Africa’s payments startups are about to face competition from a Brazilian unicorn

EBANX, with operations in 15 Latin American countries, is launching in Kenya, Nigeria, and South Africa.
Joao Del Valle, EBANX's CEO, says African fintech today reminds him of 2012
Joao Del Valle, EBANX's CEO, says African fintech today reminds him of 2012
Photo: EBANX
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A decade after starting operations in Brazil, payments provider EBANX has grown into a billion-dollar company with around one billion transactions completed in 15 countries. It carved a niche by helping global companies like Spotify, and Uber receive payments from customers living in Latin America. Last October, it filed documents for an initial public offering in the US, though the process has slowed down due to the ongoing economic downturn.

For its next move and first voyage outside of Latin America, EBANX is launching in Africa, beginning with Kenya, Nigeria, and South Africa.

The move seeks to tap into Africa’s rising digital economy driven by the rise of fintech companies like Flutterwave, MFS Africa, and OPay. João Del Valle, CEO and co-founder of EBANX, drew parallels between Africa’s present fintech momentum and the state of play in Latin America in 2012 when his company launched.

But while Africa’s fintech-powered digital economy is fast growing, it is “only in its early days, and it’s projected to grow up and to the right for the next few decades,” Del Valle said, in a statement.

What attracts a Brazilian fintech to Africa?

At least in its first year, EBANX will likely operate not as a disruptor of African fintech but as a student and potential partner of strong local players. It plans to learn from M-Pesa’s ubiquity in Kenya, and OZOW’s capabilities in electronic fund transfers in South Africa. In Nigeria, the use of USSD—allowing ease of access for those without smartphones—and bank transfers will be its target.

These three countries make up half of Africa’s GDP and are Africa’s largest markets for fintech, with varying degrees of penetration of digital payments methods. South Africa, where the use of cash in e-commerce is just 9%, could be EBANX’s most interesting market. But it can expect to square up with incumbents like Yoco, which has grown from offering payment terminals to processing web payments, and Stripe-owned Paystack.

But the Brazilian company can summon experience gained from Latin America’s decade-old head start on African fintech.

Beyond a flattering “next frontier” rhetoric, Africa appeals to EBANX because developing economies share similar challenges with brick-and-mortar financial systems designed for a past age. Indeed, some south American startups have become inspiration for African startups in similar industries.

A good case is Nubank, the world’s most valuable digital bank that is a model for Kuda, one of Nigeria’s digital banking startups. The similarities have also seen African startups expand to Brazil, one instance being Migo’s export of its credit-as-a-service business built in Nigeria.

Far from being an Amazon-size juggernaut destined to win in Africa, EBANX has had to fight for distinction in south America in the face of competition from dLocal, the Nasdaq-listed Uruguayan payments company. EBANX laid off a fifth of its employees in June to adjust to the current economic climate, despite raising $430 million in January 2021.

Still, its ambition is to float products (including new ones announced this week) in Africa that will “build the digital economy at a rapid pace,” said Paula Bellizia, EBANX’s global payments head, in a statement. Its motivation? A cash-dominant Africa is still scratching the surface on fintech penetration and growth.