South African fintech Stitch has announced its expansion into the Nigerian fintech space and a seed extension of $2 million, following its $4 million seed funding round that took place about two months ago.
The additional $2 million was raised to spearhead its expansion into Nigeria which began months ago. The total amount raised in the seed fund is now $6 million. Investors who participated in the round include Raba, Firstminute Capital, CRE, Village Global, 500 Fintech, Future Africa, and Norrsken, who are all existing investors. The round saw participation from new investors – mainly executives at global fintech companies. They include; Matt Robinson, co-founder of GoCardless; President and COO of Coinbase, Emilie Choi; Tom Blomfield, co-founder of Monzo and GoCardless; and Charlie Delingpole, the founder of ComplyAdvantage.
Many fintech companies depend on card payments for their operations and even though elaborate payment systems have been developed by payments companies like Flutterwave, Paystack and Yoco, there are still challenges associated with these forms of payments and these are the issues that Stitch plans to address with its API solutions. Its pay-by-bank feature, which it is soft-launching, will help businesses process payments better and address the problems associated with card payments.
Co-founder and CEO of the fintech company, Kiaan Pillay, said that “once you make the user experience even more frictionless for pay-by-bank, and as tokenizable as card, the choice to use this method over others (particularly for fintechs) is fairly straightforward”. According to him, within six months of its soft launch in its home country South Africa, Stitch has witnessed month-on-month growth of over 50 percent in its customer base and payments volume across all solutions.
The fintech company has also been testing its payments product in Nigeria instead of its primary data product. The product is proving to be a useful one after Stitch talked to at least 40 fintech companies about it. This is because although Nigeria has an efficient/standard bank settlement system, customers still have to depend on mobile banking platforms and internet banking to complete payments. Stitch’s API product is about to change that. The company says that with its product, users will no longer have to go through stress and be able to make one-off, recurring and user-not present bank transfers. “The opportunity is ripe. I think more and more API fintechs are recognizing that paying via credit card interchange comes with a high fee when converting customers onto their platforms. Just this month alone, we’ve seen our inbound requests increase five to tenfold here in South Africa, and customers are integrating us in Nigeria even as we were previously still in soft launch”, Co-founder and CEO of the fintech company, Kiaan Pillay said.
Stitch, which was founded by Kiaan Pillay, Natalie Cuthbert and Priyen Pillay, is fully operational in South African and Nigeria. The company says that it is on the path of facilitating $10 million in monthly payments by the end of 2021.
Nigeria is a huge market for fintech companies and there also exists huge competition which Stitch is bound to face. Answering the question on how the company plans to acquire clients and thrive in a highly competitive environment, Benjamin Dada who will be leading Stitch’s Nigerian operations said that “for a start, we are offering Nigerian businesses who intend to use Stitch free access to the product until the end of 2021. They will not only be achieving cost savings by accepting account payments, but they can now earn a little more for each payment they accept via Stitch.
Tom Blomfield, co-founder of Monzo and GoCardless, speaking about his investment in Stitch said that “I see a lot of potential in African markets, where the wave of digital finance innovation is really beginning to gain momentum, and the Stitch team is getting in at precisely the right time. The team is one of the best I’ve seen globally, and I’m excited to see them continue to grow in Nigeria and beyond.”
Stitch plans to use the funds raised to bring its operations in Nigeria up to scale and also to hire talents.