Lipa Payments secures R10 million investment

Lipa (pronounced Lee-puh) partners with banks and fintechs to enable affordable, accessible and fast payments for merchants, even if they have low-end cellphones.

Developed in 2019 by fintech entrepreneurs Thando Hlongwane and Roger Bukuru, the Lipa Payments solution has secured a R10 million investment from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank. Lipa Payments was one of the finalists of Capitec Bank’s Life 2.0 Hackathon in 2020.

Owning only a low-end smartphone, even if it lacks Near Field Communication (NFC) capabilities, allows merchants to accept either phone-to-phone payments (using Bluetooth technology) or a payment by bank card directly on their smartphone (thanks to NFC technology).

“We see technology as an evolving tool to solve everyday challenges. Lipa Payments solves two. First, we’re giving small merchants low-cost technology to accept digital payments at the point of sale and second, we’re enabling buyers of goods and services to pay digitally without having to worry about cash or credit card coverage. network”, said CEO and co-founder of Lipa Payments, Thando Hlongwane.

To date, there is limited infrastructure to support digital payments at local spazas, hair salons or fast food outlets and most micro-merchants cannot afford to buy point devices. of sale (POS). For banks and fintechs, distributing and maintaining POS devices can be costly.

“Informal sector merchants have traditionally relied on customers with cash to complete their transactions, but Lipa Payments is changing that. There are clear constraints to trading in cash and it is only becoming more difficult in a digital global economy. and cashless, said Roger Bukuru, co-CEO and co-founder of Lipa Payments.

Research for Mastercard’s State of Pay 2020 report, conducted in 14 different countries, found that people are moving away from cash. The past two years have been fertile for fintech start-ups in South Africa, with the shift to a digital economy accelerating at the onset of the pandemic.

However, few fintech start-ups focus on the potential at the bottom of the income pyramid, but for Hlongwane and Bukuru, going back to their roots and fostering financial inclusion for the low-income market was a no-brainer.

The Lipa Payment duo plans to deploy its Software-as-a-Service (SaaS) solution in South Africa and Nigeria in 2022.

“We have always wanted to solve the problems faced by traders in the informal sector. It was about finding the solution to the question: “How can we integrate them into a digital payment space?” concludes Hlongwane.

Quarterly Labor Force Survey Q4 2020 from StatsSA shows that around 2.5 million South Africans are in the informal (non-agricultural) economy and the number of people in informal employment has increased since 2013.

Whether selling goods and services from a taxi rank, spaza or dirt road in a rural village, Lipa’s digital solution for economy merchants informal enables them to be financially included in the digital economy of the future.