South Africa-based application programming interface (API) fintech firm Stitch today outlined its expansion into Nigeria.
It also announced a $2 million (R30 million) seed extension with participation from global fintech entrepreneurs – bringing its total seed funding to $6 million (R90 million).
The company says this comes eight months after the team emerged from stealth and announced an initial $4 million (R60 million) seed round.
In February, Stich said its seed round had an investor line-up that included the founders of Venmo, Klarna and Flutterwave, and the founding team from Plaid and Revolut.
Stitch will initially offer a seamless, tokenised pay-by-bank product to help businesses and fintech firms in Nigeria improve user experience, eliminate fraud and reduce fees associated with other payment methods.
According to the firm, the need for fintech infrastructure that can address the challenges businesses face when it comes to scaling across a fragmented continent has been increasingly taking the spotlight in Africa’s start-up space.
However, it points out that unlike other African open banking players that leverage screen-scraping methods, Stitch uses multiple methodologies, such as its own portal emulation technology, to ensure better stability, consistent uptime and a smoother user experience.
“Our goal is to become the go-to partner for any businesses building financial products in Africa. Access to the infrastructure Stitch is building can better enable these businesses to develop increasingly innovative solutions,” says Stitch co-founder and CEO Kiaan Pillay.
“They can now move money and access critical customer account data, while saving on costs, in hours rather than months. We’re super-excited to be launching in Nigeria today, with support from some of the most incredible fintech founders and operators globally. Nigeria is one of the most active markets on the continent, if not the world, for fintech. The opportunity we see here is endless.”
After speaking with over 50 Nigerian fintech companies, the Stitch team saw an overwhelming need for a more seamless and affordable payments solution, says the start-up company.
It adds that Nigeria-born innovators like Paystack and Flutterwave have pioneered online payments acceptance, but there is a significant opportunity to optimise the experience for businesses and users.
Card, the method-of-choice for online payments providers in Nigeria today, has a much higher cost to convert, particularly for businesses that rely on large customer deposits, the company notes.
“While the option to pay via bank transfer exists in Nigeria today, customers paying via their mobile or internet banking app must re-navigate to their bank platform to complete a transaction, resulting in a diminished user experience and significant drop-off,” says the firm.
“With Stitch, users can initiate once-off, recurring and user-not-present bank transfers without leaving the fintech product’s existing flow, and without the overhead and high costs of a standing or debit order.”
It believes the seed extension will enable Stitch to fast-track development, launch its solution and continue to grow the team on the ground in Nigeria, as it prepares to expand further across the continent.
Participating investors include global fintech entrepreneurs Tom Blomfield, co-founder of Monzo; Matt Robinson, co-founder of GoCardless; Emilie Choi, president and COO of Coinbase; and Charlie Delingpole, founder of ComplyAdvantage.
“Stitch is playing a critical role in building the infrastructure that can enable exponential growth for companies looking to scale digital finance solutions in Africa,” says Tom Blomfield, co-founder of Monzo and GoCardless and an investor participating in Stitch’s seed extension.
“I see a lot of potential in African markets, where the wave of digital finance innovation is really beginning to gain momentum, and the Stitch team is getting in at precisely the right time. The team is one of the best I’ve seen globally, and I’m excited to see them continue to grow in Nigeria and beyond.”
Stitch launched officially in South Africa in February, with a data product that enables developers to connect their apps to users’ financial accounts, at which point users can share their transaction history and balances, confirm their identities and initiate payments.
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