South Africa’s fintech sector is rapidly growing, attracting significant investment and positioning the country as a leader in African financial innovation.
In 2023, South Africa was the top destination for venture capital (VC) investment in Africa, securing US$548 million secured through 83 deals, according to Partech Partners’ 2023 Africa Tech Venture Capital report. The sum made South Africa the leading country on the continent in terms of equity funding.
That year, fintech retained the leading position in VC funding, accounting for 24% of all deals and 37% of total VC funding in the region. This trend was particularly evident in South Africa, where the fintech sector representing more than 30% of equity funding in 2023.
2023 Africa Tech VC – Equity funding by vertical in top markets (in %), Source: Partech Partners Analysis 2023, Jan 2024
South Africa’s leadership in the African fintech landscape is further evidenced by its expansive fintech ecosystem. In 2023, the country was home to 140 fintech startups, representing 20.6% of all fintech startups in the continent, according to Disrupt Africa’s Finnovating for Africa 2023 report. The figure makes South Africa the second largest fintech market in the region, after Nigeria with 217 startups and a 32% market share.
African fintech startups by country, 2023, Source: Finnovating for Africa: Reimagining the African financial services landscape, Disrupt Africa, 2023
Within South Africa’s burgeoning fintech landscape, several ventures have emerged as category leaders, recording substantial growth and garnering investor attention. Today, we look at some of South Africa’s most successful and fastest-growing fintech startups in 2024, highlighting their value propositions and recent achievements.
TymeBank
TymeBank is a prominent fintech startup in South Africa and one of the world’s fastest-growing digital banks. The company is founded on principles of simplicity, transparency and affordability, and is designed to make digital banking accessible and affordable to all South Africans across the economic spectrum.
TymeBank has no monthly banking fees and allows customers to open an account in less than five minutes. The company claims that in most cases transaction, costs are 30% to 50% lower than what customers would pay at other local banks.
TymeBank also provides innovative tools like GoalSave for setting up savings goals, as well as Grant Advance and MoreTym. Grant Advance offers government grant recipients early access to their funds without additional costs, while MoreTym is a popular buy now, pay later (BNPL) product, accepted at thousands of physical stores and e-commerce sites. TymeBank’s other services include health and funeral insurance.
TymeBank has formed distribution partnerships with major retail chains like Pick n Pay, Boxer, and TFG, enabling it to establish over 1,000 kiosks and 15,000 retail points across the country. Additionally, through its division, Retail Capital, TymeBank has become the largest funder of small and medium-sized enterprises (SMEs) in South Africa, providing financial support to over 50,000 SMEs.
TymeBank reached its first month of profitability in December 2023, less than five years since its launch in February 2019. It is the first digital bank in South Africa to achieve profitability, and claims over 8.5 million customers.
TymeBank is currently raising a Series D funding round, which is expected to conclude in Q4 2024, targeting a unicorn valuation. The bank, which is an affiliate of Singapore’s Tyme Group, aims to use the proceeds to expand into the Philippine and Vietnamese markets. It aims to list in New York by 2028 and will most likely do a secondary listing on the Johannesburg Stock Exchange.
Jumo
Jumo was founded in South Africa in 2015. Established in Cape Town, the company has rapidly grown into a market-leading banking-as-a-service platform that uses artificial intelligence (AI) to power financial services in emerging markets across Africa and Asia.
Jumo offers a range of financial products, including savings and credit solutions tailored for entrepreneurs in emerging markets. The platform also provides financial services infrastructure to partners such as mobile money operators, mobile fintech platforms, and banks. Jumo’s operations are built on two core capabilities: “Core,” which provides next-generation banking infrastructure, and “Unify,” an AI-driven processor that leverages data to reduce the cost and risk associated with lending.
In just under a decade of operation, Jumo has facilitated the disbursement of over US$6 billion in loans, reaching more than 25 million customers and small businesses. The company’s presence spans seven markets – Ghana, Tanzania, Kenya, Uganda, Zambia, Côte d’Ivoire, and South Africa – and it plans to expand into additional African markets by the end of 2024.
Jumo has secured about US$200 million in funding so far. Its last round was a US$120 million round raised in November 2021 to scale its platform capacity, provide longer term lending options for merchants and bigger businesses, and support its international expansion in new markets. Investors in Jumo include Leapfrog, Goldman Sachs and Finnfund.
Onafriq
Onafriq, formerly MFS Africa, is a leading pan-African payments company dedicated to enabling interoperable cross-border and domestic digital payments across the continent. The company is developing a global payment network, bringing together global and regional enterprises, mobile network operators, money transfer operators, banks, fintech companies, global development organizations, and online and offline merchants.
