Flutterwave is Building Digital Payment Infrastructure for Africa

by Y Combinator8/10/2016

Flutterwave is an API that lets you process credit card and local alternative payments, like mobile money and ACH, across Africa. They make it possible for global merchants to process payments like a local African company. We sat down with co-founder Iyinoluwa Aboyeji, who goes by E, to talk about how he’s transforming digital payments across Africa

What YC Liked About Flutterwave:

“When you look at how payments work in the developing world, you start to realize that it’s a lot more complicated than in the US. There’s a huge number of different payment options, and different reasons for people to use each. By making it easy for any merchant, no matter where they are located, to process all of the available payment options, Flutterwave is changing how money moves for an entire continent. That’s a huge idea, E has an incredible team to attack it.”
-Aaron Harris, Partner at Y Combinator

How did you come to work on Flutterwave?
Flutterwave began because of some of the experiences I had running my last company Andela. Andela was recruiting and training the best African developers to work remotely for large technology companies like IBM and Microsoft. We actually recently raised a couple million dollars from Mark Zuckerberg.

One of the biggest problems we ran into was sending money into Africa. We had to incorporate in every African country we had developers so we could pay them. Because of that, we processed payments every one to three months to avoid incurring too many fees. Each time, it took at least a week to transfer the money to our local bank account and it still cost us a fair bit each time.

Can you talk about what the payment processing landscape looks like in Africa.
Payment processing in Africa is very different than it is in the United States. If you go to any store in the U.S., they take debit cards, credit cards, and even mobile payments. This is not the case in Africa. To provide that same full-service payment option, merchants and payment service providers have to integrate with each form of payment individually. That means you have a POS that accepts Visa and not Mastercard. Failed transactions are so common that many store owners don’t bother with the POS anymore. The banks didn’t have seamless payments technology that could bring all these solutions to their merchants. Because of this, Africa simply defaulted to cash and then alternative payments like bank accounts, or mobile money. Flutterwave’s technology accepts traditional card based payment processing but also caters to more popular payment processing methods like ACH and mobile money payments.

Does that mean US companies have a hard time entering the African market?
Yes, but it’s not just US companies. It’s everyone. A lot of global players spend a ton of money when they enter the African market and then question why they’re not successful later on. They don’t realize that credit card payments aren’t the preferred payment in Africa.

It is very common for these companies to assume card-based payments are as popular here as they are in the US without realizing that sticking to their traditional payments infrastructure means losing sales.

Even I didn’t realize how bad it was we did the numbers. We process 10 times more in transactions and volume with alternative payments than we do with card based payments.

This is why we created a middle layer that payment service providers and global merchants can integrate with that works across payment channels, methods and local currencies in different African countries.

When you integrate with Flutterwave’s API, you are integrating all these different payment systems, and methods simultaneously. You can pay and get paid from millions of cards, mobile money wallets and bank accounts in several African countries almost immediately.

How has your API impacted US companies trying to do business in Africa?
I like to use our work with Uber as an example. Lagos was one of the fastest growing cities using Uber – they were growing faster than London was at the same stage. But due to sudden regulatory changes, it became really difficult for them to process local card payments. That really hurt their business and they had to resort to cash and mobile payments. We worked with Access Bank to provide Uber with a payments solution that enabled them to process payments locally and recover their growth in record time.

There are a lot of other similar US companies who we have helped enter, accelerate and succeed in African markets.

What are some of the major challenges you face?
One major challenge is regulation, given the variety of markets we process payments in. We’ve managed to mitigate regulatory risk by focusing on the technology side of things while partnering with local banks and payment solutions providers in each country to build compliant payments solutions.

The other big challenge is building trust with global merchants and financial institutions. Payments is a sensitive industry since it’s vital to our customers’ business. We take the responsibility very seriously and make sure we have very secure technology and infrastructure to prevent fraud and money laundering on our platform. We also do pretty advanced KYC and two-factor authentication to ensure maximum compliance and security.

The problem we are trying to solve is actually a really hard one. I have spoken to executives at some of Africa’s largest companies who face this problem with payments across Africa. Some of them have spent the last 25 years trying to solve these problem and have only managed to do so in only a few African countries.

Thankfully, our team is pretty much the best possible team to solve this problem. The team has built payments technology, like Paypal and Google Wallet, and corporate payment solutions for some of Africa’s largest banks. One of us was even a regulator with Nigeria’s Central Bank – so we know the pain points of the local banks when it comes to being compliant.

What’s your long-term vision for Flutterwave?
As an African, I have always felt like a third-class citizen on the internet because many popular web services like Stripe, Paypal, and Airbnb launch internationally but excluded African countries just because it was too hard to process payments there. I really want us to be the company that makes it possible for the world’s best internet companies to launch in Africa or launch from Africa from day one. Africa and Africans deserve to be fully included in the new global economy powered by the internet. I go to work everyday so Flutterwave can make that possible.


  • Y Combinator

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