Lipa Payments secures R10 million investment for contactless payments platform for informal sector

Developed in 2019 by fintech entrepreneurs Thando Hlongwane and Roger Bukuru, the Lipa Payments solution has secured a R10 million investment from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank. Lipa Payments was one of the finalists in Capitec Bank’s Life 2.0 Hackathon in 2020.

Owning just a low-end smartphone, even if it does not have near-field communication (NFC) capabilities means that merchants can accept either phone-to-phone payments (using Bluetooth technology) or a bank-card payment directly on their smartphones (using NFC technology). 

“We see tech as a scalable tool to solve everyday challenges. Lipa Payments solves two. First, we give small-scale merchants low-cost technology to accept digital payments at the point of sale and secondly, we allow buyers of goods and services to pay digitally without having to worry about cash or network coverage,” said CEO and Co-Founder of Lipa Payments, Thando Hlongwane. 

To date, there is limited infrastructure to support digital payments at local spaza shops, hair salons or fast food stores and most micro-merchants can’t afford to purchase Point of Sale (POS) devices. For banks and fintechs, the distribution and maintenance of POS devices can be costly.

“Informal sector merchants have traditionally relied on customers having cash on hand to transact, but Lipa Payments is changing that. There are obvious constraints to trading with cash and it is only getting more difficult in a digital, cashless global economy,” said Roger Bukuru, Co-CEO and co-founder of Lipa Payments.

Research carried out as part of Mastercard’s 2020 State of Pay report, conducted across 14 different countries, found that people are moving away from using cash. The last two years have been fertile years for fintech start-ups in South Africa with the move to a digital economy accelerating at the start of the pandemic. 

However, few fintech start-ups are focused on the potential at the bottom of the income pyramid, but for Hlongwane and Bukuru, returning to their roots and driving financial inclusion for the lower income market was a no-brainer.

The Lipa Payment’s duo plans to roll-out their Software-as-a-Service (SaaS) solution across South Africa and Nigeria in 2022. 

“We have always wanted to solve the problems that informal sector merchants face. It’s been a journey of finding the solution to the question: ‘How can we bring them into a digital payments space,” concluded Hlongwane.

StatsSA’s Q4 2020 Quarterly Labour Force Survey shows that around 2.5 million South Africans are part of the informal economy (non-agricultural) and the number of people in informal employment has increased since 2013. 

Whether selling goods and services from a taxi rank, a spaza shop or a dirt road in a rural village, Lipa’s digital solution for merchants of the informal economy allows them to be financially included in the digital economy of the future. 

If you want to learn more about Lipa Payments and our products, contact us on hello@lipapayments.com or book a demo.