Union54, a card-issuing startup based in Zambia, has raised $12 million in a seed extension round to further its goal of offering an alternative to major card companies.
As Technext reported Monday (April 18), the round was led by Tiger Global, Vibe VC and new investors Earl Grey Capital and Not Boring Capital, and follows Union54’s earlier seed round of $3 million, which was also led by Tiger Global.
Founded last year by Perseus Mlambo and Alessandra Martini, Union 54 offers card issuing services in partnership with licensed card issuers in their respective countries. The company’s application programming interface (API) lets software companies from Africa issue and manage their debit cards without needing a bank or a third-party processor, allowing for easier cross-border payments.
Per the report, Union54 said it wants to offer a homegrown alternative to global card issuers Mastercard and Visa, who dominate Africa while imposing higher fees for merchants.
Mlambo, who is also the company’s CEO, told Technext that Visa and Mastercard’s recent decision to withdraw business from Russia has shown how politics can influence payments. He added that current card networks aren’t suitable for African merchants because settlement can take several days for a local debit card, and in some cases, more than a week for an international debit card.
“There’s a significant opportunity as the world realigns itself; we need to get to a point where we’ve got a payments route that needs to be developed locally for local use,” Mlambo said.
Africa’s payments sector is poised to remain a major area of interest for FinTech funding, Abhimanyu Toor, managing director at London-based FinTech advisory firm Royal Park Partners, said in an interview with PYMNTS last month.
With firms like Opay, Wave, Chipper Cash and Flutterwave valued at north of $3 billion today, opportunities to tap into the region’s FinTech growth seem infinite.
“It’s no longer ‘the next big thing’ but [rather it] will continue to be the big thing in the near future,” Toor said.
Behind-the-scenes actors operating the infrastructure that lies behind consumer-facing FinTech offerings are also going to see increasing interest as the consumer-facing part of the market becomes more and more competitive, Toor said.