The number of API fintech firms in Africa has exploded in recent years, and many of these startups have received funding to help them achieve their goals. Sudo Africa, a fintech company in Nigeria that offers a card-issuing API to developers and enterprises, has acquired $3.7 million in pre-seed capital.
Global Founders Capital (GFC), based in San Francisco, led the financing. Picus Capital, LoftyInc Capital, Rallycap Ventures, Kepple Africa, Berrywood Capital, ZedCrest, and Suya Ventures are among the investors. Many African fintech entrepreneurs, like Olugbenga ‘GB’ Agboola, Ham Serunjogi, and Odun Eweniyi, are also investors.
Sudo Africa’s founders, Aminu Bakori and Kabir Shittu explained that the chance to develop Sudo arose from a dilemma they encountered while trying to issue cards at their earlier startup: a mobile wallet system enables users to aggregate current financial institutions into a single platform and conduct transactions.
According to Bakori, the fintech landscape is one in which, while entrepreneurs build silo interfaces that allow their clients to send and receive payments between themselves, problems develop when the world’s economic systems are involved.
Card-issuing API (pioneered by the likes of Rapyd, Ayden, and even Stripe worldwide) is gradually attracting the interest of investors who believe it’s the next big thing in a sector that has drawn the most VC funds in Africa, similar to many other API-led fintech.
Using a mobile wallet or local card in Nigeria to conduct an Amazon purchase, for example, is always a nightmare. This has become less of a problem with the advent of online dollar cards in a few digital banks and fintech companies. This technology is powered by card-issuing API fintech like Kaduna-based Sudo Africa.
Users are told that whereas banks take weeks or months to issue cards, Sudo Africa does so in days. The startup’s infrastructure, which is built in collaboration with licensed card issuers, enables it and any developer or merchant who joins its platform to issue online and offline cards to their clients.
Businesses can also customize and program cards to their liking, add functionality, and safely connect with other services on the platform.
Sudo Africa’s founders say that these functionalities, such as spending and regional controls, set it apart from YC-backed Union54 and unicorn Flutterwave, a newcomer to the card-issuing API market.
However, based on the features each firm holds to have on their websites, it appears that the three are nearly identical.
Fintechs, microfinance banks, non-tech enterprises, government organizations, logistics providers, commercial banks, and e-commerce businesses are among Sudo’s users, according to the company’s COO Shittu.
When its issued cards are used to execute an online or POS transaction, the corporation collects interchange fees, and it takes approval fees when spending and location-based controls are performed. According to Shittu, Sudo obtains card production and personalization fees at a lower cost than incumbents.
Sudo Africa is now the only company in this market that only provides virtual and physical cards to Nigerians. Although being founded in Zambia, Union54 has consumers all around Africa. Flutterwave claims to assist retailers in 35 African markets in issuing virtual cards, with real cards currently available only in Nigeria.
Techbuild’s Take
Every transaction you complete from your convenience or e-commerce platform, bank, or fintech app is based on interactions that enable you and billions of other customers to use these services; these interactions are known as application programming interfaces (APIs).
Given the importance of API fintech startups in the development of open banking, it is reasonable to assume that these firms will help the continent attain financial inclusion.
By allowing access to transaction data, these open banking platforms can help all types of customers have access to financial services as well as much more tailored and cheaper products.
On the African continent, the API fintech market has made remarkable success, and there is likely an opportunity for more.
While end-user fintech’s achievement in Africa is well established, to the point where some might contend that the end-user fintech space has become somewhat populated, it seems that API fintech is the next big thing; one that is poised to become just as productive, if not more so, as more people invest in it.
With this recent fund, Sudo Africa, which is setting a standard for other fintech and companies attempting to build a name for themselves outside of Lagos, is likely to want to grow into other African markets with this funding, not out of competition, but out of requirement.
The company goes beyond other API startups. For example, suppose a corporation uses Sudo Africa to issue cards for employee cost management; what occurs is that individuals are provided cards with a minimum balance, so every time they require to use the card, an API is called to confirm or reject the transaction in real-time.
Another instance is a delivery service that sends a dispatch rider to a mall with a programmed card to perform a transaction and spend a set amount of money.
Sudo’s API is designed in such a way that the card will not operate if the rider decides to use it in another mall for whatever reason or spends more than the specified budget.
Featured Image: Sudo Africa Co-founders
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