When Ham Serunjogi and Maijid Moujaled finally opted to bite the bullet and launch their own company in 2018, they had come through years of school and stints at Yahoo!, Facebook, and Flickr between them.
But the pair weren’t about to unveil another “cool stuff”, there are way too many of those anyway. Ugandan Serunjogi and Ghanaian Moujaled had their hearts set on something pragmatic, simple, practical, and far more relevant to their roots.
“Let’s do to money what WhatsApp did to texting” – that’s a succinct way of describing the zero-fee cross-border money transfer solution that the duo set out to build when they launched Chipper Cash.
Now, 3 years and USD 152.2 Mn in funding later, the excitement around Chipper Cash is probably at an all-time high (especially since the recent USD 100 Mn Series C which means the company has raised USD 143.8 Mn within a year from high-profile investors, including Jeff Bezos).
However, all the fanfare and the ensuing conversations about whether or not Chipper Cash is Africa’s latest tech unicorn, have sort of overshadowed a rather unconventional development around Chipper Cash that actually seems far more interesting.
And what’s that? It appears the startup is taking a rare form – that of a remittance company with an unlikely ‘Robinhood’ component, or perhaps a payments company with neobank ambitions.
Making money ‘move’
The problem Serunjogi and Moujaled opted to tackle when they launched Chipper Cash was clear and quite pressing.
According to the World Bank, the global average cost of sending USD 200.00 was 6.8 percent in the last quarter of 2019. Sub-Saharan Africa, in particular, remains the most expensive place to send money to, with the average cost at 8.9 percent.
Although it’s become more affordable over time, sending money to and across African countries still costs around 20 percent higher than in the rest of the world.
Beyond huge costs, cross-border money transfer across Africa is restricted to a few corridors, and the prevalence of multiple currencies and stringent regulatory oversight on the movement of foreign exchange make cross-border transfers quite tedious in Africa.
So, when Chipper Cash became operational for the first time in 2018, it initially allowed individuals to send and receive any amount of money across the East African region for free. Then, the startup eventually expanded the service to other countries.
Today, Chipper Cash services extended beyond no-fee cross-border money transfer to include instant local peer-to-peer (P2P) payments, discounted airtime/data purchase, and zero-fee bill payments. These additional services may not be typical with remittance companies but it’s still within the scope of payments. But then again, maybe Chipper Cash is not the typical remittance company.
“Chipper is not just a remittance company, cross-border remittances is one of our offerings. We also do local P2P (in-country) payments, airtime, data, and bill pay,” Hasan Luongo, Chipper Cash’s Vice-President of Growth Marketing, tells WeeTracker.
The startup’s growing list of captured countries now includes Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, Kenya, and most recently, the UK – its first market outside Africa. So far, Chipper Cash claims 4 million users and USD 100 Mn in payments value recorded in June 2020 alone.
For a remittance company that doesn’t charge fees (at least on individual transactions), one might wonder how Chipper Cash makes money. In any case, the company prefers to keep its money-making formula a secret. But what is no secret is that Chipper Cash has raised a tonne of cash in such a short time (at least by African startup standards).
That can only mean there is plenty of building and growing to do, and the startup seems to be positioning itself for that in a manner not many would have expected.
A fintech’s many faces
Fintech is currently the prima donna of African tech and this is clearly reflected in the high influx of capital into fintech relative to other sectors. Also, it’s no coincidence that all but one of Africa’s five (or six) tech unicorns are fintech companies.
As financial services offer the rails on which every other tech sector depends, investors are betting big on fintech startups with diverse footprints – ranging from payments, lending, digital banking, savings/investment (wealth management), API solutions, cryptocurrency, remittances, cross-border transfers, and others.
Indeed, there are African fintechs that have built their business such that they specialise in one or more of those segments. For example, the Nigerian fintech, Carbon, which launched as a digital lender is known to now offer a range of services that cater to transfers, payments, savings, investments, and even buy now pay later (BNPL) services.
Nevertheless, it’s generally unheard of for a company with a strategic interest in remittances and cross-border transfers to dip its toes into territories like crypto and fractional stock trading. But that’s exactly where Chipper Cash is headed.
And again, perhaps this is because Chipper Cash is not the typical remittance company but actually a do-it-all fintech startup that just happened to have kicked off with cross-border transfers.
Currently, Chipper Cash is enabling users in South Africa and Uganda to buy and sell bitcoin. It’s a move aimed at tapping into Africa’s booming crypto market where trading volumes are hitting record numbers on platforms like Binance, Luno, BuyCoins, Paxful, and many others, despite regulatory hurdles.
For context, Luno recently reported USD 8.3 Bn in crypto trading volumes and African users accounted for USD 7 Bn.
Also, Paxful lists Nigeria, South Africa, and Kenya among the top hubs for P2P bitcoin trading globally, and Binance P2P users in Africa grew 2,000 percent in the last five months with volumes increasing by over 380 percent. It’s no surprise, then, that Chipper Cash wants in.
Beyond crypto, Chipper Cash has also introduced virtual VISA cards available for online shopping in Nigeria and is in the process of launching a “U.S. stock trading product in Uganda, Nigeria, and a few other countries.”
In Nigeria, specifically, there is a fast-rising crop of wealthtech startups democratising investments in foreign securities. Despite recent run-ins with regulators, companies like Trove, Bamboo, Chaka, and Rise are known to enable locals to buy foreign stocks, and they have enjoyed remarkable growth in the two or so years that they have existed.
“We are moving into crypto and other investment services because this is what our customers have been asking us for and we firmly believe that expanding access to financial services such as investments is a key to unlocking global opportunities for our users,” explains Luongo.
With those investment-tech platforms poised to become even more popular in the coming years as fintech literacy, smartphone penetration, internet costs become more optimal, it’s clear why Chipper Cash is also looking in this direction.
A neobank in the making?
Think of Western Union suddenly growing out a Robinhood-shaped appendage by going beyond cross-border money transfers to also enable crypto and U.S. stock trading just like the American-born app itself. Add a touch of everyday payments and there lies the robust fintech machinery that Chipper Cash is building.
With the calibre of investors backing the startup, the amount of capital behind the company, and its speculated unicorn valuation, it stands to reason that there could be much more in the offing.
With footprints in remittances, investments, payments, and crypto, Chipper Cash already seems quite stacked but it’s quite likely that the company is gunning for the entire fintech gamut and may eventually serve up products in lending and savings, and basically morph into a neobank of sorts.
For one, there is precedent. Indeed, there are certain elements within the Chipper Cash kit that seem to mirror the components that make up Eversend; a startup that now sells itself as “a neobank for Africans”, founded by Ugandan Stone Atwine in 2017.
Having started as a platform for moving money across Africa, Eversend now enables users to exchange, save, and send money instantly at attractive rates within and beyond Africa (currently 8 African countries and 15 countries across Europe, Asia, North America, and Australia).
Eversend also enables everyday bill payments and virtual cards currently, while products that cater to savings, loans, insurance, stock trading, and crypto, are believed to be in the works.
If that sounds familiar, that’s because Chipper Cash is pretty much setting itself up in an identical manner, though, as Luongo maintains, there are “no plans for loans or savings accounts at present.” But it may only be a matter of time before Chipper Cash goes from its current remittance/payments/investment-tech iteration to neobank.
