South Africa is struggling with integrating its unbanked population. Those difficulty has posed a setback for the economic improvement of the country.
According to Oxford Business School an estimated 23.5% of the population is unbanked, and R12 billion- $1.04 billion, in cash is believed to be held outside of banks. The country may seem technologically sophisticated in some areas, but a segment of the society remains economically challenged.
In South Africa, financial services range from formal methods like bank accounts and credit cards to informal processes like hire purchase agreements and “mashonisa” loan. A bank account is still the most commonly utilised financial service in South Africa. Between 2003 and 2017, the number of unbanked adults fell from 17 million to 14 million.
This is one of the challenges common across Africa. As a result, fintech startups are bringing in solutions to solve this problem. To make financial inclusion equal and reachable to everyone. Some of the startups that are playing a huge role are Paystack, Flutterwave, Yoco, Opay and Ozow which recently received a Series B funding of $48 million.
More on Fintech Startup Ozow’s Funding
Following its year of exponential growth, Ozow plans on using this recent funding to bring in more alternative payment solutions to its millions of merchants and consumers. Tencent, the Chinese internet powerhouse, led the deal, alongside Endeavor Catalyst and Endeavor Harvest Fund taking part.
Thomas Pays, the company’s founder and CEO launched Ozow in 2014 with a plan of promoting financial inclusion through open banking on the platform. When customers perform online transactions, the company will give them access to their internet banking platform.
Ozow was created by Pays to automate the manual electronic fund transfer process that customers are using to pay for goods and services via e-commerce, point-of-sale, e-billing, and peer-to-peer methods. Pays want Ozow to make the payment process seamless for users to pay in just three clicks.
“When you look at e-commerce, point of sale, e-billing or P2P payment seven years ago, it was always a fragmented market. For example, if I want a point of sale device, I need to go to a company like Yoco. If I want to accept payments via card on my e-commerce site, I need to go to a PayU”, CEO Pays said.
“What we wanted to address was a central platform that could basically provide solutions to e-commerce, point of sale, e-billing and peer to peer payment”.
Ozow has shown 100% year-over-year growth since its Series A fundraising round in June 2019. It now handles over $100 million in monthly transaction volume over a network of thousands of merchants. The company’s user base continues to expand, with more than 120,000 new users joining the platform each month.
The Series B capital round, according to Pays, will support the company’s growth objectives and geographical expansion across Africa.
“We’re also working hard to extend our product line.” This will mostly be driven by new product development, as well as a strong focus on strategic investments such as mergers and acquisitions,” he stated.