Nigerian fintech startup Touch and Pay is planning expansion into a number of other African markets after securing a seed funding round worth US$3 million.
Founded in 2019, Touch and Pay has developed a suite of near field communication (NFC) based payment solutions for all sorts of situations. Co-founder Michael Oluwole said the startup was trying to move towards a truly cashless society.
“Today there are two types of transactions in Africa, firstly macro ones like buying a car or house, or payment of tuition, These transactions have been digitised and are processed electronically,” he said.
“But the other type of transactions are micro-transactions, like payment of transportation fares, getting snacks or a cup of coffee, or buying groceries. These are all cash-based and they account for 70 per cent of all daily transactions in Nigeria today.”
Even those that have bank accounts, therefore, still have to withdraw cash to perform these microtransactions.
“No financial inclusion is achieved, there is no data on these transactions, and no credit-scoring because all the transactions are cash or manual,” said Oluwole.
What M-Pesa is doing in East Africa, then, Touch and Pay is attempting in West Africa – the digitisation of micro-payments. Oluwole said uptake had been strong.
“We operate in a market for the lower bottom of the pyramid. Getting them to adopt is always very slow, but once we do we achieve stickiness,” he said.
“We started with payment of bus fares in 2020, and now we help 350,000 people pay for bus fares daily in Nigeria, with over 2.3 million users. We recently started digitising micro merchant payments.”
Participants in the W22 batch of the renowned Silicon Valley-based Y Combinator accelerator, Touch and Pay recently raised a seed round worth over US$3 million, and is planning expansion.
“Today we are in four states in Nigeria – Lagos, Ogun, Oyo, and Kano. We plan to roll out to Ghana and Senegal,” said Oluwole.
The startup takes a percentage of the transactions it processes, and currently makes around US$270,000 every month.”