Tiger Global-backed Axis launches digital payment platform for Egyptian SMEs months after its $8.25 million seed

Egyptian fintech Axis has launched its digital payments platform to the North African market after securing a license from the apex bank, the Central Bank of Egypt (CBE), for its open mobile wallet, axisPay, which offers a digital banking option for small businesses and their employees .

This comes nearly 18 months after the startup received an $8.25 million seed investment led by Tiger Global, Sawari Ventures and Raba, with participation from Firstminute Capital and RaliCap; the founders of Venmo, Rho Banking and Cred; and executives from Revolut and Plaid.

Axis has been stealthy, engaged regulators and obtained the necessary license for its operations, co-founder and CEO Jacques Marco told TechCrunch in a recent interview. “We have been focused for the past two years on three tracks: one, licensing (mobile money/wallet issuance and acceptance licenses); two, being conscious and focused on building the right relationships with the regulator and the local banks, and making sure we are fully licensed and regulated; three, build the full stack, put all our integrations end-to-end and pass a certification with the local switch,” commented the CEO.

Before Axis, Marco co-founded Raseedy, Egypt’s first independent mobile wallet. He left in 2020 for unicorn startup MNT-Halan, where he held several roles in strategic finance and digital transformation before leaving in early 2021. Like Marco, Axis’ co-founders Ahmed Ragab and Nada Abdelnour have fintech backgrounds. Ragab, the startup’s chief technology officer, worked as VP of Engineering at Raseedy and was an engineering consultant at IBM Egypt before that. Growth manager Abdelnour held several product roles at PayPal’s subsidiary Zettle, Yahoo and African fintech Yoco.

Small businesses drive most African economies; in Egypt, there are 8 million SMEs and they contribute to 80% of the country’s $400 billion+ GDP and employ over 20 million people. These small businesses are heavily cash-based, with little access to online banking, payroll processing and working capital financing. Over 60% of them still pay employees wages in cash, and suppliers in cash or check, which has errors from fraud to financial exclusion.

Despite the great need to digitize small business payments and cash flow, the bulk of fintech in Egypt, with solutions from MoneyFellows, Telda, Sympl and others, centered on consumer financial inclusion. “No one is serving SMEs when it comes to banking in general,” Marco said of the play Axis is making in Egypt’s fintech market.

According to the CEO, small businesses waste an estimated 192 hours per year paying their employees in cash, from purchasing to paying employees. Meanwhile, setting up bank accounts to streamline payroll is somewhat cumbersome and expensive for these businesses. The are also usually burdened with manually keeping track of salary advance requests and lending their employees money at the expense of cash flow.

For employees, most of whom are part of Egypt’s economically excluded (about 65% of the adult population), Marco argues that carrying cash is a problem and potentially unsafe; paying for things in cash means paying for them in person as opposed to the convenience of paying for things digitally.

Axis’ platform provides an alternative for these businesses, he says. It helps streamline their payments to employees and suppliers via axisPay mobile wallets. They can send salaries, reimburse expenses, perform expense management, earn cashback and offer earned salary advances to their employees on the wallet, which in turn gives employees access to a range of financial services: money transfer, bill payment and online shopping and QR code payments.

Fintechs such as Khazna and NowPay offer Earned Wage Access (EWA) services in Egypt, presenting some form of competition to Axis, a later entrant. However, the Axis founders claim that their EWA is different in that it focuses on small businesses and unbanked/underbanked employees, which can be distinguished from the other players who target businesses with mainly bank employees.

“Think of us as an M-Pesa for small businesses in Egypt. We help these small businesses that rely heavily on cash and pay their employees, suppliers and B2B payments in cash and offer them digital payment options. We also solve a consumer problem and tackles financial inclusion both ways,” said Abdelnour on the call.

“In the future, consumers will be able to receive transfers from abroad to their mobile wallet, and we are working with a few transfer players abroad to be able to enable that.” The startup partnered with Visa for its mobile wallet and virtual card and with Fawry to enable customers to cash in and out from the Egyptian fintech giant’s network of 250,000 agents across MENA’s most populous country.

Axis founders (from left to right): Jacques Marco, Nada Abdelnour and Ahmed Ragab

Axis has now beta-launched its platform to over 100 small businesses (in various industries such as food and beverage, retail, tourism, construction and health) and the 5,000 employees it onboarded while they were stealthy. Marco said Axis expects to end the year with 5,000 small businesses and 80,000-100,000 employees as the “well-capitalized” fintech continues to iterate and improve its offerings, including a lending product that taps into a $15 billion SME financing gap in Egypt.

“We want to position ourselves in a way that makes our solution much more sticky and expensive to switch from. If you do payroll with us and run B2B payments, we also want you to take working capital from our platform,” Marco said of the lending product Axis intends to launch by the end of the year. “We do all this closely with the regulator to follow the country’s national strategy for digitalisation, reduce cash, strengthen small businesses and grow the economy.”