Based on a 2019 report by Deloitte, about 80% of South Africans have a checking account however solely 24% of them make greater than three transactions month-to-month.
In contrast to different African nations, South Africa additionally has a functioning credit score system with the prevalent use of bank cards. Nevertheless, costly value-added companies like bank cards don’t essentially handle the wants of underbanked folks.
Digital funds gateways, however, have a singular use case, notably after they might help folks use their primary financial institution accounts to make funds. Ozow is one such participant. Coming off a yr of exponential progress, it has raised a $48 million Collection B to offer extra various fee options to its thousands and thousands of retailers and shoppers.
Chinese language web large Tencent led the spherical, with different buyers Endeavor Catalyst and Endeavor Harvest Fund collaborating.
Founder and CEO Thomas Pays began Ozow in 2014 to drive monetary inclusion by way of open banking. The corporate permits shoppers to entry their web banking platform after they make transactions on-line.
On a name with FiratNews, Pays stated that earlier than Ozow, guide EFT processes have been the favored choices to hold out transactions on-line. On the time, most fintechs and banks didn’t acknowledge the necessity for utilizing financial institution funds to facilitate on-line transactions.
Pays launched Ozow to automate the guide EFT course of shoppers used to pay throughout e-commerce, point-of-sale, e-billing or P2P strategies. Based on Pays, he wished Ozow to “make it seamless for shoppers to pay in three clicks.”
“If you checked out e-commerce, level of sale, e-billing or P2P fee seven years in the past, it was all the time a fragmented market. For instance, if I desire a level of sale machine, I have to go to an organization like Yoco. If I wish to settle for funds through card on my e-commerce website, I have to go to a PayU,” the CEO said in an interview with FiratNews.
“What we wished to deal with was a central platform that might mainly present options to e-commerce, level of sale, e-billing and peer to look fee.”
The platform, which caters to greater than 47 million checking account holders, sometimes works this fashion. First, shoppers choose Ozow as a fee possibility when purchasing on-line or in-store.
Subsequent, they select their financial institution (from all ten main South African banks), log in with their on-line banking particulars, and Ozow automates the fee course of.
All retailers have to have is a checking account and a “smart-enabled machine” to obtain funds. Ozow’s shoppers embody main enterprise corporations, similar to MTN, Vodacom, Shoprite Group, Takealot and Uber.
Ozow is free for particular person customers. Retailers may use the funds gateway totally free within the first 12 months, or as much as $65,000 in processing worth monthly.
The corporate additionally works with distributors and fee service suppliers and resellers of its product. They get charged a proportion price that varies between 1.5-2.5% for each profitable transaction made through Ozow.
EFTs represented about 4% of the quantity of gross sales in e-commerce shops in South Africa earlier than Ozow got here into the image. Now that quantity has grown to a median of about 30%, and EFTs have change into South Africa’s second hottest fee possibility (after playing cards) for e-commerce.
Pays says Ozow is creating automated bank-to-bank fee options for over 47 million checking account holders and greater than 100 industries in South Africa.
For the reason that firm’s Collection A increase of $2.5 million in 2019, Ozow has seen a 100% year-on-year progress of its enterprise. It processes over $100 million in transaction quantity monthly throughout 1000’s of retailers.
“We’re additionally seeing a progress in new customers, which is in extra of 140,000 monthly. That’s fairly an unbelievable progress and adoption,” he stated.
“And that is definitely because of the shopper and service provider schooling that we needed to undergo over the previous seven years because it was fairly an revolutionary answer that nobody was actually conversant in earlier than.”
From 2016 to 2017, Ozow raised a mixed $1.2 million in angel and seed rounds, and up till now, its complete increase stood at $3.7 million from backers similar to Kalon Ventures. Nevertheless, this Collection B spherical has elevated that quantity to $51.7 million.
Pays is especially excited in regards to the firm’s new buyers that made this occur. As lead investor, Tencent dedicated nearly half of the whole raised, about $20 million, Pays tells me.
“It’s an honour to deliver on board Tencent, Endeavor Catalyst and Endeavor Harvest Fund. This can be a validation of our function in remodeling the banking trade by way of the event of revolutionary, handy and extra inclusive fee options for everybody,” he stated in an announcement.
On a facet notice, Reid Hoffman was additionally concerned within the spherical as he chaired the Endeavor Catalyst’s funding committee approval.
Utilizing the brand new funds, Ozow hopes to drive fintech regulation to make sure that extra folks entry fee companies.
“We’re working intently with the regulators to drive open banking, and that features our collaboration with authorities and trade companions to rollout RPP,” the corporate stated in an announcement.
Although 8 out of 10 South Africans personal a checking account, over 70% of all retail fee volumes and 89% of the nation’s transactions in its casual financial system are nonetheless cash-based.
Ozow’s plan with the RPP (Fast Fee Programme) is to create an instantaneous fee ecosystem that will give folks the flexibility to make real-time funds utilizing easy identifiers, similar to cell numbers or electronic mail addresses.
The CEO talked about that Ozow additionally plans to broaden its staff from 100 to 250, together with hiring staff in its new European workplace.
A portion of the funds may even be directed at mergers and acquisitions and pan-African growth to 4 nations within the subsequent six months: Namibia, Ghana, Nigeria and Kenya.
FiratNews reported on this piece that African enterprise capital raised through the first half of 2021 was about twice the funds raised in H2 2020. Having raised greater than $3 billion already, the continent is ready to trounce historic data of enterprise capital raised this yr.