Africa-focused fintech Zazuu raises $ 2 million to scale its cross-border payment marketplace – TechCrunch
Over the past decade, money supply to sub-Saharan Africa has been on an upward trend since 2020; last year, it increased by more than 6% to $ 45 billion. However, the steady increase in remittances to the region has not made this activity cheaper. According to the World Bank, sub-Saharan Africa is still the most expensive region to send and receive money to; Sending $ 200 costs an average of 8% in fees compared to a global average of around 6%.
Analysts from the World Bank’s Remittance Prices Worldwide say that one factor affecting these rates is transparency among transmission providers. According to the initiative, the lack of transparency around prices and charges reduces competition as consumers continue to use incumbents because “they are not aware and can not compare the services, charges and speed of their existing remittance service with other products.” One way to solve this would be to create an aggregator of cross-border and remittance platforms. Zazuu, a UK-based and Africa-focused fintech that does just that by offering customers various payment options, announces that it has raised $ 2 million in a new venture round.
Financial systems in the United States and the United Kingdom do not favor migrants, especially non-Africans. For many, it can be difficult to perform certain financial activities such as building their credit history or sending money home.
With a migrant base of 800,000 people (most of whom are based in the United States and the United Kingdom) who send money home annually, Nigeria Sub-Saharan Africa is the largest recipient of remittances of over $ 17 billion. Zazuu founders have Nigerian heritage; thus, they could relate very well to this problem. In an interview with TechCrunch, Zazuu CEO Kay Akinwunmi said that he and his co-founders started the company in 2018 after experiencing such institutional biases as Africans living in the diaspora.
“It simply came to our notice then. Seeing my mother send money and the friction there is pretty much the story of millions of Africans and migrants sending money, said the founder who started the company with Korede Fanilola, Tola Alade and Tosin Ekolie. “Africans in the diaspora, whether you are sending money to another part of the world or trying to get a loan here in the UK, are at a disadvantage.”
The remittance area has also been fragmented. There has been an increase in remittance products in the last couple of years, with the entry of digital upstarts such as NALA, Lemonade Finance and Chipper Cash who have joined such as WorldRemit, Remitly and Western Union, older platforms Africans primarily used to carry out money transfer activities.
To help users search for these different money transfer options in their region and compare prices and fees, Zazuu originally launched as a chatbot in 2020, informing users about the daily transfer rates to different platforms via Facebook and Telegram groups.
“We looked at the typical African customer to understand their behavior, and we noticed a fascinating trend,” said Akinwunmi. “We realized that Africans have this pathological behavior, that is, we love to shop around, compare our choices and try different options before we finally make a decision.”
According to the CEO, the first product helped to remove customers’ preconceived notions about which service had the best prices when they were introduced to new suppliers. The product has now developed into a full-fledged aggregator with more than 17 service providers (money transfer companies serving multiple corridors) listed. It provides money transfer options from Canada, the US and seven European countries, including the UK, and allows customers to use the “Search and Compare” service and find suppliers who can move money from these countries to Africa.
“The core of Zazuu is to seize power from financial institutions and money transfer companies, which are inherently biased. We want to give customers this bird’s eye view and transparent view, so that for the first time they can see all the options in one place, including prices, speed and reviews. The onboarding experience will be much smoother and much better for them, ”he said, comparing Zazuu’s processes with traditional market players.
Zazuu’s proposal is clear to customers; However, it can be difficult to see what is in it for vendors on the platform. But Akinwunmi argues that his platform solves suppliers’ main pain points: churn and high customer acquisition costs. “Zazuu is a marketplace, and the reality is that customers are shopping around looking for more devices to send money. But there is an opportunity for vendors to reinforce the brand message or advertise other parts of their business apart from good prices. And unlike to just get a referral, we give them real transaction value, “he said.
Although Zazuu did not report hard user numbers, it said that this base has grown 2.3 times in Q1 2022 compared to the whole of 2021. The company will use the new investment to keep these numbers up, hire more talent and scale its Pay with Zazuu feature that allows users to complete transactions in the app. Although this service is only available to senders in the UK and receivers in Nigeria and Ghana, Zazuu says it plans to expand access to other sending and receiving countries. Also in the works are a couple of products that address economic challenges facing African immigrants, such as access to credit.
“The goal is to build a completely non-partisan economic well-being for African immigrants around the world,” said the CEO.
Zazuu’s round of funding welcomed the participation of Pan-African investors Launch Africa and Founders Factory Africa, Hoaq Club, British rapper Tinie Tempah, iROKOtv founder and CEO Jason Njoku and Kuda CEO Babs Ogundeyi. Commenting on why Launch Africa invested in the four-year-old company, Zach George, the firm’s managing partner, said, “Zazuu is building a real marketplace for financial services, starting with money transfers and payments. We believe their business will provide more fair, more transparent prices and better cross-border mobility for money across the African continent. “
