Kenyan fintech startup, Wapi Pay, recently raised $2.2 million in a pre-seed round of funding, the largest of its kind on the continent.
The African startup specialises in cross-border payments between Africa and Asia using bank accounts and mobile money platforms. Wapi Pay was founded in 2019 by brothers Paul and Eddie Ndichu, after the pair noticed how fragmented the payment infrastructure was when sending money to and from Asia.
In the two years since its founding, the duo has set up headquarters in China and Singapore and established partnerships with banks in much of South East Asia, China, Japan and India, reporting growth of 396% year-on-year.
According to a report released by the World Bank, Sub-Saharan Africa is the most expensive place in the world to send money to and from. In the first quarter of 2020, it cost an estimated 8.9% (per $200 standard transfer) for people to send money to the region, far higher than the global average that stands closer to 6.8%.
Asia, in particular South Asia, has some of the lowest remittance rates in the world, at nearly 4.95%. That, and the undervalued and often overlooked cross-border payment corridor that exists between Africa and Asia, inspired the siblings to take action, according to TechCrunch.
China-Africa trade has seen immense growth in 2021. In the first quarter, transactions between the two jumped 27% to $52.1 billion year-on-year. However, merchants in Africa still found it too expensive and time consuming to use traditional payment means. Wapi Pay says they keep charges at a low 3% and process payments within 24 hours.
Eddie Ndichu said that Wapi Pay bypassed traditional payment networks and focussed on efficiency and customer experience, offering clients more choice and flexibility in terms of payment options. One can opt for bank-to-bank, bank-to-wallet, wallet-to-wallet and wallet-to-bank options, all of which clear in under a day.
The $2.2 million pre-seed investment came from numerous top-tier investors, including Chinese firm, MSA Capital, which has invested in several prominent unicorns like Meituan, Nubank and Klara, as well as a number of African startups like EchoVC and Kepple Africa.
Tim Chen, vice president of MSA Capital, said that his firm believes Wapi Pay was best equipped to build and grow the infrastructure to support surging trade volumes.
The majority of the funds would go to diversifying Wapi Pay’s product range, engaging regulators on the continent, and towards increasing the swift and convenient transfer of money between the two continents, said Eddie Ndichu.