Zambian Startup Revolutionizes Fintech with Card Issuing API

Union54: Zambia's First YC-Backed Fintech Revolutionizing Card Issuance

Over the last ten years, more than 40 startups originating from across Africa have participated in the Y Combinator (YC) program. Now, Zambia has joined this group with Union54, a particularly promising initial entrant.

Introducing Union54: Africa’s Pioneering Card-Issuing API

Union54, founded by Perseus Mlambo and Alessandra Martini, is a fintech company that identifies itself as Africa’s first card-issuing API. The company only recently launched, but its origins lie within the founders’ previous venture, Zazu.

From Challenger Bank to API Provider: The Genesis of Union54

Zazu was initially established in 2015 as a challenger bank operating within Zambia. Like many fintechs on the continent, Zazu required the creation of debit cards for its users to access their wallets. Obtaining these cards from partner banks often involved significant delays; Mlambo recounts instances where they waited up to 18 months.

During this period, the founders began exploring partnerships with banks throughout the region to facilitate card issuance. However, they encountered bureaucratic hurdles and a lack of responsiveness. Mlambo explained to TechCrunch that banks were often ill-equipped to address their inquiries or provide the desired products.

Securing Mastercard Principle Membership

Recognizing the inefficiencies, the startup directly engaged with Mastercard. Rather than relying on potentially slow bank processes, they sought to collaborate with the card issuer directly. This strategic move culminated in Union54 achieving Mastercard Principle membership – a first for an African fintech, according to the company.

This membership granted Zazu the authority to function as an “issuing bank,” enabling them to provide debit cards. Furthermore, it allowed them to operate as “acquirers,” facilitating transaction processing services.

Spinning Out Union54: Empowering African Fintechs

The founders realized that to truly accelerate the growth of African fintech, it was crucial to simplify the process of issuing virtual or physical debit cards for fintechs across the continent. Consequently, they spun out Union54 from Zazu.

The new platform offers a suite of APIs designed to streamline the issuance of programmable debit cards for any African fintech. These APIs simplify a traditionally complex process.

A Service for the Continent’s Fintech Ecosystem

Mlambo emphasizes that Union54 allows other African fintechs to issue their own cards with ease. “They can simply connect to our APIs and move quickly, avoiding lengthy negotiations,” he stated.

The company specifically targets fintechs seeking to avoid the substantial setup costs – often hundreds of thousands of dollars – associated with obtaining virtual or physical cards. Union54 claims to issue cards within weeks, offering services like BIN sponsorship, program management, and settlement.

Africa’s First Card-Issuing API: Filling a Critical Gap

Union54’s capabilities establish it as Africa’s first card-issuing API. Many fintechs have historically focused on areas like payment gateways and wallets, overlooking the complexities of card issuance.

This is a noteworthy observation, as even established players in these other segments often encounter difficulties when attempting to create virtual and physical cards for their customers. Union54 aims to resolve this challenge, and despite being in beta, the company reports a strong waitlist and active users.

A Golden Generation of African Fintech

The CEO notes that their clientele consists of top-tier African fintech companies. “We’re now in the golden generation of African fintech,” he asserts. “It’s the ideal time for a card-issuing product to collaborate with these leaders in their respective fields, demonstrating a clear demand for our services.”

Diverse Use Cases for the Union54 API

The company’s website highlights eight key use cases for its API, including ledger-based systems, acquirers/gateways, buy now, pay later solutions, credit unions, delivery services, digital banking platforms, credit card management, and corporate card programs.

Customization and Control for Fintech Partners

Fintechs utilizing Union54 can customize card designs, specify the currency for charges, and define detailed parameters for card usage, including who can use them, for what purposes, when, and how.

Pay-As-You-Go Pricing Model

Union54 operates on a pay-as-you-go pricing structure, charging fintechs per API call. Physical card creation incurs a flat fee of $7-9, with an additional, undisclosed fee applied to each transaction.

YC Acceptance and Future Outlook

Mlambo credits their acceptance into the YC 2021 summer batch with facilitating customer acquisition, as many clients were sourced through the YC network. He describes the YC program as “worth it from day one.”

“I am truly excited and proud that Union54 has become the first Zambian fintech to be accepted into Y Combinator, and the second in Southern Africa,” Mlambo stated. “Our acceptance validates our hypothesis that it is possible to effectively serve Africa from locations like Zambia.”