Twins eye cut of billions in Kenyan, Asian commerce

Wapi Pay, a Kenyan digital payments start-up, has set sights on a share of more than Sh600 billion trade between Kenya and Asian countries such as China and India after a successful cash call.

The fintech start-up, co-founded in 2019 by twins Eddie and Paul Ndichu, last week announced it had raised Sh239.36 million ($2.2 million) from venture capitals, led by MSA Capital of China.

The firm, which is licensed in Singapore, has set up a cross-border payment platform it says will enable traders in Africa pay suppliers in key Asian markets such as China, India directly from bank accounts or mobile money wallets.

It, however, requires the go-ahead from the Central Bank of Kenya to start operations in Kenya under the Money Remittances Regulations, 2013, which, among other conditions, require a licencee to maintain a minimum core capital of Sh20 million.

“Right now we are operating as a Singapore-licensed entity, but it’s important for us to have our roots in African markets,” Wapi Pay chief executive Eddie Ndichu told the Business Daily.

“We have organised our processes and operations, and we are expecting our letter of intent from Central Bank of Kenya this month. We have gotten our investment because our core capital is ready. We are literally waiting to switch on this month.”

Besides Kenya, Wapi Pay is seeking authorisations to operate remittances services in other key African countries such as Ethiopia, Nigeria, Ghana, Zimbabwe, Zambia and Egypt.

A considerable share of the cash raised will be spend on paying for remittances licences in the targeted African countries, besides enhancing investment in technology and expand its digital payment product suit.

Opaque banking model

“The premise for remittances to Kenya and Africa is largely inbound for sustenance of families back home, but our focus is on outbound model largely for trade. We want to digitise trade payments for traders and amongst the corridors that Africa trades with 95 percent is Asia,” says Mr Ndichu, a former manager for digital financial services at Kenya’s leading banks, including KCB, SBM Bank Kenya (formerly Chase Bank) and Standard Chartered Bank.

“Today if you want to make payments for goods and services in Asia, you will rely on opaque banking model where you will fill out a form in a bank branch and use Swift (Society for Worldwide Interbank Financial Telecommunication) to process your transaction and at the back of that is a correspondence and representative banking model.”

Asian countries such as China, India and Japan account for than 40 percent of the imports into Kenya, making the region largest trading corridor for in-bound merchandise.

Imports from China, for instance, amounted to $3.39 billion (Sh369.16 billion under prevailing exchange rates) in 2020, about 23.55 percent of $14.41 billion (Sh1.57 trillion) total imports, according to provisional trade data obtained from the Kenya Revenue Authority (KRA) by the Central Bank of Kenya.

“If you walk to Nyamakima or Gikomba (popular markets), those traders selling plastics, used clothes, phone chargers or covers, have actually had to make a payment to China, Vietnam or Indonesia to get those goods,” the Wapi CEO says. “Today, they have to walk into a bank branch to process payments, but we are saying why can’t they do it from their mobile phone and pay their suppliers from their mobile wallets.”

Wapi Pay says it will aim to lower charges to three percent of transaction value and process payments within a day to grow its market share on a trade corridor where cost of remittance are as high as 15 percent and processing taking up to five days.

“We operate a funding and settlement model to facilitate real-time instructions called orders within our very own ecosystem. We earn commissions from order instructions and foreign exchange conversion,”Mr Ndichu said.

Partnerships

The upstart fintech says has inked partnerships with banks and digital payment platforms in 10 key markets in Asia, including China, India, Japan and Singapore, and is currently engaging tier-one banks in Kenya and mobile money providers such as Safaricom’s M-Pesa.

The firm targets to recruit 500,000 merchants and traders in Africa, with Kenya making up at least third of the traders, sign up 100,000 suppliers in Asian countries like China and India, and process payments in the upwards of $500 million (Sh54.40 billion) by end of 2022.

The $2.2 million (Sh239.36 million) pre-seed funding drive attracted investments from technology-focused MSA Capital of China and Kepple Africa Ventures.

They have joined Future Hub (where the Ndichus are partners), Gobi Ventures and Transsion Holding which were already on board.