South African fintech start-up Lipa Payments has secured a R10 million investment, which it says it will use to drive digital payments across Africa’s informal sectors.
Lipa secured the investment from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank.
“A key part of our digital strategy is to partner with fintech companies to accelerate the delivery of our offer and to create unique opportunities through partnerships,” says Francois Dempers, manager of innovation at digital strategy, Capitec Bank.
“Lipa Payments was selected as one such investment through our Imvelo Venture capital fund. They are a young, dynamic and agile team of tech entrepreneurs who have an intuitive grasp of the unique operating environments in Africa and how to apply technology to enable people to live better.”
Developed in 2019 by tech entrepreneurs Thando Hlongwane and Roger Bukuru, Lipa’s contactless payments software solution enables merchants to accept contactless payments directly from a mobile phone.
Lipa partners with banks and fintech firms to enable ‘tap to pay’ payments for merchants, even if they have low-end mobile phones.
According to the start-up, owning a low-end smartphone, even if it does not have near-field communication (NFC) capabilities, means merchants can accept either phone-to-phone payments (using Bluetooth technology) or a bank-card payment directly on their smartphones (using NFC technology).
“We see tech as a scalable tool to solve everyday challenges. Lipa Payments solves two. First, we give small-scale merchants low-cost technology to accept digital payments at the point of sale, and secondly, we allow buyers of goods and services to pay digitally without having to worry about cash or network coverage,” explains Hlongwane, CEO and co-founder.
Co-CEO and co-founder Bukuru adds: “Informal sector merchants have traditionally relied on customers having cash on hand to transact, but Lipa Payments is changing that. There are obvious constraints to trading with cash and it is only getting more difficult in a digital, cashless global economy.”
Lipa points out there’s limited infrastructure to support digital payments at local spaza shops, hair salons or fast-food stores, adding that most micro-merchants can’t afford to purchase point-of-sale (POS) devices. For banks and fintech firms, the distribution and maintenance of POS devices can be costly.
However, the last two years have been fertile years for fintech firms in SA, accelerated by the move to a digital economy at the start of the pandemic, it notes.
“We have always wanted to solve the problems that informal sector merchants face. It’s been a journey of finding the solution to the question: how can we bring them into a digital payments space?” Hlongwane concludes.
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