Last Friday, many African fintech startups offering virtual dollar card services sent emails to their customers stating that their virtual card service will be unavailable indefinitely starting Saturday, July 16, 2022.
Virtual cards are digital replicas of physical bank cards. They are created and stored within digital virtual wallets.
An email sent to Barter customers by Nigerian-born unicorn Flutterwave read, “…effective Sunday, 17th July 2022, all our Virtual Dollar cards will be unavailable for any transactions and purchases.”
The payments giant attributed the reason for this suspension to “an update from the company’s card partner”. Barter is a Flutterwave consumer-facing virtual card platform that launched in early 2017.
This announcement by Flutterwave is bound to affect many other startups who use the company’s white-labeled virtual card service to issue virtual cards to their customers.
Other fintech startups including crypto exchange Busha, Rwanda-headquartered Payday, and Ugandan Eversend also issued similar notices.
It’s not clear which “card partner” Flutterwave and the other fintech startups are referring to, but these platforms have issued virtual cards powered by MasterCard and Visa—two leading global card issuers. TechCabal is yet to confirm what exactly happened that led the “card partner” to take this decision.
Individuals and businesses in Nigeria’s tech ecosystem affected by the unexpected notifications went on social media to complain about the widespread suspension of virtual card services.
“It affects us in a big way because all our Facebook ads are connected to our Barter virtual card,” Douglas Kenydson CEO Selar said. “Our Amazon web services (AWS) plan is also connected, and you can’t even afford to miss one payment, or else they’ll take you off.”
When asked about his other options, Kendyson expressed uncertainty about switching to existing virtual cards by Nigerian banks. He complained about the hassle of changing dollars and potentially dealing with failed card payments.
Kendyson’s best alternative is to turn to the virtual card services of Mercury, a San Francisco-based digital bank for startups, that had restricted tens of African startups’ accounts in March.
“It’s good that this happened in the middle of the month so that whatever payment you need to make, make it,” Kendyson said.
In the midst of the widespread announcement, startups like Bitmama and Mono took the opportunity to announce that their virtual card services are still up, a reminder that not all fintech startups were affected.