Scale, a South African startup that provides brand and project management services for fintechs that want to enter new markets or build new product verticals, has raised $700,000 in pre-seed funding.
54 Collective, a sector-agnostic venture capital firm, and fintech-focused First Circle Capital, led the pre-seed round. Sunny Side Venture Partners and some angel investors also participated.
The one-year-old startup founded by Barbara Woollams and Miranda Perumal, a former director at Visa, also provides partnerships with payment infrastructure providers to fintechs. The company will use this funding to expand operations to Kenya, Zambia, and Cote d’Ivoire. Particularly, it hopes to deepen the reach of Scale Execute, its customisable card-issuing product developed in partnership with Visa and Mastercard.
This comes during a period when African fintechs are second-guessing card services as the cost of processing payments through multi-layered partnerships eat into margins for them.
Chargeback fraud is another headache in the card payments industry. In 2022, African fintechs like Eversend and Busha briefly scaled back their card operations and had to change providers after Union54, a Zambian fintech that provided a virtual card-issuing API, discontinued its card services as attempted chargeback fraud cases on its platform rose by 600%.
However, expanding into a market like Cote d’Ivoire makes sense for Scale, as the country ranked first in West Africa in card issuance. Ivorian banks issued about 2.4 million cards to customers in 2022.
“With the backing of our esteemed investors and partners, we are well-positioned to expedite our ecosystem engagement, build trust with African businesses and continue to strongly focus on solving major pain points when enabling card rails by delivering unrivalled, world-class service,” CEO Perumal said in a statement.
Though cash remains a dominant payment method in some African markets, Scale is betting its card issuance service on the continent’s growing fintech market, projected to reach $230 billion by 2025. By 2029, card issuance platforms are also expected to issue about 35% of all cards used in payments.
Scale will compete with players like Onafriq in the B2B card issuance sector.
“The Scale team, led by a rockstar female founder [with] deep sector expertise and proven bias toward action truly excites us, and we look forward to seeing Scale become a critical enabler for fintechs,” said Hetal Patel, chief investment officer at 54 Collective.
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