Global financial transactions are mainly facilitated by payment processors such as Visa or Mastercard. They are responsible for communication between banks and fintechs to quickly process transactions for consumers and businesses.
Africa is different. It is not a predominantly map continent. Telecoms and banks conduct the majority of online financial transactions conducted in the region via mobile wallets and bank accounts. But here’s the challenge: while both systems typically work well when users transact in their unique environment, there is no interoperability for transactions between them.
An alternative payment network with connected wallets that allows a mobile money user to transact using a bank account would solve this problem, and that is the premise of the Ghana-based fintech hyphen. Today, the Unified Payments app announces it has raised $32.8 million in an oversubscribed seed round.
Founder and CEO Prince Boakye Boampong founded the company in 2019. Prior to Dash, Boampong co-founded OMG Digital, a YC-backed Ghanaian media startup He started alongside Jesse Ghansah – the current CEO of Hover– in 2016.
Two years earlier, Boampong traveled to Kenya and was fascinated by how unbanked Kenyans were sending and receiving money while paying bills with mobile money, a payment system developed by Safaricom’s M-Pesa, which has nearly 30 million customers. But having a mobile money background himself and being Ghanaian, Boampong experienced how interoperability inside and outside of mobile money systems was a challenge.
“I was blown away by the ubiquity and convenience of mobile money in 2014 when I first visited Kenya. However, there are over 200 mobile wallets and 100 banks across the continent [do] don’t work together,” the chief executive officer told TechCrunch.
What this means is that a Kenyan using M-Pesa and traveling to Ghana will find it difficult to send money to a Ghanaian using MTN Ghana as both mobile operators do not allow transactions between themselves.
Likewise, a Nigerian or South African with a bank account cannot transact with an M-Pesa mobile money account or an MTN Ghana account due to the different payment ecosystems. So when they travel, they need to exchange currencies or set up the necessary bank or mobile money accounts that work outside of their home countries.
Dash’s alternative payments network brings this mobile money and traditional banks together, facilitating transactions for consumers and businesses. It doesn’t aim to replace mobile money or banks. Instead, the wallet allows users to access a variety of services that they cannot find from their traditional provider.
“We are building this interoperability so that a Kenyan traveling to Ghana, or a Ghanaian traveling to Kenya, is able to pay for things without having to switch currencies or set up accounts when they hit the ground,” said Boampong. “We’re taking a page from AliPay and PayTM by developing features that make our users’ lives easier without having to switch from different carriers.”
Dash’s playbook is similar to Visa or Mastercard, routing payments through banks and telcos regardless of who issued them. So, uUsers from different countries — Ghana, Nigeria, and Kenya for now — can connect their bank or mobile money accounts to Dash, pay bills, and send and receive money to other users while the platform does the currency conversion.
The company earns revenue from processing fees, savings (earning interest when users save), FX fees when using Dash cross-border, bill payments (commission received when users pay bills on Dash), and subscriptions (for Dash+, its premium Service).
Dash claimed to have processed over $300 million in TPV in January, up 300% monthly from the fourth quarter of 2021. Overall, since its launch in 2020, it has processed over $1 billion from 1 million customers the company has won from Ghana, Kenya and Nigeria, Boampong said.
Those numbers indicate tremendous growth since last October, when Dash closed its seed round for the first time before reopening after rising investor interest. At the time, the Ghanaian fintech had raised $8 million — a big seed in its own right — and had just enlisted just over 200,000 users with $250 million in transactions.
The speed at which Dash has managed to quadruple the size of its initial investment in five months is fascinating. However, for some investors and viewers, $32 million is an incredibly large seed that could do more harm than good to a three-year-old company. But Boompong disagrees.
“With most products, it’s either you find things out or you figure them out. We were surprised by the crazy growth in a very strange way. We didn’t prepare for growth, so we raised more money to meet that demand and we believe it can only get better,” he said, attributing the company’s massive seed funding to a 5x increase of customer base and transaction volume.
Dash’s seed round, led by New York Insight Venture Partners, is one of the largest of its kind in Africa; only PalmPay costs 40 million dollars tops it at the moment. The round, which comes after a $500,000 pre-seed, continues a list of fintech deals amid a wave of innovation sweeping the sector accounted for up to 60% of Africa’s total VC funding last year.
This deal is also notable because it diverts attention from Nigeria, Africa’s hottest fintech ecosystem, to neighboring Ghana, where venture capital raised by its startups hit a meager $167 million last year.
Other investors in the round are Global Founders Capital and 4DX Ventures. They attended alongside ASK Capital, Techstars, Guillaume Pousaz’s Zinal Growth Partners, Jupiter Money’s Jitendra Gupta, Pine Labs’ Amrish Rau, the founders of Moss, executives of ProcessOut and the founders of PennyLane.
The funding will help the Techstars-backed company expand into new markets such as Tanzania and South Africa, obtain the licenses needed to operate there, build its team, invest in technology and introduce new features.
Ghanaian fintech Dash raises $32.8M seed to build connected wallets for Africans – TechCrunch Source link Ghanaian fintech Dash raises $32.8M seed to build connected wallets for Africans – TechCrunch