Lipa Payments, a South African fintech startup, has secured a R10 million ($650, 000) funding to build a contactless payments platform for the informal sector.
The funding came from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank.
Founded in 2019 by fintech entrepreneurs Thando Hlongwane and Roger Bukuru, Lipa Payments is a payment software solution for banks and fintechs that allows small merchants to accept digital payments using NFC and Bluetooth technology.
Owning just a low-end smartphone, even if it does not have near-field communication (NFC) capabilities means that merchants can accept either phone-to-phone payments (using Bluetooth technology) or a bank-card payment directly on their smartphones (using NFC technology).
“We see tech as a scalable tool to solve everyday challenges. Lipa Payments solves two. First, we give small-scale merchants low-cost technology to accept digital payments at the point of sale and secondly, we allow buyers of goods and services to pay digitally without having to worry about cash or network coverage,” said CEO and Co-Founder of Lipa Payments, Thando Hlongwane.
To date, there is limited infrastructure to support digital payments at local spaza shops, hair salons or fast food stores and most micro-merchants can’t afford to purchase Point of Sale (POS) devices. For banks and fintechs, the distribution and maintenance of POS devices can be costly.
“Informal sector merchants have traditionally relied on customers having cash on hand to transact, but Lipa Payments is changing that. There are obvious constraints to trading with cash and it is only getting more difficult in a digital, cashless global economy,” said Roger Bukuru, Co-CEO and co-founder of the startup.
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