Open banking, in which traditional banks release their data via application programming interfaces (APIs) to enable the development of new financial services for their customers, has been one of the most significant disruptions in global payments over the past decade. Less than five years ago, this innovation, in which companies use APIs to access customers’ financial accounts and provide a range of integrated and blended financial services, took off in Africa.
And in the latest developments, fintech in South Africa stitchwhich has built “a comprehensive payments solution designed to meet the complex and sophisticated payments needs of its enterprise customers,” is announcing some financing to become a market leader in this payments segment.
Stitch is focused on enabling businesses to build, improve, and scale financial products and providing Application Programming Interface (API) gateways to improve conversion for online payments and improve payment processes for its customers. Cape Town fintech company has raised $25 million in an extension round of funding led by global fintech investor Ribbit Capital, bringing Stitch’s Series A total to $46 million. Existing backers, including CRE Ventures, PayPal Ventures and Raba Partnership, participated in the round.
This is Ribbit Capital’s third investment in Africa after leading Chipper Cash’s Series B of $30 million and Wave’s Series A of $200 million. Kian Pillay He said the team has been fortunate to have prominent domestic and international backers in its corner since it emerged from secrecy in 2021. Its previous investors have bought into the narrative that his team, targeting a broad market opportunity, can build and scale products that create value. In the Emerging FinTech category. But as it enters its growth phase, having healthy growth numbers is even more important, especially given the current slowdown in venture capital.
Pillay acknowledged this, stating that the fortuitous match between strong traction and pre-existing relationships was crucial in attracting the lead investor and closing the round. “It was a good coincidence that we are finally starting to find traction in a world where hard numbers matter for investors like Ribbit, whose team we have known for a while,” the CEO noted, adding that Ribbit Capital’s strong understanding of the global market will The fintech and emerging markets landscape is invaluable to Stitch which is on track to process more than 50 million transactions, totaling $2 billion in total payment volume (TPV) this year.
Those numbers are in seven product features Stitch has launched since early 2022. Stitch was a quasi-data, quasi-bank-to-bank payments platform before embarking on a feature release spree. Its clients, from businesses to entrepreneurs, can use its platform to access clients’ financial accounts and innovate in the delivery of services such as personal finance, lending, insurance, payments and wealth management.
It has now developed into a full-fledged payment service provider. Customers can accept payments via bank payment, debit and credit card, recurring debit, cash and manual bank transfer; Manage, coordinate and settle payments across multiple methods, providers and geographies in one dashboard with PayOS; And disburse funds through payments. Many use cases include e-commerce payments, financial transactions, financial services, lending and insurance, marketplaces, and recurring payments.
Stitch says its end-to-end payment solutions are primarily offered to businesses in South Africa. MTN, Multichoice, Foschini Group (TFG), Standard Bank’s SnapScan, and Yoco are some of the names. However, it still has a few startups and small businesses as clients in Nigeria and other African countries where it has licenses to operate, Pillay said in the interview. The fintech, whose competitors include Mono, Okra, Revio and MoneyHash, serves PSP’s global partners and is in talks to do the same with a handful of global consumer internet companies.
“We have moved away from being a one-style platform to the next generation PSP for local and global enterprises,” said the CEO who founded Stitch with. Natalie Cuthbert And Brian Pillay. “Initially, we had a payment feature where we support bank and card payments. Although we have added more, we now have an orchestration layer that many organizations use to manage payment and settlement methods across different banks. We make payments, whether cash, refund or withdraw. Our solution is attractive to global companies trying to enter the market for the first time because of the comprehensive process.”
From the perspective of these consumer Internet companies in the US or Europe, South Africa is often seen as the gateway to Africa. Unlike other African markets, the country has a functional credit card system, making card integration easy. However, it is still necessary for these companies to consider other payment options in the cardless African market, and that is where Stitch comes in. According to Pillai, the demands of local enterprise customers have prompted the company to develop these product features, which he believes can be tailored to suit the needs of global customers, over the past year.
“I don’t think big companies use us for just one method. I think one of the best metrics for us is within the first three months of a startup with a large organization, we’ve seen almost everyone adopt a second or third product because we can add things incrementally in a very modular way; ” He said. “We’re kind of playing in a space we didn’t anticipate, but as the big merchants asked us for more product, it became easier to get into and expand from there.”
Stitch, which emerged from stealth in 2021, claims its platform provides customers with better reliability, higher uptime and faster issue resolution by using direct connections with banks and networks and removing intermediaries. In addition to its open banking features, Stitch provides support to customers, including local insights into the payments landscape and tailored, co-innovated solutions designed to remove the complexities of sending, receiving and managing money. Its subsidiary, WigWag, allows small businesses and micro-influencers who sell goods and services on social media platforms to accept payment via a link and card.
The fintech has now raised $52 million in venture capital (including $6 million USD). Pillai expressed on the call that the company, which has more than 80 employees, plans to use the Series A funds to further develop its platform, expand its customer base and seize opportunities to serve new markets.
“Everything we do is focused on the customer. We will continue to improve on what they have. Then we expand geographically with them and delve into the products they already have,” the CEO added. “We also want to continue adding as many first-party payment methods as possible. Our value proposition has been precision engineering and deep infrastructure, so, for example, we are looking to connect to card rails and banks without intermediation. Things like this are often slow and capital-intensive; That’s why we raised.