Business credit

Mobile Solutions Help African Traders Digitize

Despite high mobile phone penetration in Africa, cash remains a preferred mode of payment for everyday transactions, with around 95% of transactions in Nigeria, one of Africa’s largest economies, in cash.

For merchants who receive these payments in cash, the lack of a digital collection system can make it difficult to track their income and expenses or determine how much money they have to replenish inventory, for example .

“Most businesses are just collecting money and when you are just collecting money, [it’s difficult to know] how your business is actually doing,” Bastien GotterCEO of an enterprise software startup Bambasaid PYMNTS in an interview.

The introduction of mobile money payments – prevalent in countries like Kenya and Ghana – as a second payment collection channel in addition to cash further complicates the situation, Gotter said, creating a situation in which Merchants must follow two different sets of payment streams while trying to make sense of business fundamentals.

“We see a lot of traders trying to [undertake the complicated task of] record sales on paper or count SMS received to make sense of sales data,” he explained.

Simplifying this process is what Bamba aims to do today, helping merchants “professionalize” their sales process and easily record cash sales as well as access cash advances against future cash flow, which gives a clearer picture of their day-to-day operations.

“All of a sudden they get a pretty accurate picture of [their day-to-day business operations] combined between cash and mobile money,” noted Gotter.

Related: Kenyan software startup Bamba secures $3.2m seed funding

Today, the startup, which is currently in stealth mode, secured $3.2 million in seed funding to improve its app and expand its user base in 12 countries across sub-Saharan Africa, including Kenya, Ghana and Cameroon, which have high mobile money penetration. .

Meet the needs of merchants

Given the huge working capital deficit on the continent, the company also has a huge opportunity to serve small and medium-sized enterprises (SMEs) in the region in need of funds by leveraging the data it has on merchants to offer credit and make the right choices. lending decisions to small businesses in urgent need of funds.

And compared to consumer loan products, which tend to have a negative reputation, Gotter said SMBs often use business loans for productive purposes — whether that’s for additional location, hiring employees. an additional employee or improving their customer service processes, all of which are essential for business growth.

He added that Bamba was exploring a model similar to what US payment company Square is doing by taking a higher rate on advanced billing features over standard billing features, as they help merchants with their checkouts and checkins. payment.

Finally, he highlighted the Software-as-a-Service (SaaS) component, which goes beyond helping businesses with their day-to-day operations to help them pay vendors, employees, or even marketing services.

Ultimately, it comes down to listening to what merchants are saying, understanding their pain points and key pain points, and building solutions that work for them.

“That’s part of Bamba’s strength – to really understand what’s happening on the pitch and to understand what the next layer of serves [are needed to meet merchants’ needs],” he said.

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NEW PYMNTS DATA: THE CUSTOM PURCHASING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.