Buy-now-pay-tard (BNPL), a short-term consumer finance that allows buyers to buy products online and pay in installments with nominal fees or no fees, is sweeping the global commerce industry electronic. Afterpay, Klarna, Affirm and Zip are some of the players leading this charge as tech and payments giants Apple, Square, PayPal and Visa have their respective BNPL initiatives as they seek to secure a share. of action.
In Africa, where most people are averse to credit, BNPL’s business is just starting to pick up. But there is a feeling that consumers on the continent will adopt low- or no-interest point-of-sale financing options, depending on the rate at which Africans are now taking out loans at ridiculous interest rates to finance their needs. Last September, Australian company Zip acquired Payflex, the South African player from BNPL, in a deal that indicates Africa may be ripe for buy-now and on-payment services.
A number of companies, including neobanks, payment service providers and traditional banks, have already launched or are planning to deploy BNPL services in Africa. ThankUCash, a Nigeria-based multi-merchant rewards platform, announced this week that it has raised $ 5.3 million in seed funding, part of which is slated to add BNPL infrastructure to its suite of services, which already includes cash back rewards on purchases and merchant offers.
“A lot of people have started to lend and it is gaining ground, but the main problem has been using the loans for other things rather than what they were obtained for,” said the co-founder and CEO Simeon Ononobi at TechCabal. “So we had two options: build the infrastructure to collect and pay merchants directly (BNPL) or distribute the tokens for them ourselves.”
Considering that there are already several companies offering consumer loans, ThankUCash decided to play on the infrastructure side. “We already have a merchant network and will continue to develop it, so why not use it and extend it to our merchants? Said the CEO.
ThankUCash will provide the technological infrastructure that will connect merchants to loan facilities, so that customers can pay for goods and services directly through its Super App, with loans. The company plans to launch the beta “in a few weeks,” according to Ononobi.
In Nigeria, the majority of existing BNPL services are manual, provided by asset finance companies and sometimes the traders themselves. ThankUCash’s platform will automate this process for its users and merchants. In keeping with its mission to build an infrastructure that powers the emerging industry, Ononobi reveals that the startup is currently approaching most of the players in the space.
“We will have our machines in store. So when customers apply for loans, we generate a code for it; customers enter it into the POS machine and the merchant is credited directly. The code can only be used in the chosen store and only for the requested loan amount. At the end of the day, the customer buys directly from traders, ”Ononobi said in a statement.
The ability to spread payment over an agreed period will certainly appeal to African consumers, especially in Nigeria where paying the full cost of purchasing expensive products at one time has become more difficult, due to high inflation ( currently above 15%) and declining purchasing power. For merchants, adopting BNPL helps drive sales and attract new customers.
ThankUCash has already signed a partnership with the Nigerian fintech Interswitch to embark all of the latter’s merchants in order to boost its network. The company is also in talks with “about 7 other national and multinational banks” for potential partnerships. “We are opening this infrastructure to everyone and really want to give this platform to loan companies,” said the CEO.
Founded in 2018 by Ononobi, Suraj Supekar (Chief Technology Officer), Madonna Ononobi (COO) and Harshal Gandole (Senior VP, Engineering), Connected Analytics, the parent company of ThankUCash, currently operates in 3 of the major cities of Nigeria — Lagos, Abuja and Port-Harcourt, with a workforce of approximately 45 employees.
The startup claims to have registered more than 600,000 users, with more than 1,000 stores on its platform and processed more than $ 80 million in transaction volume in 2 years. Some of the new capital will be used to expand operations to other cities in Nigeria, expand into Ghana and Kenya, as well as add a new remittance product.
The ultimate goal of ThankUCash, according to Ononobi, is to create sustainable solutions for small businesses and merchants to be successful while increasing the purchasing power of customers. “The vision for us is not just that our traders are happy because they stay in business and make money,” he said. “We also want to make spending fun, because with us there is always an opportunity for you, whether it’s cash back, offers, BNPL or remittances. “
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