Flutterwave, Eversend and other fintech African startups are closing down virtual card service
Earlier today, many African fintech startups offering virtual dollar card services emailed their customers that their virtual card service will be unavailable from Saturday, July 16, 2022. Virtual cards are digital copies of physical bank cards. They are created and stored in digital virtual wallets.
An email sent to barter customers of Nigerian-born unicorn Flutterwave read: “… as of Sunday, July 17, 2022, all of our virtual dollar cards will be unavailable for transactions and purchases.” The payment giant attributed the reason for this suspension to “an update from the company’s card partner”. Barter is a Flutterwave consumer-facing virtual card platform that was launched in early 2017.
This announcement from Flutterwave will affect many other startups that use the company’s white labeled virtual card service to issue virtual cards to their customers.
Other fintech startups including the Busha crypto exchange, Payday headquartered in Rwanda and Ugandan Eversend also gave similar messages.
It is not clear which “card partner” Flutterwave and the other fintech startups refer to, but these platforms have issued virtual cards powered by MasterCard and Visa – two leading global card issuers. TechCabal has not yet confirmed what happened that led to the “card partner” making this decision.
Individuals and businesses in Nigeria’s technological ecosystem affected by the unexpected alerts went on social media to complain about the widespread suspension of virtual card services.
“It affects us greatly because all Facebook ads are linked to our virtual trading card,” said Douglas Kenydson CEO Selar. “Our Amazon Web Services (AWS) plan is also connected, and you can not even afford to miss a single payment, otherwise they will take you off.”
When asked about his other options, Kendyson expressed uncertainty about switching to existing virtual cards from Nigerian banks. He complained about the hassle of exchanging dollars and potentially dealing with failed card payments.
Kendyson’s best alternative is to turn to the virtual card services of Mercury, a San Francisco-based digital bank for startups, which had limited dozens of African startups’ accounts in March.
“It’s good that this happened in the middle of the month, so whatever payment you need to make, do it,” Kendyson said.
In the midst of the extensive announcement, startups such as Bitmama and Mono took the opportunity to announce that their virtual card services are still up, a reminder that not all fintech startups were affected.
