TechInAfrica — Payment startup focusing in Africa, PalmPay has launched in Nigeria following a $40-million seed round led by Chinese mobile-phone maker Transsion.
Transsion spokesperson confirmed that the investment came from Transsion’s Tecno subsidiary, with participation from China’s NetEase and Taiwanese wireless comms hardware firm Mediatek.
Before going live today at a launch event in Lagos, PalmPay had previously piloted its mobile fintech offering in Nigeria since July,
According to a statement, the company aims to become Africa’s largest financial services platform.
As part of the investment, PalmPay enters a strategic partnership with mobile brands Tecno, Infinix, and Itel. This partnership includes the pre-installation of the startup’s app on 20 million phones in 2020.
The UK-headquartered venture, which was also founded with Chinese seed investment, offers a package of mobile-based financial services, including no-fee payment options, bill pay, rewards programs, and discounted airtime.
In Nigeria, PalmPay will offer 10% cashback on airtime purchases and bank transfer rates as low as 10 Naira (equals $.02).
Other than Nigeria, PalmPay will also use the $40 million seed funding to grow its financial services business in Ghana. The payments startup has plans to expand to additional countries in 2020, PalmPay CEO Greg Reeve said.
PalmPay received its approval from the Nigerian Central Bank as a licensed mobile money operator in July. During its pilot phase, the payments venture registered 100,000 users and processed 1 million transactions, according to a company spokesperson.
With its payments focus, the startup enters Africa’s most promising digital sector, but also one that has become notably competitive and crowded — particularly in the continent’s largest economy and most populous nation of Nigeria.
It is estimated that Africa’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population.
An improving smartphone and mobile-connectivity profile for Africa sees this as an opportunity for mobile-based financial products. This is the reason behind the descending of startups on Africa’s fintech space, looking to offer scalable solutions for the continent’s financial needs. Fintech now receives the bulk of VC capital and deal-flow to African startups according to stats offered by WeeTracker.
So far, Nigeria has multiple new digital-payments entrants and several firmly rooted later-stage fintech players, such as Paga and recently confirmed unicorn, Interswitch.
PalmPay CEO Greg Reeves said, “On channel and access, we’re going to be pre-installed on all Tecno phones. You’re gonna find us in the Tecno stores and outlets. So we get an immediate channel and leg up in any market we operate in.”
Tecno’s owner and PalmPay’s lead investor, Transsion, is the largest seller of smartphones in Africa and maintains a manufacturing facility in Ethiopia. The company secured almost $400 million in a Shanghai IPO in September. It also plans to spend about $300 million of the funding on new R&D and manufacturing capabilities in Africa and globally.