US-based Kappa Pay raises US$2.1m to bolster Africa presence
US-based Fintech platform Kappa Pay, which leverages blockchain solutions to enable instant merchant and cross-border payments, has completed a pre-seed funding round with US$2.1-million.
The round, led by Morningside with participation from Lake Partners, will enable the Fintech company to build infrastructure to facilitate the movement of money in- and out of Africa for the benefit of back African businesses and consumers.
Blaise Buma, Co-founder of Kappa Pay, said the P2P infrastructure they are setting out to build will be designed for ultra-low cost, near-instant local and cross-border transfers. “We seek to eliminate much of the friction that has held back African businesses and consumers for decades. Our mission is to accelerate the continent’s economic growth through fast, cheap and secure transactions.”
Though building financial infrastructure is difficult - especially in a fragmented market like Africa, Kappa Pay officials say they are up to the task because they have the right backers. The company has already announced the recruitment of engineers, operators and other staff to drive its expansion.
To date Kappa Pay’s platform, with state-of-the-art security and encryption, allows users to send money directly into- and out of mobile money wallets in Cameroon and some other parts of Africa.
The average transfer time is three minutes, officials claimed.
Kappa Pay was established in a climate of difficulty experienced by African entrepreneurs in being able to pay or receive money for import or export.
Money transfer apps like Wise or PayPal are still unavailable in African countries like Cameroon, while international wires are prohibitively expensive and slow.
Part of a statement by the company reads, “Whilst remittance apps have made it easier to move money into Africa, they aren't designed for businesses and do not support the bidirectional flows required by most merchants. To work around these limitations, businesses typically go through black-market intermediaries who collect local currency in Cameroon and use affiliates in the US to pay out USD. Fees range from 5% to 20% and reliability and security are major concerns.”
The Fintech firm is hoping to change the tides and give importers a better option to make payments to their suppliers in US, Europe, China, and other places, as Africa’s manufacturing sector is just taking off.