Onafriq’s network currently spans 40 African markets, connecting over 500 million mobile money wallets, 200 million bank accounts, and over 400,000 agents in Nigeria. It enables domestic and cross-border disbursements and collections, card issuing and processing, agency banking, and treasury services.
Onafriq secured its last round of funding in June 2022, raising an additional US$100 million in equity and debt for its Series C. The capital brought the total amount raised for the round to US$200 million. Onafriq said at the time that it would use the proceeds to accelerate its expansion plans across Africa, its integration into the global digital payment ecosystem, its expansion into Asia through its joint venture with LUN Partners, and its ambitious growth plans for the Baxi network of merchants and agents in Nigeria and beyond.
Baxi is a prominent agent network Onafriq acquired in 2021 to expand to Nigeria. This acquisition has since been bolstered by additional licenses from the Central Bank of Nigeria.
Yoco
Yoco is a leading African fintech company serving small businesses in South Africa. The company offers a comprehensive range of products and services tailored to help small businesses accept payments, manage their finances, and grow their operations.
One of the primary offerings from Yoco is its card machines, which allow businesses to accept in-person payments using major credit and debit cards, as well as through digital wallets such as Apple Pay, Google Pay, and Samsung Pay.
In the realm of online payments, Yoco provides businesses with the ability to accept payments over the Internet without the need for a physical card machine. This service includes the use of payment links, online stores, and e-commerce integrations.
Yoco also provides funding solutions to help small businesses access the capital they need to grow, along with tools for managing sales, inventory, and customer relationships.
Yoco claims it has empowered over 400,000 small businesses by providing them with accessible and affordable point-of-sale (POS) systems and says it processes over US$2 billion annually through its platform. The startup’s success has earned it recognition on CNBC’s list of the top 250 innovative fintech companies in 2024, and a spot among the top three inspirational youth-founded companies by Brand Africa in the same year. Yoco has also been featured by the Financial Times as one of Africa’s fastest-growing companies and has been recognized by Fast Company as one of the best workplaces for innovators.
The startup has raised US$170 million from leading global investors such as TPG, Dragoneer and Partech. In its latest funding round in July 2021, its secured US$83 million, enabling it to expand its offerings.
Lula
Lula, formerly known as Lulalend, is offering instant access to funding, all-in-one business banking accounts, and cutting-edge financial analysis tools for SMEs in South Africa.
Founded in 2014, the company provides banking products including the Free Business Account, which is tailored for startups and freelancers, offering benefits such as interest on account balances, free card transactions, and proactive support, as well as the Unlimited Business Account, which offers unlimited funding access and free electronic transfers, along with advanced data support for strategic decision-making.
In addition to business banking, Lula provides unique funding solutions with fast approval processes ensuring that funds are available within 24 hours. The Revolving Capital Facility offers a flexible line of credit, allowing businesses to withdraw funds as needed without reapplying, while the Capital Advance provides a straightforward way to access business funding with clear, fixed costs and no early repayment penalties.
Lula also provides free bank cards that come with unlimited free swipes, as well as Lulapay, a trade capital platform that enables businesses to receive immediate payments while offering customers a BNPL option.
In February 2023, Lula raised a US$35 million Series B funding round to help it scale its business, increase the size of its loan book, bring new solutions to market, and invest in technology and talent. In addition, the startup said it will work in partnership with new investor Women’s World Banking Asset Management to scale its product to women-owned SMEs in the region.
Ozow
Ozow is an automated electronic funds transfer (EFT) solution that allows payments to be completed quickly and securely. Merchants can use Ozow to accept payments through different channels like SMS, e-commerce sites, eBilling, or QR codes, while consumers can use the solution to conveniently pay using any of their online bank accounts, such as savings, credit, or cheque accounts. Payments are processed instantly, so there’s no need to email proof of payment, speeding up the entire transaction.
For merchants, Ozow provides secure, instant, and irrevocable bank-to-bank payments. Once a payment is confirmed, it is final, with no chargebacks. Payments are received directly from the customer’s bank accounts, and merchants receive instant notifications of customer transactions.
For customers, Ozow offers a fast, easy, and secure way to make online payments without needing a physical card. Payments can be made in 60 seconds or less, and no registration is required. Customers pay only the merchant, with no hidden charges, and the transaction is instant, removing the need for proof of payment.
