Wapi Pay Secures $2.2M Pre-Seed for Africa-Asia Payments

Remittance Costs to Sub-Saharan Africa Remain High

The World Bank reports that sending money to sub-Saharan Africa is demonstrably more costly than transfers to any other global region. Simultaneously, this region represents the highest expense for outward remittances. In the first quarter of 2020, the average cost for sending funds to this area reached 8.9%, significantly exceeding the worldwide average of 6.8%.

Focus on Africa-West Corridors Overshadows Other Regions

Much discussion centers on money transfers from Africa to Western countries, prompting numerous startups to utilize both traditional and cryptocurrency-based methods to streamline cross-border payments. However, comparatively little attention is given to payment corridors connecting Africa with regions like Latin America or Asia.

Considering South Asia’s remarkably low average remittance costs – 4.95% for a standard $200 transfer – exploring opportunities within this market is logical. Wapi Pay, a Kenyan startup with operations in China and Singapore, is actively pursuing this strategy, establishing a niche by facilitating payments between Africa and Asia.

Wapi Pay: Bridging the Payment Gap

Established in 2019 by Paul and Eddie Ndichu, Wapi Pay functions as a payment gateway. It enables African businesses to both receive and dispatch funds to Asia through mobile money platforms and conventional bank accounts.

Addressing a Gap in Digital Infrastructure

Historically, remittance efforts have largely concentrated on the inflow of funds into Africa for basic needs. Consequently, digitization has primarily focused on delivery mechanisms, rather than the development of new infrastructure and payment processing systems for African individuals and businesses engaged in cross-border transactions.

Financial institutions often rely on outdated systems and correspondence-based methods to serve their clientele. These transactions are inherently complex due to stringent compliance requirements. The absence of updated infrastructure or streamlined processes contributes to opacity, extended processing times, and elevated costs. While cryptocurrency remittance startups propose solutions, none have yet achieved widespread, effective adoption.

The Genesis of Wapi Pay

“We initiated Wapi Pay after observing the fragmented nature of the payment infrastructure and the substantial expense and difficulty associated with sending or receiving payments to and from Asia,” Paul Ndichu explained to TechCrunch.

He further elaborated, “Having spent time in Asia, witnessing the increasing trade relationship between the two regions, we recognized the growing need for a more efficient, faster, and cheaper system. This evolved from simply remittances to encompass broader global payments. Given the inherent complexity of these transactions, our goal was to simplify them, making them as straightforward as using mobile money.”

Growing Trade and Persistent Challenges

In the first quarter of 2021, trade between Africa and China experienced a 27% surge, reaching $52.1 billion compared to 2020. Despite economic recovery from the pandemic, African merchants continue to encounter high costs when sending and receiving money. These expenses can reach as high as 20% in Southern African countries, with payment processing times sometimes extending to a full week. Wapi Pay asserts its ability to process payments within 24 hours, with fees as low as 3%.

According to CEO Eddie, “Wapi Pay circumvents traditional payment networks, optimizing both efficiency and cost for our users. Customers can select their preferred delivery channels – bank-to-bank, wallet-to-wallet, or combinations thereof – for fund transfers and merchant payments, with settlement completed within 24 hours.”

Wapi Pay’s Expanding Network and Growth

Currently, Wapi Pay collaborates with local banks and platforms in China, Indonesia, India, Japan, Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam. The company reports a year-on-year growth rate of 396% since 2019 and aims to sustain this trajectory. By the end of the following year, Wapi Pay intends to facilitate $500 million in remittances and expand its network to include half a million African merchants and 100,000 Asian suppliers.

Securing Funding for Expansion

The recently announced $2.2 million pre-seed investment will be instrumental in achieving these objectives, specifically scaling global payments and remittances between Africa and Asia.

This funding round is among the largest of its kind in East Africa and across the continent. Participating venture firms include China-based MSA Capital, with prior investments in prominent companies like Meituan, Nubank, and Klarna; Pan-African and Africa-focused firms EchoVC, Kepple Africa, and Future Hub; and Pan-Asian firms Transsion Holdings and Gobi Ventures.

Future Plans and Regulatory Engagement

Wapi Pay will utilize the investment to engage with regulatory bodies for licensing across Africa and to facilitate broader scale, product development, and geographical expansion.

“These funds will enable Wapi Pay to diversify our product offerings and accelerate growth, transforming remittances into real-time global cross-border payments, beginning with Africa and Asia. Crucially, this must be achieved with minimal transaction costs, mirroring the ease of sending money via M-PESA,” Eddie added.

Tim Chen, Vice President at MSA Capital, stated, “Africa to Asia represents a significant and currently underserved trading corridor. We believe Wapi Pay possesses the optimal team to construct the necessary infrastructure to support its expanding trade volumes. We are excited to support them with our extensive network and expertise in China’s fintech sector.”