or other channels, your agent gets an instant WhatsApp confirmation, and the customer can be on their way.

Beyond bank transfers, customers can scan a QR code and access multiple payment channels, including Cards, USSD, and Apple Pay, which is popular with international customers.

Find out more about Virtual Terminal here.

You’re also invited to join our Live Q&A session to learn how different kinds of businesses use Virtual Terminal, learn how to set up Virtual Terminal for your business, and get your questions answered in real-time.

This newsletter was written to Lady Donli’s Pan African Rockstar and Juls’ Palmwine Diaries.

Tochukwu Ironsi
Market Intelligence Specialist
Introducing Paystack Virtual Terminal

Accept blazing fast in-person payments at scale, with ZERO hardware costs

Learn more on the Paystack blog

South AfricaSanlam restructures digital products under Sanlam Fintech. South Africa’s Sanlam, one of Africa’s biggest non-banking financial firms, is clustering its suite of digital products under Sanlam Fintech, a new subsidiary. IT News Africa
South AfricaMTN South Africa launches new payments solutions. MTN South Africa has announced new remittance and merchant payment solutions for South African MoMo users. Using the MoMo app, users can send and receive money internationally for a 4% fee. Business owners will also have access to a point-of-sale device for customer payments and airtime purchases. Reuters

As we noted in Issue 179, remittance/cross-border payments are becoming a useful wedge to acquire and engage African users. Many Africans subsist on remittances from family and friends. Increased migration (partly driven by economic challenges) will see even more Africans sending money home to those who choose to remain.

MTN’s strategy to focus on remittances and merchant payments, especially for informal mom-and-pop stores also known as Spaza shops, might help turn the tide for their mobile money business in South Africa. Mobile money has generally struggled in South Africa, which has a mature banking ecosystem and a relatively high banked population. Players like MTN and M-PESA have either exited the market or had to restart multiple times to get any adoption.

That said, many South Africans, especially in peri-urban townships still prefer cash payments. Spaza shops account for about 40% of economic activity in these regions but only 1% of these businesses accept digital payments.

MTN is betting that there is a lot of economic value to be unlocked from targeting these financially underserved segments. It'll be interesting see how this bet pays off in coming years. 
GlobalA real use case for stablecoins. Simon Taylor writes in the Fintech BrainFood newsletter about how stablecoins can be used for cheaper, faster, programmable cross-border payments. Fintech 🧠 Food

As mentioned in the essay, African fintechs are already working on crypto-enabled remittances for individuals and businesses. This exploration is not just being done by crypto-native startups but also “traditional fintechs” like MFS Africa and Flutterwave. There was an existing market for better cross-border solutions but demand for instruments like stablecoins has increased due to the FX challenges facing many African countries.

If these fintechs can scale the risk and regulatory hurdles, we expect to see even more adoption in the coming years.

Another idea mentioned in the essay is the programmability of money. Bank transfers in Nigeria are applying this concept in interesting ways. As we previously wrote, NIBSS Instant Payments (NIP) has made real-time payments available and accessible. Fintechs like Paystack are now using these rails via APIs to make bank transfers programmable.

Today, Paystack merchants can use Virtual Accounts - temporary account numbers for receiving and routing payments - as tokens that can represent almost real-world objects and systems. A bank account can represent a buyer at checkout, a sales rep (Virtual Terminal), a consumer wallet, a supplier invoice, an insurance policy, a prepaid electricity meter and much more.

Bank transfers to these virtual accounts can be initiated and confirmed in real-time using code and can even trigger a real-world action - send an SMS, load electricity tokens, or update a customer’s balance - without the intervention of a human being.

Stablecoin payments today are borderless and these Nigerian bank transfer innovations are still locally bounded by geography. But it is a signal that there are still improvements we can make with the fiat systems we’ve already built. 
GlobalThe history of the ATM. Ernie Smith, Editor at Tedium, chronicles the development of the Automated Teller Machine, from the initial deposit-only designs to the bad weather event that sparked a spike in demand. Tedium

One point that Ernie makes is the decline of ATM deployments and usage globally. In African countries where cash usage has remained relatively high, cash withdrawals have simply shifted from ATMs to human agents. We noted this in our analysis of GTCO’s half-year report in Issue 179.

Then we wrote: Another key channel for GTB is cards, which are issued to customers and interfaced through ATMs, POS devices, and web portals. Four hundred million POS/web transactions worth ₦3.9 trillion were processed through GTB-issued Naira cards in H1 2023, a 70% increase in volume and a 63% increase in value from the same period last year. ATM activity from Naira debit cards, however, decreased significantly by more than 50% from H1 2022.
GlobalThe second wave of fintechs. Boston Consulting Group (BCG) takes a look at global fintech trends, revenue projections, and growth opportunities in this new report. BCG

Key takeaway: African fintech revenue is expected to reach $65 billion by 2030.
AfricaRegulatory Sandboxes in Africa. The Kigali International Finance Center (KIFC) dives deep into the state of regulatory sandboxes in Africa and how they can unlock growth for digital payments in Africa. KIFC

We did a breakdown of regulatory sandboxes and how fintechs can leverage them in this article
NigeriaRisevest acquires Chaka. Risevest, a Nigerian investment fintech, has acquired Chaka, a digital stock trading platform, for an undisclosed sum. Both companies will continue to operate independently but will collaborate on product development in the future. Nairametrics
AfricaUntapped Global raises $3 million in seed funding. Untapped Global, an asset financing fintech, has raised $3 million in seed funding. The round was led by E3 capital and will be used to drive product development. WeeTracker
South AfricaRevio completes a $5.2 million seed round. Revio, a South African payment orchestration company, has completed a $5.2 million seed funding round. The round was led by QED with participation from Partech Africa. Techcrunch
South AfricaRoot raises $1.5 million seed round. South Africa’s Root, an API-enabled insurtech startup, has raised $1.5 million in seed funding. The investment came from Invenfin and will be used to power Root’s European expansion. Disrupt Africa
ZambiaLupiya raises $8.25 million in Series A funding. The funding round into the Zambian neobank was led by Alitheia IDF Fund, with substantial participation from INOKS Capital SA and the German Investment Bank KfW DEG. Lupiya will use the new funding to increase market penetration and drive product development. WeeTracker
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