Ozow secured its last round of funding in November 2021, raising a US$48 million Series B funding round to support its continued growth, product development, and expansion into other African markets. At the time, the company said it processed over US$100 million in monthly transactions across its merchant network, recording a 100% year-on-year growth since its Series A in 2019.
Peach Payments
Peach Payments is a fast-growing payment solution provider founded in 2012 in Cape Town. The company has established itself as one of the largest online payment gateways in South Africa and has expanded its operations to Kenya in 2018 and Mauritius in 2021.
Peach Payments offers a comprehensive toolkit that enables merchants to accept, manage, and disburse payments through both web and mobile platforms. Their services include online payment acceptance, pay-outs, and subscription solutions across a variety of payment types, such as credit and debit cards, electronic funds transfers, digital wallets, mobile money, and BNPL options. The company serves a diverse range of merchants, from small e-commerce stores to large enterprises, facilitating seamless online transactions for industries such as food delivery, travel, and retail.
Peach Payments raised a US$31 million Series A funding round last year to accelerate its growth across the continent and grow its product offering, and it is now actioning this expansion with the acquisition in July 2024 of Operativa. Operativa is a customer software development firm Peach Payments had been collaborating with since 2022. Operativa has serviced clients in the financial services, information security, e-commerce and cloud hosting industries.
Entersekt
Founded in 2010 in Stellenbosch, Entersekt is a global leader in customer and payment authentication solutions for financial fraud prevention. The company helps financial institutions reduce fraud losses, grow revenue, maintain regulatory compliance, and deliver better customer experiences.
Entersekt’s solutions cover a broad spectrum of needs including user authentication, customer onboarding, and tokenization. Its services extend to mobile and online banking authentication, card-not-present authentication, and mobile app authentication, ensuring comprehensive protection across various digital channels. The company processes over 2.5 billion transactions annually for more than 250 million cardholders, 450,000 merchants, and 850 banks in nearly 70 countries.
Entersekt’s growth trajectory has been marked by several key developments. These include securing major partnerships with industry giants such as Mastercard, contributing to initiatives like Mastercard’s Scam Protect, which utilizes AI to prevent financial scams, and acquiring smaller companies, such as Modirum’s 3-D Secure software business. This acquisition marked one of the largest transactions by a South African fintech company and allowed Entersekt to expand its capabilities in secure online transactions.
Recently, Entersekt secured more funding from PAPEfunds to fuel its growth and solidified its market position.
Valr
Founded in 2018, Valr is a leading cryptocurrency exchange platform offering advanced trading services to both retail and institutional clients. The platform enables users to securely buy, store, and sell a wide range of cryptocurrencies, and leverages AI and machine learning (ML) technology to ensure the security and identity validation of traders.
Valr has rapidly expanded since its inception, now serving over 1,000 corporate and institutional clients, along with more than half a million retail users globally. While approximately 75% of its customers are based in South Africa, the company aims to increase its international user base, and is focusing on becoming a global player.
Recently, Valr was approved to offer crypto asset services in Poland. The company also has received initial approval from Dubai’s regulator Virtual Assets Regulatory Authority and is now in the process of obtaining a license in Mauritius, Valr CEO Farzam Ehsani told Reuters in April 2024.
Valr is one of 130+ crypto asset service providers that were granted licenses this year by the Financial Sector Conduct Authority (FSCA) to operate in South Africa.
Pineapple
Pineapple is a prominent fintech startup, distinguished for being a leading innovator in the digital insurance space. The company operates as an app-based property and casualty insurance comparison platform, catering to a wide array of items including home electronics, bicycles, cameras, drones, and more. The platform is fully accessible through Android and iOS apps, providing users with an efficient and modern approach to managing their insurance needs.
Pineapple’s 100% digital operation allows customers to generate quotes, activate policies, lodge claims, and update coverage online without the need for direct interaction with consultants. This streamlined process is further enhanced by advanced AI technology, which automatically recognizes and categorizes items based on images provided by users.
In addition to its platform, Pineapple has also forged a notable partnership with Old Mutual Insure to offer comprehensive car insurance through its website and app. This partnership has enabled Pineapple to provide customers with quick and easy insurance solutions.
So far, tens of thousands of customers have insured their vehicles with Pineapple, the company says. It claims that its offering has been instrumental in extending insurance services to a new customer demographic, with nearly 50% of customers being first-time insurance buyers.
In November 2023, Pineapple secured a US$22 million funding round, which it claimed was the largest Insurtech fundraising round in Africa to date.
Featured image credit: edited from freepik
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