Union54 Is Betting On A Bold New Play To Offset Major Stumble

Zambian fintech startup Union54, which faced a major setback last year due to a massive wave of chargeback fraud incidents and attempts, is making a comeback with a bold new offering. In partnership with global payments technology company Mastercard, Union54 is launching a new product called ChitChat.

ChitChat is a collaborative endeavour between the startup and the payments giant that aims to provide users across Africa with an encrypted messaging platform. Additionally, ChitChat will serve as a social commerce platform akin to a superapp, allowing users to send money to each other, access a USD debit card, and make purchases from digital storefronts within the app. Supported by Mastercard integration, ChitChat’s card and payments features will initially be introduced in a beta version for Angola, Tanzania, and Ghana, with plans to expand into more markets later this year.

Perseus Mlambo, CEO of Union54, expressed his enthusiasm for the ChitChat product and the expanded partnership with Mastercard. He believes that integrating mobile payments and chat platforms can play a pivotal role in boosting trade across Africa. Mlambo stated, “We’ve built payments into a chat platform, giving everyone a USD card on demand – on our terms.”

Union54 initially burst onto the scene as a fintech that collaborates with licensed card issuers in various countries to provide card issuing services. The Zambian startup partnered with esteemed clients such as Barter, Eversend, GetEquity, PayDay, Vesti, Busha, Flutterwave, PayDay, Plumter, and Bitmama. Through its API, Union54 enables companies to offer debit card options to their customers and employees, eliminating the need for a traditional bank or third-party processor.

However, Union54 faced a major setback in July 2022 when it suspended its services following a chargeback fraud crisis amounting to USD 1.2 B. This incident prompted several African startups that had previously relied on Union54’s card-issuing services to seek alternative solutions. In a March interview with TechCrunch, Mlambo shared that Union54 aims to leverage the lessons learned from the event and its subsequent hiatus to re-enter the African fintech market.

Back from the lull, Union54 is betting on a new interesting product, ChitChat, which is expected to debut in September with a somewhat unusual spin, at least in African fintech industry terms, that features secure messaging paired with dollar-based virtual cards to allow international transactions

Notably, Union54 claims it has issued over 2 million cards to Africans through the joint initiative with Mastercard. Gabriel Swanepoel, the country manager at Mastercard for Southern Africa, expressed delight in deepening the partnership with Union54, highlighting the goal of creating a world beyond cash and offering consumers a secure and convenient way to access financial services.